John Kenneth Galbraith once said: “The only function of economic forecasting is to make astrology look respectable.” It seems the media agrees, as they are having a hard time these days deciding whether the economy is recovering, stagnant or still on a downward slide. New numbers released almost daily can seem contradictory and confusing, so let me try to shed some light on the trends I’m seeing in the quantitative job markets.
While our industry was not hit with the same force and immediacy that struck many other fields during this recession, like the economy as a whole, we have experienced long months of layoffs and hiring freezes. The tail end of this recession seems to be following the same pattern of the 1991 downturn — a V-shaped model with a prolonged period of layoffs and hiring freezes, followed by a robust hiring recovery. This is in contrast to the 2001 recession, where hiring was slow to recover and increased only gradually over several months.
We first began to see an increase in the hiring of analytical professionals this past September, just a trickle at the time, but definitely trending upward throughout November and December — typically slow hiring periods. I’m happy to report that since the first of the year, we have been seeing widespread hiring increases throughout the country.
In many ways the layoffs in analytics, while certainly painful to those affected, were shorter and not nearly as widespread as in most disciplines. Even at the low point of the recession, most organizations understood that quantitative talent is scarce and that they would face significant challenges if they had to replace lost employees. Though bonuses may have been eliminated and salaries frozen, the vast majority of quantitative professionals kept their jobs, and most who were laid off last year have already found new positions.
The prevailing sentiment among hiring authorities is that there is an abundance of talented, qualified candidates available and eager to accept positions. This is simply not the case in analytics. Even in these early moments of the recovery, competition for the premier candidates is, as always, fierce. We are seeing multiple offers and counteroffers for the top talent in analytics.
Human resource and quantitative group heads who have been congratulating themselves on low attrition rates should take heed — pent up demand is going to whip up the recovery froth. Many analytical employees knowingly set aside growth plans for the last 18 months – choosing instead to play it safe with companies where their value was recognized, rather than risking moves where they would have short tenure, no proven history, and no established mentors. The common recessionary tactic of salary freezes or worse — pay cuts — means that those who have put career plans on hold are eager to look for growth opportunities in the recovering economy. Small or nonexistent annual bonuses (usually paid in the spring) mean that many will not wait until later in the year to look for new, more lucrative positions, creating a wave of applicants looking to jump-start their careers.
Of course, all this movement creates more openings and brings significant churn to the job market. The tsunami is coming, and I suspect it may go on for a year or more before things settle back into a normal hiring pattern.
There are certainly still challenges in some sectors. The continued weak housing market means many people are anchored to an area because they are unable to sell their homes and relocate. The area of credit analytics, while somewhat improved, will continue to offer limited growth for years to come. We have seen that salary increases as an enticement to move are still generally modest, but I suspect that will change soon. While there are some virtual positions for consultants who are willing to travel extensively, most companies are still not willing to consider corporate managers or directors who want to maintain a remote home office. Globally, we are seeing increased interest in US-trained analytics professionals, but salaries for equivalent positions in other parts of the world are much lower, so most candidates are not willing to make an international move.
Despite these lingering concerns, the outlook for the analytical job market, even at this early stage of the recovery, is very positive. Here at Burtch Works, we are busy, and when we’re busy that means clients are looking to hire and candidates are looking for new positions. Our level of activity is one of the clearest indicators that the economy — at least our part of the economy — is moving ahead at a steady pace. But please know we are never too busy to hear from you. Just give us a call or drop us an email and let us know how we can help you with your own recovery plan.