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Finding a Job Takes Longer in Slow Economy

But long-term predictions say things will turn around

By Mark Huffman
ConsumerAffairs.com

October 20, 2008

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As the slowing economy forces employers to put the brakes on new hiring, job seekers have seen their searches lengthen by nearly one month, according to the latest Job Market Index released outplacement consultancy Challenger, Gray & Christmas, Inc.

However, job seekers' understandable reluctance to relocate may be inflating the time it takes to find a new position.

The median job search among those winning positions in the third quarter lasted nearly 4.4 months compared with the recent low of 2.8 months recorded in the fourth quarter of 2007. While the longer search times come amid a weakening economy and job market, the increase may be seasonal in nature.

In the previous four years, the third quarter has experienced the longest median job search time. In 2007, job searches climbed from three months in the second quarter to 4.3 months in the third quarter. In 2006, when the job market was relatively strong, job search times rose to 4.2 months in the third quarter, compared with 3.6 months in the previous quarter and 3.7 months in the fourth quarter.

"Considering all that is going on in the economy, including the turmoil in the financial sector, increased job cuts across several industries and decreased spending by consumers and business, it would be easy to attribute the longer job search times to the struggling job market. However, we will need to wait for the fourth quarter to see if we have a trend," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

"The economic downturn notwithstanding, the third quarter is also a traditionally heavy vacation period. It is also a time when companies are working on budgets for the coming year, so decisions regarding staffing, vendors, acquisitions, etc., are often placed on hold," said Challenger.

At least one survey suggests that there is reason to be optimistic about lower job search times in the future. The quarterly survey among CEOs of leading U.S. companies conducted by The Business Roundtable found that 67 percent expect sales to increase over the next six months. Nearly 40 percent of the CEOs said their companies will increase capital spending over the next two quarters and nearly one in three said they planned to increase their payrolls.

The biggest obstacles job seekers may face in the months ahead may not come from the economy, but from their own aversion to risk taking. Only 13 percent of job seekers finding positions in the third quarter relocated for their new positions.

"The reluctance to relocate, while entirely justified considering the state of the housing market, invariably leads to a longer job search because job seekers are casting a much smaller net. With a growing number of Americans upside down in their mortgages, it is only going to become more difficult for employers to recruit out-of-town candidates," said Challenger.

Job seekers also appeared more reluctant to change industries in the third quarter. The portion of job seekers who switched industries for new positions fell to 35.9 percent from 37.3 percent in the previous quarter. In 2007, an average of 40 percent of job seekers changed industries each quarter.

Challenger notes that this downturn is definitely hitting some industries harder than others adding, "now is the time to make the switch from a down-on-its-luck industry to one with more promise. Changing industries can be difficult, even if one remains in the same function. It becomes necessary to learn a whole new set of customs and nuances."

Still, industry switching is far more preferable to career switching and for some it may be the quickest path to reemployment. "Unfortunately, in times of significant turmoil, such as now, it is more comfortable to stick with the familiar. That comfort level may outweigh the need to find a job quickly," said Challenger.

If the longer job searches are indeed related to the economic downturn, and not merely part of a seasonal trend, it could be several quarters before search times begin to fall. Companies are likely to keep hiring at a minimum until they know if the government's intervention on Wall Street was effective.

"Some employers are also waiting to see the outcome of the presidential election. The winner and his policies could play a role in determining the direction some companies may take in regard to expansion, investment and hiring," said Challenger.

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