Has the Greatest Job Market in History Ended?

Pushing back hiring decisions. Promoting internally to fill open roles rather than increasing headcount. Capping salary increases. Calling workers’ bluff when they say they’ll quit if they’re required to return to the office.

The greatest job market ever for employees appears to be over. While economists debate what will replace it, experts say companies are already shifting their hiring tactics and trying to reclaim some of the leverage they ceded to workers of all levels over the last two years. “It’s one hundred percent true that employers are regaining control of hiring again—across every industry across the board,” says Jacob Zabkowicz, vice president and general manager of Korn Ferry’s Recruitment Process Outsourcing business.

Over the last week, numbers released by the US government show that the job market has taken its foot off the accelerator. There were 9.9 million job openings in February, a 12% decline from just last December, and the first time that figure has fallen below 10 million since July 2021. Companies added around 236,000 jobs in March, only about half the number they added in January. During the last week of March, 228,000 people filed for unemployment benefits for the first time, an 18% jump from the end of January.

The job market at the moment is still quite good. But it’s no longer epic, and almost certainly will trend downward. “The market was artificially high. Will it be overcorrected? I don’t know, but it’s being corrected now,” says Doug Charles, president of Korn Ferry in the Americas.

Companies are not only hiring fewer people, experts say, but they’re also taking longer to make offers. Organizations are under pressure to keep a lid on costs, and they have plenty of candidates to evaluate. That’s allowing hiring managers more time to find the ideal candidate—what Zabkowicz calls “the purple squirrel.”

The slowdown is at all levels. During the white-hot market, firms were, on average, making hiring decisions on senior-level roles several weeks quicker than they did before the pandemic, Charles says. He expects that number to return to normal relatively soon. “People were so desperate to hire because their candidates were saying they had five other job offers. That’s happening far less now,” he says.

While salaries aren’t going down—“It’s very hard to go back on salaries,” Zabkowicz says—they aren’t skyrocketing, either. Hourly average earnings growth has slipped from a 5.8% annual clip in spring 2022 to 4.2% today. Companies are looking more frequently to fill open slots with existing employees, who often cost less to recruit, and become productive faster, than new hires. Clients who last year wanted to fill 25% of open roles internally are now looking to fill 40% that way, Zabkowicz says, and sometimes even more.

Companies are now less afraid that people will quit rather than spend more time at the office. Since firms are already under pressure to contain costs, some are AOK with a certain percentage of people resigning over remote-work policies, Charles says. The firms can thus reduce headcount without having to pay severance.

Even if the white-hot job market has ended, experts warn that it’s left some lasting changes. For one, companies are still seeking leaders who can build and sustain inclusive workforces, Charles says. That became a much higher priority after the 2020 protests over the death of George Floyd; it remains important. But organizations do realize that remote work, in some form, is likely going to persist, so they’re looking for managers and individual contributors who can thrive even when they’re not working in close proximity to one another.

It’s critical that employers remain hyperaware of developing and maintaining a high-quality hiring brand, says Zabkowicz. Younger employees in particular want to feel they’re working for purposeful organizations that will treat employees and other stakeholders with respect. “That brand is as important as the salary and benefits,” he says.

For more information, contact Korn Ferry’s Talent Acquisition business.

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