Despite recent layoffs, the job market is strong! The national unemployment rate is still at a record low of 3.5% and there are strong opportunities for job seekers.
While hiring is likely to continue to slow a bit, it’s coming down from record highs, and the slowdown in 2023 is not generally expected to create a large increase in unemployment. What does this mean for job seekers? The balance of power has changed slightly towards employers, but companies still need to work hard to attract and retain talent.
5 Predictions For 2023
James Hawley, NextPath CEO
1. Jobs Will End Year Up
Yes, there will continue to be headlines about big firms laying off, however, there was no slack in the system, so those losses will be absorbed by the majority of companies that have struggled to find people in the past few years.
Big tech set big hiring targets and had a “whatever it takes” agenda. Many companies simply couldn’t compete with the bidding war they created. That was not sustainable, and the bubble popped. There was a seat for those displaced however, as it’s been reported that 80% of those laid off landed in new roles within 90 days.
We saw this in the January jobs report where 517k jobs were added, and the unemployment rate dropped to 3.4%, lowest level in 50 years. This year, while it will be bumpy, will finish UP in jobs added when it’s all said and done.
2. Hybrid For The Win
The pandemic was a forced experiment in remote work that has run its course. We are seeing candidates prefer a blended model where they can go to an office to collaborate again with coworkers but maintain flexibility to work from home too. This doesn’t mean remote is dead, not by any stretch, but it’s more about having balance.
Companies that only offer a 5 day/week in office schedule will fail. There needs to be a “fit for purpose” based on type of job to allow for mixture of work performed throughout the week. We will, most likely, see more of the 100% remote jobs get replaced with hybrid roles, offering some onsite with couple days remote. This will depend on the type of work, and skills that are harder to find will likely allow any option including fully remote.
3. Perm Isn’t Going Away
Companies had difficulties finding talent the past 3 years. They don’t want to lose them only to struggle again. Candidates prefer perm over contract (temp) roles, and companies will accommodate to hire and retain that talent. If a job is truly project oriented with no expected work behind it, then contract will be used. Unlike past times of uncertainty, contract will not be the go-to model used when hiring in 2023. As long as candidates stay in demand, they will dictate the terms. Thus, companies will have to offer permanent roles to play in the labor market.
4. AI Will Add Jobs Not Replace Them
Everyone is talking about ChatGPT (AI) and if it will replace their job. If you’ve played with it, you can see it has massive potential. I mean, it passed the Wharton School MBA exam and can write pretty darn good legal agreements!
It also makes errors and mostly sounds generic with its content. No doubt it will get better, but it truly is an “assistant” helping save you time. I see how this will speed up people’s work, to not have to start from scratch, but it is no different than the promise of completely autonomous, driverless cars, zipping you around. We are nowhere near that reality today, but we have amazing driver “assisted” vehicles that help us drive better. We are, however, still required to be behind the wheel. AI, for the foreseeable years to come, will be a great assistant to help us be more productive but won’t replace us behind the wheel.
5. Pay Remains Level
The market has increased the pay scale quickly, especially in tech roles, but this can’t keep going forever. We haven’t seen pay going backwards, with the exception of some recent hires at big tech companies, which were well above market. They will need to adjust to market, but the rest likely will not see large jumps, like we saw the past 2 years. It’s plateaued of late, and we think it will stay firm where it is in 2023. That’s not ideal if you expected a pay bump for a lateral move, but on the bright side, there should be a job for everyone.
Want some insider info? Two of our top recruiters in the IT and Professional Services space weigh in on what they have noticed from the recruiter perspective.
Although the percentage of organizations anticipating budget cuts has increased since last year, over half still plan to spend more on IT in 2023 than in 2022, according to a recent report from TechTarget’s Enterprise Strategy Group (ESG). “If I had to predict, I think development roles will continue to be in demand, specifically in the MERN stack. I also think data science/data analytic type roles will continue to be a top priority with companies,” said Stephanie Cassle, IT Recruiter.
In addition, Cybersecurity is expected to be next year’s biggest driver of business IT spending, followed by AI and machine learning, according to ESG’s research.
On the Professional Services side, Megan Dudley, Professional Recruiter, says that the SaaS Account Executive roles are far and few between, which is a shift from the last half of 2022. “In the AE sales roles, I am seeing a lot of traction within cybersecurity companies. Also, candidates that are going for more small to mid size business or mid market roles seem to be having success getting jobs. The enterprise AE roles seem to be tougher to come across right now,” Dudley said. She has also seen growth in the Accounting and Finance space.
Some more general observations are that people are being a bit more conservative about making moves. “This time of year is interesting with people waiting to see how Q1 goes. Seems like lots of candidates are uncertain about what to expect,” says Dudley. “The remote work aspect will continue to be an interesting battle. Candidates have enjoyed their flexibility at home, and people in high demand skill sets might be able to continue to demand it,” Cassle said.
Let’s Get Ready To Rumble!
NextPath Kick Off Never Disappoints
In true NextPath fashion, we started this year off with a bang, rallying the troops for our annual Kick Off meeting in January. This team crushed their goals last year and helped so many people in the process. Their hard work and dedication led to over 2000 interviews for their candidates and $29 million in combined salaries for the people they placed in new jobs! We are pumped and ready for another great year. Watch out 2023. We are READY TO RUMBLE!