All right, welcome everybody to the Talent Insights Podcast, special edition: Hirewell’s Data Insights, Hiring Trends from Q2 2023, which those of you loyal followers know we’re really talking about Q1 because this is all data that happened in the past. Brought to you by Hirewell and Rainmakers. Once again, our wonderful engaging CEO, Matt Masucci.
Hey James. This one actually is a little bit different because Q1 admittedly, I’ll cut to the chase and say Q1 was a little slower than we would’ve liked, but we wanted to see the April numbers come in. So we bought ourselves an extra month to talk about a little bit of the rebound we saw in April.
So it’s mostly Q1, some Q2, and then some other stuff. So it’s a little bit of a hodgepodge this time. Yeah. All right. Well pick us up. Why don’t you give us a high level, what did we see like in last quarter and kind of how’d it lead into this quarter in Q2? Yeah, for sure. So for all of our loyal watchers, we kind of break it down.
What are the trends? What have we seen? We’re able to kind of look at everything on a year over year basis. And we realize that first half of Q2 was kind of the true top of the bull market in hiring. We saw kind of a steady slowdown, Q3, Q4 going into the holidays.
We weren’t really sure what to expect what was going to happen in first quarter. We saw a decent January, some nice things coming through but then a little bit more of a slowdown. I think that kind of coincided with a lot of the banking troubles that hit. So again, we saw unfortunately a further slowdown from Q4 of 2022 to Q1 of 2023.
I think when you start comparing things year over year, when you look at Q1 of 2022 to this year’s Q1, there was a pretty substantial drop. We saw 20 plus percent, in some areas 25%. So it was, you know, it was substantial. Yeah. Salary-wise though, that was the thing that was interesting about all this.
I guess, I don’t know if you want to get into this but we haven’t seen a slow down there, at least in tech area. Yeah. Yeah. So obviously, tech recruiting has been our biggest area since day one. It’s actually been 20 plus years of doing this and we started off doing tech recruiting and that’s always been the biggest thing.
So we did see a slowdown in tech hiring, really, for the first time ever. I mean it was sort of a gradual one, Q3, Q4 but the slowdown did pick up a bit. But interestingly so, we saw like a fairly substantial slowdown in the hiring of developers or software engineers.
But we did not see a slowdown in salaries. And so I think that just kind of speaks to the challenge of it where if you’re hiring for engineers right now, it is a better time to hire because there’s much less competition, there’s much less people doing it. But there’s not great bargains out there where there’s a lot of engineers are coming off the market pretty quickly and they’re not seeing drops.
I mean, I think we saw the average salary for software engineers in Q1 was 150,000 annually. So that’s some big numbers. So that is what was interesting to me. So the average Q1 salary is 150. I rounded up to 151 when I did the calcs. 9% above what it was in Q4 last year, right, which is significant.
But the sample size was down. And then we have to admit that I think we were down, it was roughly 30% less in terms of like the placements we were able to make in tech just because the demand wasn’t quite as there for clients. But here’s the rub, and here’s what I actually wonder- is it people come to us and I always have to, this is the one disclaimer I always have put on the show, is Hirewell is not the demand of the market, it’s the demand of like the urgent market. Companies come to us when they really need help. Is it the fact- are companies just hiring more senior devs or are they just coming to us with more senior needs? Right. Is there just as much junior level hiring happening?
They just don’t need as much help with that right now? Or do you think it’s all, there’s just more senior level hiring happening across the board? I guess a little bit of both. I mean, I think it sort of speaks to just what you’ve said where, I do think if companies are hiring or they’re looking for help, like there’s not, you can’t just post a job and have dozens and dozens of top flight senior software engineers apply and it probably can happen on the lower end of the market.
So that’s part of it. And yeah. I mean I think it all just sort of ties to it. I mean, there have been layoffs. It does feel like the pace of layoffs has hopefully slowed down. But again, what we’re seeing is software engineers are still having two, three offers pretty quickly.
Mm-hmm. A year ago it might have been seven to 10, you know? Yeah. But it’s still like, they’re not just sitting there not finding something. All right. Let’s talk about the contract side because that was interesting too. What are we seeing kind in the contract versus permanent hire space? Yeah. And so still in the tech world, especially when you think of like the overall volume dropped year over year, but we saw a fairly significant uptick in hiring for contract roles.
So it’s actually up 50% year over year and it almost doubled from Q4 of 22 to Q1 of 23. And again, last year Q1 is roughly a quarter of the engineer hired we did were contract roles and now it’s up to like 35-36%. You know, I think it speaks to just the changes in the market. When there’s uncertainty
companies rely more on contract labor, interim resources, are a little bit more afraid to kind of make bets and hiring FTEs. So that’s the route they go and the numbers really back it up. All right. What’s happening on the HR side? Because Matt, I always have to say too, when we started putting the show together just for sake of ease, those are the two areas I focused on
were really in kind of Tech and HR. And really within HR typically was more contract recruiting. Friendly reminder, we also do marketing and sales and finance and accounting, which we’ll talk about a little bit in a second here. But what are we seeing on the HR side overall? Yeah. So interestingly, our reference, seeing a slowdown kind of across the board in Q1, our human resources practice was the one area that did not slow down.
They actually picked up year over year. But interestingly, their volume did drop fairly significantly. So a year ago they were working a lot more kind of mid-level roles and more volume-based stuff for clients. This year it was the opposite. It was fewer roles, but much more high level strategic leadership roles, CHRO, VP of People, things like that.
There’s definitely a good amount happening there. Then on the flip side, a year ago or a year and a half ago even, it was a ton of placing recruiters, talent acquisition people. That number dropped by 75% in Q1. So it was probably the biggest drop of anything.
Now to be honest, when I was running the numbers, I was almost expecting the drop to be bigger. The market for corporate TA has just fallen off a cliff. And I think a lot of people watching this know it’s unfortunately been a part of the market hit really hard. So yeah.
And the numbers back it up. We saw a 75% drop there. So leading into the last thing we’re going to talk about and why I think we’ve hit a bottom, and the both things we kind of talked about here analyzing both Tech and HR. The trend is we’re seeing more high level hires happening. And historically, whenever we see more higher level hires being made that’s more strategy level people, that means they’re going to start building other teams, kind of the next step, which means overall hiring picks up.
So fingers crossed. We don’t know that’s what’s going to happen but it’s what’s happened in the past, so we’ll see. We pulled some other numbers too. Let’s say we pulled- Indeed did our work for us. And this is not, the good thing is these are all numbers they pulled from the Fed. So I actually like taking kind of the overall economic data and seeing what we can learn from it.
And Indeed actually sent out a document where they actually put all this stuff out there for us, but then cited sources and the same stuff we kind of always pull from the Fed. So thank you Indeed. But anyways. There was actually quite a bit, a lot of interesting things happening right now.
So I’m not a huge fan of using job postings as the metric for how many openings there actually are because as we know, there’s a million flaws with that, where one company posts a job a million times or they might for 20 hires only post one job, they might leave jobs out there. It’s not an accurate, but I think you can pull some gauges in terms of how that number kind of tracks itself.
So long story short is the peak all time high of the higher demand of job postings per people out there, per workers was two x. So that was I think back in 2021 or something like that. But it’s 1.7 now, so it’s still way more openings than there are on unemployed people.
It’s gone down a bit, but I don’t think it’s necessary. I mean, it’s still at a pretty elevated rate. But I think the expectation is like when you look back and throughout the year 2021 where hiring has been in as like, I don’t think we may never get there again. You know what I mean?
But still seeing things at 1.7 is good to see that there’s still more jobs being posted than there are people. Yeah. And I think that sort of speaks to a lot of it. You talk to anybody who’s hiring now, the concept is you can post something, you can usually get a little bit more traction.
Where a year ago you’d post something and you might, it just might be crickets. Now you might get a little bit of response. And to kind of speak along that point, when you look at year over year numbers, just the total number of postings, it’s still near an all time high. Peaked again a year ago,
as we keep saying. It’s down roughly 13% year over year. So it hasn’t fallen off a cliff, which was something that I thought might be the case but it absolutely hasn’t. Another interesting thing, and again, we are pulling a lot of stuff from Indeed, which we’ll probably share in the footnotes of whatever we put out online or at least some of the graphs.
I think they’re interesting to see. But the wage growth, it’s sort of- you know, wage growth is obviously very closely tied to inflation. Or effectively the same thing. And when we look at what inflation did a year ago, everything peaked at roughly 9%.
And that’s the year over year growth in job posting like dollar amounts. So again, it’s not a foolproof number, but that number, it’s still 6.3% up year over year. But it does kind of match the inflation numbers of, it’s coming down but it’s still pretty high.
So it’s kinda interesting thing to look at. All right. Labor participation rate. This is always a fun topic because everyone always complains the labor participation rate isn’t high enough. We’re at 62.6% and it’s actually been upticking. Just to give you some perspective, right before the pandemic hit, so February, 2022, it was 63.3%.
Then it dropped like a rock, obviously in the middle of the pandemic down like 60%. And we had steadily climbed up since then. So we’re at 62.6. So it’s eventually getting there. Now, I have to say this topic always makes me kind of laugh because anytime you quote the unemployment rate, which is currently 3.5% as of March, everyone’s like, “Well that’s not the real unemployment rate because there’s participation rate and more people just gave up on working.”
What that really means though, is you have to look at what’s happening with how many people are retiring. There’s still 10,000 baby boomers retiring per day. What’s a participation rate on 25 to 54 year olds, which is like the heart of the workforce? That’s 83%, which is pretty good. And then you have to worry about things like the replacement rate.
And this is- if you want to talk long term, you have to worry about where we’re headed. The replacement rate, is “2.1” births, per woman. Where at the US is at 1.7. So we are producing less of our own laborers than we need to. But we’re not quite in the, “Oh crap, something’s going to melt down” like Japan is, which is in 1.3%.
Long story short, I think that the unemployment rate is in a good spot. I think that the participation rate continues to grow. There’s less government programs, the ones that remaining are going to be cut off soon. But I do think our bigger issue is we either need more people or we need more immigrants because we have too many baby boomers retiring.
That’s my piece. I’m sticking to it. Yeah. You can’t fight demographics and the amount of people who are retiring and aging. I mean, this has been something that has been talked about for 20 years and now it’s happening and it’s going to be fascinating to see it play out.
I think it’s gonna hit a variety of places. I do think kind of small and mid-sized businesses, you know, particularly like family owned ones are going to be hit particularly how hard it’ll be. It’ll be fascinating to see how it plays out. Alright. Yeah. The next thing I want to talk about is remote work.
It’s a huge concept. Obviously we know your stance on it. I think you are a fan of remote work. I think that’s been, you know, I think that’s been hit home. You’re saying me as you are also at home right now filming this. Fair enough. But you know I do go in occasionally.
But no, it’s definitely been an interesting trend and I was curious to see what the numbers look like and Indeed shared some pretty interesting stuff. So the short answer is remote work is still a thing. The numbers are coming down. Again, roughly a year ago
10% of jobs were listed as remote. Now it’s down to a little bit over 8%. We’re feeling that trend as well where, you can never tell what’s just sort of companies putting this out there saying they’re calling employees back or not. But again, there’re just, there are more roles that are in the office now. And again, it’s interesting to see that only 10% or I guess 8% of this point are actually remote.
But the two areas I thought were interesting, like Indeed had some cool numbers on what the change was over time and the biggest jump were kind of- the software engineers is what I expected, right? That is the most common role that works remotely. And now it’s roughly 40% of software engineers are remote.
That’s jumped four times between obviously pre pandemic and today. The biggest jump of all was banking and finance. That’s actually seven times more likely now, roughly, one in four are working remotely. I think that’s interesting. I mean, obviously banking and finance is a bit broad, but banking has been one of the ones where they really,
whether it be Morgan Stanley, a lot of the different places that really pushed like saying you have to come in the office. But it’s interesting to see roughly one in four of those roles are remote. And again, I just, I don’t see that changing anytime soon with those types of roles, so. They can be done anywhere.
People have enough- I mean it’s very much a supply and demand thing. Like software engineers, while the market has slowed, they’re still highly in demand. They can do that job anywhere. So asking all your software engineers to come back in the office tomorrow would be a bad move in my suggestion or in my opinion.
Yeah. I was surprised by the banking numbers only like the seven times higher than pre pandemic didn’t surprised me at all because I don’t think anybody will worked remotely when they’re banking pre pandemic. But the fact it’s still 24% now, way higher than I would’ve thought just because I have a few friends that are in it and they’re called back.
But I do have, knew one or two other people that aren’t, so. But anyways, interesting trend. Now prediction time. Are we calling a bottom? Are we saying March? Are we saying Q1 was the end of it and it’s all smooth sailing from here? I am not. I’m hopefully feeling that way, but I think that’s a fool’s errand to guess that. I think when you’re calling a recession, like I think we sort of felt the top when it was at the top.
And again, we talked much about it, like for that six month stretch, arguably the greatest time in recruiting history. Calling the bottom is a lot scarier thing, but as I mentioned, March was a challenging one from what we saw across every sort of number.
But April was a big bounceback and as I said before, that’s part of why selfishly I wanted to wait a little bit to do this. I did want to include some April numbers. So have at it. Kind of tell us sort of yourself. Yeah, so I just looked at- this is just Hirewell’s numbers, and I looked at the amount of placements we made in April compared to the three month average
from Q1. So our Tech group overall, 56% higher in April. Our F&A group 80% higher, HR group 15% higher. As Matt mentioned, that’s the one that was actually killing it throughout the first quarter. Marketing was 37% higher, Sales is 27% higher. Supply chain, the only one I’ll cringe on is about 50% lower, but in total across the entire organization, 30% higher the amount of total placements we made in April versus any the average of the three months in a Q1 of this year. Which has me hopeful
and things look to be improving. Of course, I think we said that in January though too, so. We did. So we’ll see. The two things that stick out to me are, I guess maybe there’s a little bit of, sort of- F&A is one. That’s where we saw the biggest jump. I mean Q1 is notoriously slow for our finance and accounting practice. It’s largely due to placing so many people in accounting.
That’s an area where Q1 is considered busy season, so people are less likely to change jobs than- supply chain is the other one to look at. I mean, it is a smaller group, so I don’t want to take one month and draw any major conclusions out of it. That was probably our fastest growing area for the better part of 12 months prior.
So it could be just a little bit of a blip. I was at an event the other day and with people kind of in that world, logistics supply chain, and they were seeing things starting to slow down a bit.
So it’ll be interesting if that’s just again, a short term blip or something that is kind of broader in what’s happening because I think the beauty of sort of what we do is being in a lot of different areas, a lot of different industries. Some are stronger than others and kind of the diversification helps us, but it also kinda gives us some pretty unique insight into kind of what each area is doing.
All right, so you heard it here. I’m calling a bottom, Matt is not. But I’m putting the caveat in that no one knows anything. Certainly not recruiters. So who knows what’s going to happen. That’s all we got. So thanks everyone for tuning into the Talent Insights Podcast, part of the Talent Insights series, which is always available for replay on talentinsights.hirewell.com, as well as YouTube, Apple Podcast, Google Podcast, Spotify, and Amazon.
Matt, thanks again as always. See you on the next one we do in three months. Everyone out there, we’ll see you soon. Bye.