Indiana Hiring & Recruiting 2024 Outlook & Interest Rate Impact

 

This week, Federal Reserve Chairman Jerome Powell announced no rate cut in the federal funds rate, leaving the rate at 5.25 to 5.5 which is the highest in two decades.  Younger generations of workers haven’t see rates like this in their lifetimes, making them cautious about using credit cards and taking out mortgages.

But what does this mean for the job market and the impact upon employers’ ability to hire?

While Career Solutions had a small flurry of hiring by corporate clients in Civil Engineering and Financial Services in December 2023, the year overall continued to be very challenging for employers.  

Many job postings did not yield quality candidates and those applying didn’t seem to have read the qualifications.  Worse is that many HR departments and corporate recruiters have come to expect half of scheduled interviews and even starts to become “no shows”.

Post-pandemic employment continues to have big challenges.  The retiring generation is too big to be replaced by the generations behind them.  There are not enough bodies to fill all the available openings.  And to complicate things, the younger generations are more attracted to “gig work” than traditional salary with benefits office jobs.

The wage and salary increases seen in 2023 are being reported to be moderating.  Bank Of America reported “moderating wage growth signaled by increased gig work and immigration”  - but this is by customers without a traditional job.  It will have little impact on skilled labor and professional level hiring.

Goldman Sachs economist, David Mericle, added that “there are signs the labor market is wobbling.”  He added that most of the hiring leading to the “wobbling” and “moderation in employment” is due to hiring in service industries.  

Nationally, the labor market may be moderating due to these factors.  But in a heavy manufacturing base economy like Indiana, it may not cause wages & salaries of skilled labor and professional level positions to come down.  

I decided to ask ChatGPT:  what is the impact of interest rates on hiring and recruiting professional level and skilled tradespeople?

ChatGPT’s response (in part):

if interest rates rise significantly, businesses may face higher borrowing costs, potentially leading to a slowdown in expansion plans and hiring. Industries sensitive to interest rates, such as real estate and construction, might experience reduced activity, affecting the demand for skilled trades.

Again here in Indiana, we may not see what the national prognosticators are forecasting.  In the January 12th edition of the Indianapolis Business Journal, the Indy Chamber provided data that job postings had dropped considerably from 115,650 in May 2022 to 52,535 in December 2023.  But job postings are not always reflective of actual demand for hiring.  And as Ball State economist Michael Hicks was later pointed out in the article, the drop in postings hasn’t been accompanied by an increase in unemployment” which Indiana’s unemployment rate increasing slightly to 3.7% at the end of the year.  Hicks went on to say with higher interest rates and a statistically slowing job market, we would ordinarily see heavier layoffs which we haven’t seen in Indiana (outside of some tech sector RIFs).

The article, “Once red hot, job market has cooled; unemployment still low”, references some tech sector statics and examples that are really not representative of a manufacturing based state like Indiana.  The more relevant example was near the close of the article, describing an employer of certified technicians.  The HR Director said she had raised the pay rate for the certified technicians twice in 2023 and now more seasoned techs earn above $36 per hour.

January hiring numbers reported by the US Labor Department are HUGE and that means that the Fed may not have slowed down the economy enough yet.  Employers added 353,000 reported jobs and the numbers for December were revised upwards to 333,000.   The stock market is still setting records too.  This would seem to mean the Fed will not be lowering rates anytime soon.

The percentage of wage increases (4.5%) for 2023 is outpacing the inflation rate.  Consumers with increasing purchasing power means goods and services will still support higher prices (inflation).  But these job gains are primarily coming in professional and business services, less from the manufacturing, engineering, and technical fields.  And these big jobs gain and wage increases are happening while the Indiana unemployment rate stays unchanged at 3.6% which is considered full employment.

At Career Solutions, our interpretation of all this analysis is that hiring and recruiting in Indiana will be just as challenging in 2024 as it was last year.

This will be especially true for professional level hiring and skills trades, but possibly also in roles that compete for recent college graduates.  See - “Why Employers Are Still Struggling.  The talent war persists, with evidence in the job market contradicting expectations of its decline.”  Younger college graduates can still prefer the flexibility of gig work to an office job.

Some sectors of the Indiana job market are in high demand for new talent.  In commercial and industrial engineering & construction, there continues to be robust growth accompanied with shortages of experienced candidates for engineering and managment positions.  Manufacturing will continue to see challenges with a low supply of qualified talent for openings pushing demand for higher wages & salaries in specific disciplines like Maintenance and more generally across Engineering & Technical roles.

2024 is going to require Hiring Managers to think about WHO is a good fit for your job before starting to search.  There are important questions to ask:

1 - Does the person in the job description really exist?  Don’t base your job spec on a unique LinkedIN profile.  If you can’t easily find ten or more similar backgrounds on LinkedIN, then change your job description before you start your search.

2 -Where are they now?  You would be surprised the number of professionals and technical people who have no presence online.  We recently found an engineering discipline with less than 10% having any online profile however 600+ reside in Indiana.

3 - How do I get an interview with them?  Think about the reasons why your job is a good opportunity for someone.  It may not be a great job for everyone.  You can save yourself plenty of frustration by starting your search focused on people who should appreciate what you’re offering.

As Career Solutions approaches its 29th year of helping employers and hiring managers, we look forward to the opportunity of assisting you.  For inquiries or just general advice, please contact Steve Fero.

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