From Unemployment to Wage Growth: 10 External Indicators That Drive Talent Decisions

We all know the feeling in human resources and talent acquisition—the constant need to stay one step ahead.

And keeping up with industry news, then applying it strategically, can help your organization gain a competitive edge when competing for talent.

Internal data like time-to-fill and cost-per-hire are crucial, but there's actually a whole world of information outside your company walls that can be a game-changer.

Industry data—like unemployment rates, inflation rates, and others—can offer a wider lens on the job market, the economy, what candidates expect, and even what's happening in society as a whole.

In this guide, we'll explore the significance of these industry trends and numbers and rank the ten most important contextual indicators that every HR and talent acquisition leader should monitor.

By understanding these trends, you can make smarter hiring decisions and manage your workforce more effectively, and we'll show you how.

📈 Why EXTERNAL Data and metrics Matter

External data and metrics provide a window into the broader economic and social factors that influence the job market and, by extension, your organization's ability to attract and retain top talent. 

This knowledge can help you:

• Anticipate hiring challenges and opportunities before they materialize
• Adjust recruitment strategies in real-time
• Make informed decisions about compensation and benefits
• Understand and adapt to evolving workforce expectations
• Align talent acquisition efforts with broader market trends

By incorporating insights into planning, we can position our organizations to be more responsive, competitive, and successful.

📊 Top 10 Industry Indicators for HR and TA Leaders

Lets explore the most important data points you should be tracking, ranked in order of importance (in our opinion, of course):

1. Unemployment rate

The unemployment rate is a fundamental indicator of the job market's health and talent availability.

🔍 Why it matters: A low unemployment rate typically signals a competitive labor market, making it more challenging to attract and retain talent. On the flip side, a higher rate might mean a larger candidate pool, but it could also reflect broader economic challenges.

🛠️ How to use it: Tailor your recruitment strategies based on the current rate. In a tight market, focus on retention and competitive offers. In a looser market, prepare for a higher volume of applications and potentially more leverage in negotiations.

2. Labor force participation rate

This metric shows the percentage of the working-age population that's either employed or actively looking for work.

🔍 Why it matters: It offers insight into the overall supply of workers in the economy. A declining rate could hint at challenges in finding workers, while an increasing rate might suggest a growing talent pool.

🛠️ How to use it: Use this information to guide long-term workforce planning and to understand broader trends in labor supply that might affect your industry.

3. Job Openings and Labor Turnover Survey (JOLTS)

JOLTS data, released monthly by the U.S. Bureau of Labor Statistics, provides information on job openings, hires, and separations.

🔍 Why it matters: This survey offers a more detailed picture of labor market dynamics, including quit rates and industry-specific trends.

🛠️ How to use it: Compare your organization's turnover rates against industry standards and anticipate potential talent shortages or surpluses in your sector.

4. Wage Growth Rate

This metric tracks the year-over-year change in wages and salaries.

🔍 Why it matters: Wage growth rates directly impact your ability to offer competitive compensation and can signal broader economic trends affecting worker expectations.

🛠️ How to use it: Let this data inform your compensation strategies to ensure your offers remain competitive in the current market.

5. Industry-specific employment trends

These metrics focus on employment data for specific industries or job categories.

🔍 Why it matters: Industry-specific trends can provide more relevant insights for your particular sector, helping you understand the competitive landscape for talent in your field.

🛠️ How to use it: Adjust your recruitment strategies based on the supply and demand dynamics in your industry. For instance, if your industry is experiencing rapid growth, you may need to be more aggressive in your talent acquisition efforts.

6. Remote work statistics

With the rise of flexible work arrangements, tracking remote work trends has become increasingly important.

🔍 Why it matters: Understanding the prevalence and expectations around remote work can help you shape your organization's policies to remain competitive in attracting talent.

🛠️ How to use it: Consider adjusting your work arrangement offerings based on broader trends and candidate expectations. This may involve implementing hybrid models or expanding your talent search to include remote candidates.

7. Skills gap indicators

These metrics track the discrepancy between the skills employers need and the skills available in the workforce.

🔍 Why it matters: Understanding skills gaps can help you anticipate training needs and inform your recruitment strategies.

🛠️ How to use it: Develop targeted upskilling programs for your current workforce and adjust your hiring criteria to focus on adaptable, learning-oriented candidates who can bridge identified skills gaps.

8. Demographic shifts in the workforce

These metrics track changes in the age, gender, and ethnic composition of the workforce.

🔍 Why it matters: Demographic shifts can signal changes in workforce expectations, values, and available skill sets.

🛠️ How to use it: Adjust your employer branding and recruitment strategies to appeal to changing demographic groups. Ensure your organization's diversity and inclusion initiatives align with broader workforce trends.

9. Gig economy growth rate

This category of metrics tracks the growth of freelance, contract, contingent, and temporary work arrangements.

🔍 Why it matters: The expansion of the gig economy can impact traditional employment models and affect your ability to attract and retain full-time employees.

🛠️ How to use it: Consider incorporating more flexible work arrangements or exploring hybrid workforce models that include both full-time employees and gig workers.

10. Employee Sentiment Indices

These metrics, often derived from large-scale surveys, provide insight into overall worker satisfaction, engagement, and priorities.

🔍 Why it matters: Understanding broader trends in employee sentiment can help you anticipate changes in worker expectations and adjust your employee value proposition accordingly.

🛠️ How to use it: Use these indices to benchmark your own employee satisfaction metrics and to inform improvements to your workplace culture, benefits, and employee experience.

📝 Creating a data-driven company culture

There are a lot of ways to incorporate industry data and benchmarks into your day to day operations, and the most important statistics will likely vary from company to company.

Foster an environment within your HR team that values and regularly reviews external data. Make data analysis a key part of your strategic planning process.

We have a few ideas on how to do that, but this list is not exhaustive! Feel free to implement your own initiatives and ideas. 

• Create a dashboard: Develop a centralized dashboard tracking key external metrics alongside your internal metrics. This can help you spot correlations and trends more easily.
• Conduct regular market analysis: Use these metrics to perform quarterly or bi-annual market analyses. This will help you stay ahead of trends and adjust your strategies proactively.
• Collaborate across departments: Share relevant external HR metrics with other departments, such as finance and operations. This can help align HR strategies with broader business objectives.
• Invest in predictive analytics: Use historical data and current trends to forecast future talent needs and potential challenges.
• Educate leadership: Regularly brief company leadership on key external HR metrics and their potential impact on the organization's talent strategy.
• Subscribe to our By the Numbers newsletter: Every other Friday, we send out the top three industry stats we're keeping an eye on, which can help keep you informed and updated.

By monitoring market and industry news and statistics, you'll be well positioned to make educated decisions about your organization's hiring and retention strategies.

Importantly, the key to leveraging these metrics effectively lies in translating the insights they provide into actionable strategies. By doing so, you'll position your organization to stay competitive in a tough labor market.