As an Executive Recruiter I’ve noticed that the marketplace for labor behaves similarly to other free markets in a capitalistic economy. As demand increases for it and supply remains the same or decreases, prices (wages) rise. All kinds of factors can impact that basic premise, of course, including minimum wage laws, fiscal policy, and other interventions, but generally we can rely on the forces of supply-and-demand to drive the labor market. To understand the impact of the COVID-19 pandemic on the market for labor we have to consider the various segments of that market.
The labor market can be segmented in many different ways, including by industry, geography, function and level of position. In the BioPharma and Med Tech industry in the U.S. the demand for middle management and executive level labor took a hit in the spring of 2020 due to the COVID-19 pandemic. Stock markets tumbled, in-person meetings were cancelled, and uncertainty took hold. Many organizations announced hiring freezes and a significant number began laying off employees. However, since the underpinnings of the downturn were not economically generated, the demand for talent soon bounced back in many segments after capital began flowing again and employers became more confident that business can be conducted effectively in a remote manner. So now we’re seeing a demand for labor that looks very similar to what it did before the arrival of COVID-19, at least in middle management ranks within our industry. Some of the jobs are a little different now, to be sure, but the need is there and for that we can feel somewhat relieved.
Good news, right? Generally yes – but an interesting thing has happened to the supply and demand for labor over the past six months. With the ongoing virus outbreaks across the U.S. many (most?) employees are highly reluctant to consider making a job change unless they feel forced to do so. There is a fear that if they leave a relatively stable job and go somewhere new they are putting themselves at risk if the new organization struggles in an uncertain economy. The new, relatively unknown company may run into financial difficulties or managerial changes and if things go south the new employee may not be as protected as they were in their prior organization, given their lack of tenure. They won’t get a sizable severance package in the event of layoffs, and they have not yet built up enough political capital to leverage in the event of a reorganization. Although their current work situation is not optimal, it’s not terrible either, and the risk-reward tradeoff of making a job change may not be high enough.
Given all that, we seem to be experiencing a relatively strong demand for talent at a time of relatively low supply. That means that new jobs are being created yet fewer candidates are willing to pursue them. This imbalance is temporary, of course, but it makes it tough for employers to achieve business goals when there are vacant positions everywhere. As an Executive Recruiter, on the other hand, I’m suddenly busier than ever trying to connect with prospective candidates to explain that this is a “buy” job market for them and that there are potentially career-enhancing opportunities out there to consider.
What I’ve found is that response rates to phone calls and emails have dropped so I have to work harder to connect with people. But when I finally do find the right person who is open to making a change something remarkable happens: the candidate finds his or herself in an interview process with far fewer competitors pursuing a position that is likely to be personally rewarding and provide compensation at a somewhat higher level than it did just one year ago. Fear of the unknown has created opportunities for those willing to “seize the day” and consider making a career move.
As with all markets nobody knows how long this situation will last, and many industries, geographies and job functions will experience this far more than others. But for now there is a window of time where prospective job seekers can potentially benefit. The old adage is that “opportunity knocks, it doesn’t kick the door in.” It can’t hurt to have a conversation – go ahead and call the recruiter back.
As always I welcome your comments and questions.