No matter what side of the hiring table you are on, you may have questions about the impact rising interest rates will have on the job market.
This question is a little tricky to answer, and economists and labor experts seem a bit split on the subject of a rise in interest rates effects upon the red-hot labor market we’re seeing at present.
Part of the complexity lies in the fact that we don’t yet know by how much interest rates will rise in 2022, or how long that rise might last. We aren’t sure what industries will feel the pinch of those rate hikes most acutely.
Effects of a Rise in Interest Rates on The Labor Market
The historical effects of a rise in interest rates have been a slowing in the labor market. Forbes says, “typically, recessions cause companies to pivot from their growth agendas into cost-saving agendas – including layoffs of staff.” But, the Forbes article goes on to explain, the interest rate hikes in 2022 are not a part of your average historical moment.
While conventional wisdom suggests that a rise in interest rates will cause hiring to cool, the fiery job market that happened alongside the 2022 interest rate hikes was a part of a larger trend. Or, as Forbes puts it, “a ‘perfect storm’ of factors causing the current labor challenges, and the talent shortage will continue for the foreseeable future (at least for five years).”
In other words, it is probable that employers will need to keep an aggressive hiring agenda despite a rise in interest rates, simply to meet labor demands. Investopedia summarizes: “If the U.S. economy does fall into a recession, it will be very different from the typical recession over the past 50 years, given that the labor market remains strong amid persistent inflation.”
Higher interest rates may cause challenges in recruiting. As mortgage rates rise, the housing market may become challenging should employees need to relocate. Coupled with the surging labor market and the impact on wages, the rise in interest rates for mortgages may mean that employers will need to come to the table with more money in order to land the best candidates. It’s also possible that employers will be less inclined to select a candidate who requires relocation because of these costs.
How a Rise in Interest Rates May Impact Your Job Search
Most vitally, you need to evaluate how the interest rate rise may impact you. If you are a job hunter on the market, this rise might historically mean that jobs will be harder to find, and that wages may be lower than they had been. But as we stated above, the conditions may also be perfect for you to come to the table with higher salary needs. For those on the hiring side, you may need to be prepared to pay more for the right candidate.
Either way, QuickConfirm can help with your salary and employment history verification process.