The state of the IT staffing industry

By Chris Walters, Senior Vice President, LRS Consulting Services

It seems that everyone takes notice when the Bureau of Labor Statistics releases its monthly jobs report. That was certainly the case when it released its December 2021 report, which reported that a paltry 199,000 jobs had been added.

Fewer people notice the monthly Job Openings and Labor Turnover Summary report, issued just days before the jobs report. On January 4, that report noted that the U.S. quit rate hit a record high of 3% in November, with 4.5 million quits recorded that month — the highest number recorded since the Department of Labor began recording quits in December 2000. September also had a quit rate of 3%, with 4.4 million employees quitting their jobs.

To be sure, some industries saw more quits than others. Accommodation and food services; healthcare and social assistance; and transportation, warehousing and utilities saw the highest increase in quits. The consistent factor in all of the quits is that people quitting their jobs didn’t drop out of the job market.

They found better jobs.

The phenomenon is being called “The Great Resignation” or “The Great Migration.” Either way, it’s an indication of the freedom and power US workers are now feeling. When they decide they don’t like their pay, working conditions, or company culture, they quit and then look for another job. You may think The Great Resignation will have no affect on IT Staffing, but workers in all industries are seeing demand for their skills.

With workers changing jobs and companies facing stiff competition for workers have had an impact. As the BLS noted in the December jobs report, “Over the past 12 months, average hourly earnings have increased by 4.7 percent.”

That kind of increase will continue in 2022, according to the IT Salary Report 2022 from Computer Economics. That report anticipates “average wages for IT workers will rise 4.0% at the median, much higher than the 2.3% pace last year. At the same time, hiring plans are also strong, with 68% of companies planning to increase IT head count, much higher than the 47% last year.”

This could mean a very happy new year for IT talent but not so much for employers. There was already a shortage of IT talent, and with 68% of companies looking to hire in 2022, the shortage will get even worse.

According to the HR Dive website, the labor market troubles we experienced in 2021 are likely to stay around for some time. Along with the high quit rate, there is evidence that baby boomers are retiring in droves.

The website quotes economist Miguel Faria e Castro of the Federal Reserve Bank of St. Louis, detailed in an October report the impact of the pandemic on encouraging baby boomers to retire. Faria e Castro found that, as of August 2021, the U.S. recorded slightly more than 2.4 million excess retirements due to COVID-19, a figure that represented more than half of the total number of workers who left the labor force from the beginning of the pandemic to the second quarter of 2021 — 4.2 million.

A year ago I stated my belief that 2021 would be a year of amazing recovery and growth. Overall economic numbers have borne out that belief, even while IT Staffing has been in a state of flux all year.

I’m confident that 2022 will bring us continued recovery and growth even as we deal with the upheavals in the IT Staffing space.

Regardless of what happens, remember that LRS Consulting Services will be here to serve our clients and consultants like always. From the beginning of pandemic restrictions, we have increased our focus on hiring managers and consultants, even creating a new position to help increase our focus and creativity relative to client engagement.

Possibly because of our increased focus, we were fortunate to post a good fiscal year. Our goal this year, as always, is to be an even better partner to our clients and consultants.

So, please, let us know what we can do to serve you.