What’s Behind The Glacial Pace Of Tech Hiring?

Despite a low national unemployment rate and a strong job market overall, many white-collar professionals are facing significant challenges when it comes to securing new employment. 

For those in higher-paying, skilled roles, the job market has taken a turn, with hiring freezes and slowdowns becoming increasingly common. What was once a thriving landscape for tech workers and other professionals is now marked by frustration, slow-moving hiring processes, and increased competition.

While the broader economy remains relatively healthy, with many low-wage sectors still seeing strong hiring, certain white-collar fields have been hit hard, according to Business Insider. 

Recent data from LinkedIn shows the tech industry, in particular, has seen dramatic cuts in hiring. In the past few years, sectors such as information technology, quality assurance, product management, and even engineering have all experienced sharp declines in recruitment. 

These fields, which were once considered recession-proof, are now struggling to recover from the overhiring that occurred during the post-pandemic surge. 

In fact, the hiring of tech professionals has dropped by double digits in many areas, with engineering roles down by 26%, and IT and product management seeing similar reductions.

While these trends have made it difficult for many professionals to find new positions, some sectors continue to fare better. Industries like healthcare, community services, and military/protective services are still seeing steady growth. 

The healthcare sector has been in high demand due to a combination of an aging population and high levels of burnout among healthcare workers. Job postings in healthcare have increased by 10% recently, with physicians, nurses, and physical therapists being some of the most sought-after professionals.

The slowdown in white-collar hiring can be attributed to several factors. One major reason is the overexpansion of companies during the post-pandemic hiring boom. 

Many businesses, particularly in tech, hired aggressively to meet the surge in demand, but now find themselves with excess staff as the economy slows down. In response, many organizations have implemented hiring freezes or resorted to mass layoffs in an effort to trim their workforces. 

However, instead of cutting aggressively, many companies are opting for a more gradual approach, letting attrition take its toll and reducing headcount through voluntary turnover rather than immediate layoffs.

Another contributing factor is the increased stability in the workforce. With many professionals opting for job security over career moves, voluntary turnover has slowed significantly. 

For instance, in the tech sector, turnover rates have dropped from 27% in 2022 to under 20% this year. This means that employers are hiring fewer new employees to replace those leaving, further contributing to the slow pace of recruitment.

Additionally, advancements in artificial intelligence (AI) have also impacted hiring trends. Tools like ChatGPT and other AI-driven technologies have enabled existing employees to perform tasks more efficiently, which has reduced the need for additional hires in some industries. 

In coding and programming, AI-assisted tools have made it possible for developers to complete projects faster, leading companies to reconsider their hiring needs.

For job seekers, the process has become increasingly frustrating. With many more candidates applying for the same positions, competition has intensified. The average number of applications per job posting has tripled since 2021, with some openings receiving over 200 applications. 

This has made it difficult for candidates to stand out, even if they are highly qualified. As a result, many job seekers have found themselves applying to dozens, if not hundreds, of positions, with little success. 

Even with a large number of qualified candidates available, recruiters are taking longer to make decisions, with the time to hire increasing from 52 days in mid-2021 to 66 days in early 2024.

The extended hiring process has been a source of stress for many. 

While companies are overwhelmed by the influx of applications, they are also becoming more cautious in their decision-making. As one recruiter put it, the vast number of available candidates has led to a phenomenon called “See More Disease,” where employers want to review even more applications before making a final decision. 

This prolonged decision-making process, coupled with a lack of feedback or updates, has left many candidates feeling ignored and devalued.

Despite the challenges, there is some hope on the horizon. While the white-collar job market is still recovering from the effects of the hiring slowdown, there are signs of improvement. 

Data from the industry group CompTIA indicates that the tech sector has started to rebound, with job openings rising from 144,000 in late 2023 to 223,000 in early 2024. Although the numbers are still below pre-pandemic levels, this uptick suggests that companies may begin hiring more aggressively again as the economy stabilizes.

Job seekers remain hopeful, despite the difficult circumstances. Many professionals are optimistic that once the economic uncertainty settles and interest rates decrease, employers will once again ramp up hiring efforts, according to Business Insider. 

For those who have faced months of rejections or no responses, the hope is that the job market will gradually shift toward recovery in the coming months.