The competitive landscape of recruiting has been significantly affected by the tight labor market since 2020, resulting in a surge in key costs such as cost-per-application and cost-per-click. The industry has been disrupted due to the imbalance between the demand and supply of labor. However, some developments in 2022 suggest that the recruitment industry may be heading toward better times.
During the pandemic, there was a significant decrease in labor supply, and the recovery process requires time. However, there was a promising improvement in 2022, as the prime-age labor force increased by 0.5% points or 2.5 million workers between December 2021 and December 2022. This positive trend continued into the first month of 2023, with prime-age labor force participation reaching 82.7%. While there is still room for improvement, as the pre-pandemic labor force participation rate was 83%, the recovery seen in 2022 is a positive indicator for the future of the job market. The core question is – What caused the change encouraging job seekers to return to the workforce?
The current job market is heavily in favor of job seekers, with competition for talent being so strong that job seekers have a wide range of employment options with attractive pay and benefits. This has empowered workers to search for new opportunities, resulting in wage growth throughout 2022 and into the first month of 2023. In addition, new benefits have made the workplace more accessible for groups like workers with disabilities and parents caring for young children. The trend of remote work that gained momentum during the pandemic continued into 2022, making it easier for these groups to participate in the labor market.
Recruiters have been facing significant recruitment costs and tough competition in the labor market since the pandemic. However, in 2022, the cost-per-application (CPAs) fell and stabilized. In December 2022, CPAs were almost 22% lower than the previous month, at $25.14. While these costs are still higher than pre-pandemic levels, acquiring new candidates and applications was more cost-effective in 2022 than the previous year. This decrease in CPAs was partly due to an increase in apply rates in 2022, which reached the highest point of the decade so far, thanks to the return of serious job seekers. Despite the high competition with other companies, recruiters had more potential candidates to choose from.
