Employers continue to see far fewer applications per job opening

Most of College Recruiter’s employer customers post at least dozens and typically hundreds or even thousands of jobs globally via fully automated feeds which are programmatic, performance-based (typically cost-per-click), or both and we get from many of them some interesting metrics on their effective costs-per-application (eCPAs).

A few days ago, the programmatic, job ad distributor for one of our customers told us that our performance was poor as our eCPA was double the employer’s average. That wasn’t a good sign and so we looked into it. Turns out that the job distributor was using 2020 eCPA numbers for the average but June 2021 numbers for our performance. That might have been a reasonable approach before Covid, but not for the past 1.5 years as the labor market is changing too often and too quickly.

Turns out that without any significant changes on the employer’s end regarding its roles, compensation, technology, etc. that they’ve gone from five to 10 percent of clicks to their ATS converting into applications to about one percent. That means that a role they advertised in 2019 at an eCPA of $25 (typical for hourly, retail roles in the U.S.) is now seeing an eCPA of $125 to $250. So the fact that we were at about $50 should have been cause for celebration but the job distributor and, therefore, its client didn’t see it that way…until yesterday.

What this job distributor and employer are seeing is the result of the inverted labor market that we started to see in February 2021 as the U.S. began to emerge from Covid. What do I mean by an inverted labor market? It means that there are far more job openings than candidates applying to them. To be clear, that doesn’t mean that there is a shortage of candidates. It just means that candidates aren’t applying to as many jobs and so employers are receiving far fewer applications than they used to. For employers who hire at scale as they hire dozens, hundreds, or even thousands, that’s awful. All employers want quality applications, meaning applications from candidates who are ready, willing, and able to do the work. But they also need those applications in sufficient quantity that they can hire the people they need as quickly as they need.

It is unclear what factors are driving the inverted labor market, which some might incorrectly refer to as a labor shortage. Some point to a lack of affordable, safe child care. Others to primary and secondary schools not consistently being open for in-person learning. Many point to increased unemployment benefits, even though the half of states which eliminated those benefits aren’t seeing more people entering the labor force than the half of states which have continued those benefits and some job boards are reporting fewer applications to jobs in the states that have eliminated those benefits, which certainly is counterintuitive.

My money is on a combination of these and other factors, most notably employers being unable or unwilling to adapt how they treat and compensate their employers. For decades, employers became accustomed to being able to fully staff even if they treated their employees like crap and paid them like crap. Now, those employers are discovering that they can treat their employees like crap or pay them like crap, but not both. As sad as it is, even that low bar is too high for many employers. The consequence for those employers — and their employees — will likely be the failure of their business due to their inability to properly serve their customers.

There is surely a lot more disruption coming to the labor market and that’s going to create a lot of pain for a lot of people, but employers who embrace using data to make instead of justify decisions will be better equipped to not just survive but actually thrive.