It’s harder than ever to hire in IT, but why is that? Tech hiring managers have a lot on their plates, and it often feels more productive to forge ahead with the recruiting process than to sit and reflect on the industry numbers. However, a deeper comprehension of unemployment rates and IT candidate supply and demand will go a long way in understanding why salaries are rising and how to land elusive talent.
Job seekers in the United States are currently enjoying a low, 4.1% unemployment rate, while in Richmond the job outlook is even stronger with an unemployment rate of 3.7%. The reason these numbers are so low is because organizations are in dire need of talent. In the Richmond area, Facebook has announced plans to build a $1 billion data center, while Amazon is set to build a massive distribution center and warehouse. As the region continues to see such growth, the need for talent will only increase as the unemployment rate continues to stay low.
When it comes to the tech industry, it’s widely reported that demand for talent is very high while candidate supply is drastically low, and unemployment rates shed light on why. These numbers indicate that the country is actually in a state of full employment, especially in IT where the current unemployment rate is 2.5%. In economic terms, all truly available workers have jobs, while those not employed are either in between roles or brand new to the labor market. This is why the unemployment rate will never be zero and exactly why it feels impossible to find the right tech pro for an open role.
Given the state of the IT labor market, it comes as no surprise that industry professionals are becoming selective in choosing their next role. They see many options and understand that they are in a position of power. So, what is it they are looking for? A massive study of 615,000 Glassdoor users found that job seekers greatly value culture, career growth, and work-life balance. Candidates want benefits and appreciate even small perks that are often taken for granted by businesses looking to cut costs. Many IT pros have recognized that Richmond is a great place for their tech careers, but employers must offer more than just a great location. Of course, candidates are also holding out for higher pay, and even though younger professionals are entering the industry, that does not mean they can be lowballed.
While it’s not what business leaders like to hear, those who want to secure the best tech talent must consider offering higher salaries. Quality has a cost, especially in today’s competitive labor market, but landing the sharpest tech pros will increase efficiency, productivity, and profits. Strangely, many companies are trying to get by with lower salary offers, but this strategy backfires due to the imbalance of supply and demand. Basic economic theory dictates that as the supply of a product dwindles and demand increases, the equilibrium price of that product rises. It’s exactly the same with IT salaries, and this is the very reason 56% of hiring managers report that salaries are rising for their new hires.
Thus, if one business isn’t offering a healthy salary, especially for niche talent in Agile Project Management, Business Intelligence, or Cybersecurity, another company will. With so much demand, tech pros are being inundated with opportunities from recruiters and hiring managers, and that is by no means limited to active job seekers. When the unemployment rate is so low, retention can become a concern as current employees see a constant flow of interview requests come their way. If salaries for existing staff don’t rise with those of new hires in order to meet the market equilibrium, then securing and retaining talent will only become more difficult.
Grasping a full picture of the IT hiring landscape is necessary to alleviate staffing headaches and find greater success in the future. With an understanding of tech candidate supply and demand, unemployment rates, and candidates’ motivations, a hiring manager has the tools they need to alter strategies and prove to company ownership that larger salary budgets are a requirement. During these uncertain times, adapting to current market conditions by investing in employees up front is one of the only sure-fire ways to keep a company successfully staffed.