It may sound cynical to say that bad news for job seekers is good news for employers, but in many cases, that’s absolutely the truth. The labor market, like any market, is based on supply and demand. When demand is high and supply is low, prices (wages in the case of the labor market) tend to rise, and the converse tends to be true when demand is low and supply is high.
An Employer’s Market
When the labor supply is low and jobs are plentiful, applicants have significant leverage to shop around for the best opportunities with the greatest perks and best pay. But when the labor supply is high and jobs are scarce, it’s employers who have the leverage.
ZipRecruiter’s recent Job Seeker Confidence Index, therefore, is likely welcome news for employers, revealing that confidence among job seekers has dropped to its lowest level since the index began in Q1 2022. Job seekers’ confidence in the labor market and their own financial wellbeing has deteriorated sharply. Consider these data points from the report:
- 41% of job seekers reported it is now much harder to find a job.
- Almost half of job seekers (43%) said their job search is going poorly, while only 13% described it as going well—marking the widest gap since Q1 2022.
- More than half of job seekers (53%) said there are fewer opportunities compared to six months ago, and more than 1 in 3 job seekers (34%) have had to expand their search outside their usual field.
Compensation Impacts
This shift in market conditions has had measurable and predictable impacts on employee compensation.
- Half of job seekers have not seen pay increases since the Great Resignation, and nearly 1 in 5 job seekers (19%) say their pay has decreased.
- Almost half (42%) of job seekers have lowered their salary expectations.
- Pay and benefits appear to be deteriorating as well, with 17% of respondents noting more jobs with lower-than-expected pay, and 8% reporting fewer jobs offering comprehensive benefits.
And increased leverage for employers:
- Nearly two-thirds (64%) of job seekers feel they must accept the first job offer due to financial pressures, up from 50% in Q2 2022.
The labor market, like most markets, tends to be cyclical, and it’s fairly certain that at some point the pendulum will swing back in favor of job seekers. But for the time being, the ball is in the court of employers.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.