The USA Economy and the Job Market - part 2

As discussed in part 1 of this blog, the job market now is comparable to pre-covid years, as the years between 2020 and 2022 were in many ways unsustainable. This slowdown is creating a different candidate experience, reflected in some of the stories shared across social media, with some employers not getting back to candidates, a lack of feedback or slow in delivery of feedback.

Some employers are also becoming more selective in which candidates they choose to take forward, so it is more important than ever for candidates to take control of their resume, interview preparation and to remember it is a two-way street. Ask questions about the business, the direction it is heading in, the tech stack, development, projects, team dynamics, growth, skills gaps, and demonstrate how you are interested in their business, and the topics raised within your line of questioning. Most employers want to hire someone who is technically able as well as being someone they like. Asking the interviewer questions demonstrates your interest in them and the business. On the flipside, as an employer, you cannot afford to drop the ball on candidate experience, regardless of how flooded the market is. The best talent will not wait around, and smart competitors will snap them up.

The role of inflation in all of this is important. The reason for the crash in the job market after 2022 was because the federal government raised interest rates in an attempt to curb inflation. When interest rates are raised this affects the stock market and tech companies lose stock price, finding it more difficult to raise capital and continue on the hiring spree they once enjoyed. When Elon Musk laid off 80% of the workforce at Twitter (X) it was proven that mass layoffs were possible, leading Meta to follow suit and then Google. Couple this with geopolitical unrest and increased regulation, and this leads to stifled innovation. Many companies felt that operating in this kind of environment wasn’t conducive to operating at the high staffing levels they had enjoyed up until then.

Some hiring managers have been indicating that they were told they needed to make their teams leaner to appease financial teams, but on the proviso that they could re-hire, albeit for amended roles, ones that met business objectives. Now more than ever it seems that workforce planning is an extremely important activity to undertake so that companies understand what roles will allow them to move forward and achieve company goals. The job data does seem to back this up, with a rise in technology jobs being advertised so far in the first half of 2024 (from an all-time low in 2023 job adverts are up 30%).

In terms of salaries: 
Looking at specific sectors, AI salaries continued to grow regardless. Most tech salaries however took a dip by a couple of percent (in aggregate). Starting salaries took a big hit, but it could be argued that they were overly inflated during the boom of 2020 to 2022. Equity is the area that has been hit the hardest. On average employees are taking 37% less equity than they were in 2022. With declined valuations for tech companies, this is inevitable.
 
In terms of sectors:
AI and Deep Tech companies continued to hire at a faster rate than software heavy companies like Edtech and gaming.

Where do the opportunities lie for clients and candidates? For candidates the options have opened, demand is there across different verticals such as healthcare, banding and financial services. As mentioned previously, small to medium sized businesses have taken over from the giants, who once offered a buffer to volatile markets and an often-overlooked area by clients and candidates is contract work. This type of work can give employers immediate access to much needed skills and provides a foot in the door to some amazing companies for candidates struggling to secure a full-time position. The interview process typically is shorter as is the time to offer.  

One other area where we have noticed a boom occurring is within Government technology roles. Often, seen as a less appealing option, the public sector is currently offering security and an alternative to technology professionals who may have been used to working in the private sector.

Outlook: 
The industry is still at an all-time high. Taking 2019 as the benchmark, we are better off in terms of advertised jobs, salaries and working patterns. Yes we have dipped since 2022, but that really was an unusual market. Long term perspectives are helpful at this point. As a candidate, upskilling is helpful and, as an employer, conducting thorough workforce planning exercises will help you align hiring and existing skill sets to business objectives and growth.