Talent Talk: The Roots of the Rising Storm in the Labor MarketTalent Talk: The Roots of the Rising Storm in the Labor Market
To prepare for the looming crisis in the US labor market, it’s important to know how we got here.
October 7, 2024

Last week we began an in-depth discussion of the US labor market. When we are done, we’ll have a good idea of the crisis we will be facing over the next five to 10 years in the plastics industry, but first we need a baseline of how we got to where we are today.
As we saw, higher birthrates following World War II and a much higher workforce participation rate from women combined to nearly double the workforce from 1960 to 1990. The labor market was a “buyer’s market.” From 1973 to 1997 the US unemployment rate never dropped below 5%, the level historically associated with full employment. By comparison, we haven’t seen unemployment above 5% in nine years, with the brief COVID exception.
How did this environment shape the mindset of employees?
College enrollment skyrocketed, as a college degree was deemed necessary to set yourself apart and compete for scarce jobs. Competition also meant relocating to climb the corporate ladder. Housing, including new construction, was abundant and affordable so moving really wasn’t a big deal.
How did this environment shape the mindset of hiring managers?
Managers could be far more selective, which manifested in detailed job descriptions with very specific experience, skillset, and education requirements. They did not have to be flexible or negotiable when it came to compensation. “This is what the job pays,” which the prospective employee understood, as well. If someone was looking for more salary, benefits, or time off, well, they needed to step aside and let the next person in line take the job.
A new social contract
As a side note, during the latter part of the 1900s the employer/employee social contract was much different, much stronger. Companies had a preference to retain and promote from within, and employees were loyal: If their career was tracking as expected, they were far less likely to change companies. What we are talking about in this series is the outside hiring aspect, but the “lifetime employment” expectation was part of the backdrop.
The corporate departments that we know today as Talent Acquisition were unnecessary in these ideal conditions. But by the early 2000s, the winds of change were beginning to freshen, and we will talk more about that next week.
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