This economy has placed recruiters in a difficult position. One the one hand, Job vacancies are at an all time high with 5,851,000 open jobs in United States. That puts our job vacancy rate at 4.1%! That's the highest vacancy rate we've experienced in the past 30 years.
Recruiters definitely have their work cut out for them. The problem is, there aren't very many qualified candidates out there.
Our unemployment rate is still relatively high, 5.5%. While that number may seem low compared to the 10% rate we had in November 2009 it's still a lot higher than the 4.4% rate we experienced when the economy was last booming in May 2007.
So what does this mean for recruiters?
There are a lot of open positions, but not a lot of qualified job seekers.
Recruiters are seeing a lot of applicants, but they aren't seeing the right applicants. They're wasting a lot of time interviewing candidates who aren't qualified.
What's the solution? Employee Referrals of course. Referrals are sourced from your employee's former work places and are typically the most qualified candidates.
Introducing the Beveridge Curve
Understanding the relationship betweeen unemployment and job vacancy can be tricky. Luckily, economists have helped us tackle the situation with something called the Beveridge curve.
It was invented in the 1940's by British economists who wanted to meassure the difference between cyclical unemployment (The unemployment we experience durring recessions) and structural unemployment (unemployment caused by the underlying structure of the economy).
Here's the chart:
Let me explain how this works.
The veritcal axis (on the left hand side) measures job openings.
The horizontal axis (along the bottom) measure unemployment.
Each colored line represents the course the economy has taken over time. It starts at the top left of the graph in December 00' (as a blue line). This shows us that the economy was doing well as we had a high vacancy rate (3.6%) and a low unemployment rate (4.0%).
Then as the economy crashed we saw job vacancies decline as unemployment rose. When the economy started to recover in mid 2000's we saw unemployment decline and job vacancies rise again. Since the economy recovered in much the same way as it declined we see the red line (tracked from the mid 2000's) overlap with the blue line (which represents the early 2000's). In the late 2000's we saw a much more severe recession as unemployment jumped to 10% and job vacancies fell to 1.6% (the green line).
Here's the interesting part. The purple line has tracked the economy from June 2009 to June 2014. Look, it doesn't follow the path that the economy took from 2000 to 2009. That means that since 2009 we've seen both high unemployment and a lot of job openings. What on earth could cause this?
What it means
We seem to be experiencing a skills mismatch. This means that unemployed people simply don't have the skills necessary to fill the open jobs. This makes things incredible tough for recruiters as they've got more jobs to fill and less qualified peopel to fill them. They've also got a lot more unqualified people they need to weed through before making a hire.