On Thursday, Federal Reserve Chair Jerome Powell cited retirements and even the length of time it takes to fill jobs as a drag on the economy. Labor data shows a significant rise in the number of workers leaving their jobs. For employers, these trends may challenge how they hire people and their decisions about recruiting tech.
Powell was optimistic about the economy but put a light on present problems.
"We've seen a significant number of people retire," Powell said at a press conference. This will correct itself in a few years, "because people would have retired, anyway, and you'll be back where you would have been."
Quit and retirement rates are high overall, but Fortune 500-sized firms are less affected, according to Visier, a people and workforce analytics firm. It analyzed the resignation rate of its customers using anonymized data.
In March, Visier reported an employee resignation rate for its customers of 1.15%. But if that monthly rate continues, a firm would lose 12% to 15% of its population every year. A 1,000-employee business may lose 150 employees in a year at that rate, and has to hire that same number "to stay still," said Ian Cook, vice president of people solutions at Visier.
Ian CookVice president, people solutions, Visier
The larger firms that Visier analyzed have better pay, benefits and analytics. But in April the resignation or quit rate for the economy -- which includes SMBs and large firms -- was much larger, at 2.7%.
"Losing people in certain parts of the business is highly disruptive: knowledge loss, relationship loss, momentum on key projects," Cook said.
Recuiting tech challenges
Even before the labor pandemic emerged, employers have been trying to increase candidate pools. Diversity, inclusion and equity goals are helping to drive this. Employers have sought help from recruiting tech to make candidate lists more inclusive.
In terms of recruiting tech, employers have tools such as language parsers that help write job ads that are inclusive and open. In addition, there is blind recruiting tech that can remove race, gender and age identifiers, at least in the initial stage of the applicant process. And then there are AI-type systems that can sort and rank candidates, as well as speed hiring by automating the initial selections.
Overall, hiring by businesses has "something of a speed limit on it," Powell said. "You've got to find a job where your skills match what the employer wants. It's got to be in the right area. There's just a lot that goes into the function of finding a job."
It's not clear whether all these recruiting tech tools help. Evelyn McMullen, an analyst at Nucleus Research, said hiring managers want the race, gender, and age information from recruiters to help them meet diversity, equity and inclusion goals, making moot the use of blind recuiting tech.
The parser checkers for job ads is available, but McMullen said she doesn't believe it's in wide use. But she does see these tools as helping in preparing job ads.
Machine learning systems used to rank and sort candidates "are better suited to serve as a guideline than a replacement for recruiter review," McMullen said. But the quality of the system is based on the underlying algorithm. "If the underlying models have a bias to them, the end result is going to be biased as well," she said.
The retirement opportunity
Retirements are a problem, but also an opportunity for hiring managers.
According to the Federal Reserve Bank of Dallas in a report in May, the number of people who retired during the pandemic was more than double what normally might have happened.
Retirements increased from 18.5% in February 2020, at the start of the pandemic, to 19.5% in April 2021. In terms of numbers, it means that 1.2 million workers, or 0.4%, would have retired, regardless of the pandemic, according to the Dallas Fed. The additional retirements during the pandemic account for another 1.5 million, or 0.6% of the overall increase.
"One might expect a number of individuals who have retired during the pandemic to return to the labor force as the effects of the pandemic continue to fade," said the Dallas Fed. But it was unclear whether that will happen, it added. "How this trend unfolds -- along with the degree to which caregiving, unemployment benefits and other special factors influence employment -- will impact the ultimate size of the available workforce."
"Hiring older workers is now a huge opportunity for employers," said Josh Bersin, an industry analyst and head of Josh Bersin Academy.
"Even though many baby boomers retired in the last two years, there is an enormous pool of highly experienced people ready to work, and most at this stage of life are more than willing to mentor younger employees, work part time on projects in their areas of expertise, and serve as consultants to company leaders," Bersin said.
The opportunity for hiring managers is to "make sure they aren't inadvertently pushing away older workers," Bersin said.