Hiring that’s Laser-Like—and Frustrating

It would seem to be an ideal market for job hunters: Hiring is up. Wages are growing. And the percentage of people with jobs is at its highest level in more than two decades. What could go wrong?

Plenty, apparently. The latest US jobs data beat expectations, with firms adding 272,000 jobs in May, above the 12-month average. But in an apparent contradiction, the unemployment rate hit 4% for the first time since January 2022—suggesting that companies are doing a major rethink on how they hire. “The labor market is starting to reach a new equilibrium,” says  Radhika Papandreou, president of North America for Korn Ferry.

Papandreou says companies are taking a “laser-like” approach to hiring, with a focus on frontline and commercial-side roles that directly contribute to operational efficiency, customer experience, and more. To be sure, more than half of the jobs added in May were in healthcare and government—industries in perpetual need of people—along with travel and leisure, which is trying to keep pace with record-high demand. “Leaders are navigating the balancing act of talent needs through a strategic blend of hiring and layoffs,” says Papandreou.

In areas that are considered less crucial right now, companies have cut back. That’s evident in the latest job-openings data, which shows just 8 million unfilled positions, the lowest number  in more than three years, down from a peak of 12.2 million. The dearth of positions is hitting early-career workers and executives the hardest. The National Association of Colleges and Employers expects hiring of college graduates for entry-level roles to fall by 5.8% in 2024, for instance, marking the first year of negative growth since 2018. Michele Capra, a vice president in the Recruitment Process Outsourcing practice at Korn Ferry, says companies are—at the expense of new graduates—filling entry-level roles with laid-off workers or retired people coming back into the workforce. “There’s a lot of talent on the sidelines that firms can bring into those roles,” she says.

At the opposite end of the spectrum, companies have significantly pulled back on hiring for professional and senior-level roles, says Mark Arian, CEO of Korn Ferry Consulting. “There’s a near-recession for white-collar positions,” he says. Financial-services and information-technology job growth was flat in May, for instance. And while professional services overall grew jobs by 32,000, most were added in technical consulting and engineering, which experts say is likely a reflection of the need for AI talent.

Dennis Deans, Korn Ferry’s vice president of global human resources, says the latest data won’t diminish the frustration both hiring managers and job candidates feel amid top-line data that paints a picture of companies hiring robustly from a plethora of available skilled talent. The reality, says Deans, is that firms have been hiring conservatively for the last few months—and he expects that to continue into the second half of the year. “Companies are hiring in areas that will bring the greatest return, and hitting the pause button on everything else,” says Deans.

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