Job Market Feels Like Déjà vu? Let Me Explain Why

As we are heading into the last quarter of 2024 and look towards 2025, it’s essential to understand that the job market, much like the economy itself, operates in cycles.

Every stage of the job market cycle offers specific opportunities and challenges. Successfully navigating these stages involves recognizing their defining features and adapting your job search approach to suit each one.

In this edition of Career Compass, I’ll dive into the four primary phases of the job market cycle, examine where we are now, and look ahead to what you can expect in 2025.

1. "Bullish trend" or Growth phase ??

The recovery and growth phase typically occurs during periods after recession and during robust economic growth, when businesses are optimistic and willing to invest in hiring. This is a time of abundance for job seekers.

Companies are confident in their growth projections. They are looking to fill roles quickly, often offering higher salaries and more flexible benefits packages to attract the best talent.

Key Characteristics:

• Rising demand for talent: Most companies hire aggressively, often scaling their teams to support expansion initiatives.
• Lower unemployment: The labor market tightens, with fewer people looking for work as more roles become available.
• More job openings: There are plenty of opportunities in various sectors, and competition for talent grows among employers.

In my experience, during a clear expansion phase, job seekers have more leverage to negotiate not only salaries but also job perks like remote work flexibility, bonuses, and professional development opportunities.

A great example of this was in the post-pandemic recovery period from 2021 to 2022.

After a disruptive year 2020, companies were eager to rebuild and reinvent themselves, especially in sectors like tech, healthcare, and e-commerce. Candidates with in-demand skills, particularly in tech, found themselves in an excellent bargaining position.

How to Navigate:

• Explore multiple opportunities: If you’re employed but considering new opportunities, this is the time to cast a wider net. Even if you're not actively looking, this phase offers the perfect opportunity for you to explore the market by accepting interview invitations.
• Negotiate assertively: Employers may be more willing to accommodate your demands, knowing that there is competition on the market.
• Future-proof your career: Look for companies investing in long-term growth areas like AI, green energy, and health tech. Industries experiencing expansion in these areas often lead the way during growth phases.

Research Insight: According to the U.S. Bureau of Labor Statistics (BLS), during economic expansions, the unemployment rate typically drops below 4%, as it did in 2019 and again briefly in early 2022, before shifting into a contraction phase by mid-2023.

2. The Summit or Peak Phase ??

This phase represents the height of economic activity, but it also signals that change is on the horizon.

Employers begin to sense that the market could shift, so while there is still demand for talent, hiring becomes more deliberate.

This was visible in early 2023, when the job market was hot, but companies began showing signs of caution, particularly in sectors like finance and tech, where layoffs soon followed.

Key Characteristics:

• Low unemployment rates: The job market has hit full employment, meaning almost everyone who wants a job has one.
• Wage inflation: Companies begin to offer higher wages due to increased competition for a smaller pool of workers.
• Signs of caution from employers: While opportunities still exist, companies may slow down hiring as they anticipate a market shift.

From my own experience as a recruiter, I’ve seen how the peak phase can offer a false sense of security. People often assume that the robust hiring environment will continue indefinitely. However, this is when companies start making more strategic decisions about new hires, slowing down processes, and scrutinizing every role more carefully.

How to Navigate:

• Move quickly: If you’re thinking of changing roles, act sooner rather than later. During the peak phase, the window is closing.
• Demonstrate value: Employers have options, so it’s crucial to show why you’re the best candidate for the role. Tailoring your resume and working on your interview skills can make all the difference. Strong personal brand also has a huge impact.
• Lock in long-term benefits: Since wage inflation is common during the peak, this is the time to secure better benefits and salaries while you still have leverage. Be sure to negotiate perks that will hold value even in a slowdown, like health benefits and professional development.

Example: The tech boom in mid-2022, especially in areas like AI and cybersecurity, reflected a peak phase where demand was at its height. But by late 2023, companies like Meta and Amazon began to cut jobs and implement hiring freezes, signaling an end to that period.

3. "Bearish Trend" or Contraction phase ??

The contraction phase is a phase of uncertainty and caution. Wall street guys call it "bearish trend".

Hiring slows down significantly, and companies are focused on cutting costs rather than expanding their teams. This often leads to layoffs or hiring freezes.

A perfect example of this is the ongoing contraction we’ve seen in sectors like technology and finance through last year. After rapid hiring during the pandemic and early post-pandemic phases, many of these industries began tightening their belts as inflation and interest rate hikes slowed down the economic growth.

Key Characteristics:

• Hiring freezes and layoffs: Companies begin to cut back on hiring and may initiate layoffs. In some cases, such things can be also a result of an internal strategic decision.
• Increased competition for roles: There are fewer job openings, and more candidates are applying for the same position.
• Tighter budgets: Companies reduce their spending, often cutting back on salary growth, bonuses, and benefits.

From a career perspective, I often advise job seekers to focus on upskilling during this time. If the market isn't hiring, this is your opportunity to prepare yourself for when thing turns around.

Think about enrolling in certifications or learning new technologies that will make you more competitive when the market picks up again.

How to Navigate:

• Enhance your skills: Use this phase to improve your qualifications through online courses, certifications, and industry-specific training. Being prepared with new skills will help you stand out when hiring picks up again.
• Consider interim roles: Freelance or contract work can be a great option during a contraction. It keeps you employed while also building experience and your personal brand.
• Network strategically: Connections become even more important during tight markets. Attend industry events, webinars, and conferences to stay connected.

Research Insight: Research from the Society for Human Resource Management (SHRM) suggests that networking during contraction phases becomes even more critical, as a large percentage of job placements are made through internal referrals.

4. Recession Phase ??

This is the most difficult part of the job market cycle. This is when number of job opportunities on the market is at the lowest level.

Historically, the global financial crisis of 2008 is an excellent example of a severe recession that saw unemployment go to over 10% in some regions, with companies cutting jobs across industries.

Key Characteristics:

• High unemployment: Many companies have laid off workers, and unemployment rates peak.
• Limited job openings: There are few available positions, and those that exist may offer lower wages or reduced benefits.
• Stagnant growth: Economic growth is at a standstill, and businesses are focused on survival.

During this phase, job seekers need to focus on survival strategies rather than growth. Finding a stable role, even if it’s not your dream job, is key to weathering the storm until the market rebounds.

How to Navigate:

• If you can, target recession-proof industries: Healthcare, education, utilities, and government roles tend to be more stable during economic downturns. Targeting these sectors can increase your chances of finding a job.
• Enhance essential skills: Focus on skills that are in demand even during tough times, like project management, critical thinking, and sales.
• Prepare for flexibility: Be willing to take on roles that may not align perfectly with your career goals but provide a stable income.

Where Are We Now? ??

If you ask me, as we wrap up 2024, we’re currently in a contraction phase, though it's a mild one compared to full recessions.

Certain sectors like AI, cybersecurity, healthcare, and clean energy are still actively hiring, while others, such as tech and finance, have been more cautious due to inflation and interest rate concerns.

Many companies are taking longer to make hiring decisions, and we’ve seen widespread layoffs , particularly in tech since mid-2023.

Geopolitical tensions, the Federal Reserve’s monetary policy and the broader global economic slowdown are keeping companies cautious. According to Harvard Business Review , hiring freezes and layoffs are common in late-cycle contractions, and I expect more companies to follow the trend in Q1 of 2025.

However, there's optimism for a potential return to recovery and expansion by Q2 2025. Innovations in AI, green energy, and infrastructure projects could spur growth. According to 麦肯锡 , industries investing in long-term innovation will be driving the next expansion phase as early as mid-2025.

Predictions for 2025

• Q1 2025: I expect companies to remain cautious, with tight budgets and slower hiring processes. Job seekers should focus on flexibility and consider contract roles or freelance opportunities on the short run to stay active in the job market.
• Q2 2025: If economic conditions improve, expect a gradual return to growth, particularly in sectors like AI, sustainability, and Tech in general. Number of job opportunities should increase, and job seekers who spent time upskilling during the contraction will find themselves well-positioned.

There are some things and events that can significantly change the duration of each phase. For example geopolitical tensions, potential pandemics or other global environmental issues.

Navigating the job market is not just about being reactive. It’s about anticipating change and positioning yourself ahead of the curve. Understanding these phases and knowing when and how to pivot can be the key to maintaining career momentum, regardless of where we are in the economic cycle.

Talk to you soon,

Edmond

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