The US labor market goes through cycles: sometimes unemployment is high, and employers can pick and choose from a host of qualified candidates; at other times a tightening labor market makes it much more difficult to recruit highly-skilled candidates for a company’s open positions. Unfortunately for most employers, these cycles often run counter to a company’s need to recruit new employees as they grow. In times of strong economic growth when companies are most likely to want to expand their operations and hence their workforce, it can often be a challenge to attract and hire individuals with the specific skills that can fuel a company’s growth. Below is a list of 9 signs of a tightening labor market that could have an impact on your company’s recruitment efforts.
#1 Low Unemployment RateAs of May 2018, the unemployment rate fell to a seasonally-adjusted 18-year low of 3.8 percent. This is one of the clearest signs of a tightening labor market. Low unemployment means that fewer people are looking for work, making it harder to find new employees from a shrinking pool of applicants. 
#2 High Numbers of Newly Created JobsNew job creation numbers point to the future and help to determine if a tightening labor market will continue. This May, 223,000 new jobs were created in the US, suggesting that the current tightening is likely to continue. 
#3 Rising Wage GrowthAccording to Reuters, “Economists are optimistic that tightening labor market conditions will boost wage growth in the second half of this year.”  Wage growth reflects the increased incentives companies must offer to attract new talent and retain their employees.
#4 The Appearance of “Skills Mismatches”Skills mismatches are often regional situations in which the skills job seekers have in a region do not match up with skills required for the positions currently available. One such skills mismatch is occurring in the mid-Atlantic region where the Philadelphia Federal Reserve states that firms are reporting difficulties finding skilled workers, especially those with specific machine and tool skills. 
#5 Increased Benefits Package CompetitionRising wages aren’t the only change in total compensation packages that companies make in response to difficulty hiring new workers; increasingly, companies are competing by enhancing the retirement and health benefits they offer employees. 
#6 Higher Applicant Drug Test Failure RatesMany companies are reporting higher rates of failure on pre-employment drug tests of their job candidates in recent years. This is due to a combination of the current opioid epidemic and decreasing availability of job seekers. Essentially, the current crop of job seekers is more likely to have issues such as drug abuse than were previously the norm. In fact, prior failed drug tests may even be the reason that they are still seeking work instead of being employed at the present. Many companies – such as Clayton, MO-based Belden that saw 10-15% of their applicants fail their initial drug test – have responded to this new reality by actually modifying their drug testing policies to not automatically disqualify applicants who fail a drug test. 
#7 Encountering More Applicants with Criminal RecordsIn the same way that a shrinking applicant pool results in higher rates of drug test failures, it also increases the numbers of applicants who have some form of criminal record. Many employers have noted that they are currently seeing many more applicants with criminal records than they have in the past. And, increasingly state and local jurisdictions are beginning to even outlaw the practice of inquiring about an applicant’s criminal history prior to employment. Whatever your view on the propriety of looking into candidates’ criminal histories, it is clear that the tightening labor market is causing employers to view this issue differently due to the simple metrics of supply and demand in the workforce.