Employment Services NAICS 5613

Apr 25, 2025 - Skills Gaps Becoming a Problem for Companies

• Employers in the US are increasingly hiring employees based on skills criteria and deemphasizing past job experience, according to global recruiting firm Hudson RPO. A survey of HR professionals in the US found that 60% of recruiters are placing more importance on transferable skills - capabilities that apply to different jobs and industries - than the historically standard educational and work experience qualifications. Workers who display transferable skills such as communications, leadership, and flexibility should have a leg up. The trend dovetails with data from consulting firm McKinsey & Company that says 90% of companies either currently have or will experience skills gaps in their workforce in the next five years. About 53% of employers told McKinsey they are tackling the problem by reskilling current employees, while the rest are relying more on skills-based hiring, shifting workers to different roles in an organization, and hiring more outside contractors.
• Layoffs in the US job market spiked by 205% in March 2025, the third-highest level ever recorded, according to outplacement staffing firm Challenger, Grey & Christmas. The majority of job cuts came from the federal government with billionaire Elon Musk’s Department of Government Efficiency (DOGE) firing 216,000 federal employees. (The previous highs in job cuts were both in 2020 when the pandemic shut down the US economy.) So far this year DOGE has cut 280,000 federal employees across almost 30 agencies, while another 4,500 employees - mainly at non-profits and health organizations - lost their jobs through the cancellation of federal contracts or aid. Challenger’s data also shows that hiring at private sector US companies is slowing with an expected drop of 16% from the same period last year.

• Leaving your current job for one with better pay is becoming harder to do, according to a survey of US labor statistics by the Federal Reserve Bank of Atlanta. Workers who stayed on the job in January and February 2025 increased their pay by 4.6%, while job leavers increased their pay by 4.8%. It is the narrowest margin between the two groups since 2023 when the salary increase gap was 5.5% for stayers compared to 7.7 for leavers. The tech industry, in particular, has seen contraction in pay increases for job hunters last year, compared to the post-pandemic hiring boom and the bigger salaries that went with it. Given the lower starting salaries and rising layoffs in the overall job market, the 39.6 million Americans who quit their jobs in 2024 fell 11% compared to the year prior (per the US Labor Department).
• The US unemployment rate hovered around a low 4% for most of 2024, but that still translates to roughly 7 million Americans out of work - and 1.6 million of those have been unemployed for more than six months, according to data from the US Department of Labor. The number of workers out of a job that long has risen by 50% in the last two years. Another four million workers are underemployed - those working in part-time or temporary jobs as they continue to look for a full-time position. Other unwelcome job market stats include an average of one job posting per unemployed worker, down from two in 2022, and wage growth that shrank from 6% to 4% year-over-year in November 2024. Healthcare and hospitality industries are still experiencing strong hiring, while office jobs in technology, media, and legal services have been hit with layoffs as employers cut costs.