This is the question that I hear more than any other. Over the past decade I feel like Woody from Toy Story, when you pull his string, he says “There’s a snake in my boot!” Well, my response has been, “The market remains strong”.
Recently, the question is less rote, and carries with it the question of whether the market is softening. My response, in turn, has been less canned.
During “The Great Recession” of 2007 – 2009, the search market and our business remained healthy. Companies took the opportunity to “top-grade” their teams and change the mix of skills they possessed. Executives who performed well in a steady-state or growth environment did not always do so in a distressed or underperforming situation. Moreover, private equity firms remained active during these periods, taking advantage of relatively attractive purchase price multiples and the omnipresent need for institutional funds to deploy capital. Market corrections also provide the best circumstances for special situation funds to capitalize on performance improvement opportunities.
Private equity firms remain active in the market today, a strong indicator for continued growth. Their work in the market leads to consistent opportunity for quality talent.
From our perspective, the demand for talent is strong and we expect it to remain so. Great leadership is always needed, and with a growing economy this demand will only increase. About supply, two primary factors contribute to our assessment: demographic trends and workforce participation of specific age groups.
Broad demographics indicate a shrinking workforce. Over 30 percent of the Southeast Michigan workforce is over 55 years of age. Meanwhile, the number of Michigan births hit a 76-year low and the number of high school graduates is projected to decline by 9.7 percent according to WICHE. These trends do not exclusively impact our region or Michigan.
According to the Bureau of Labor Statistics, workers 65 years and older are expected to make up 25.2 percent of the workforce by 2028, which is over twice as much as the 12.4 percent working in 1988. Conversely, due to increased time spent in education, the labor force participation rate for those ages 16 to 24 is projected to decline by 51.7 percent by 2028. An aging population remaining in the workforce, compounded by a new generation with a declining birthrate and increased time in education dramatically impacts supply.
The market is strong, and opportunities exist for executives across industries. Experienced candidates have extended their careers which allows companies to benefit from longer employment terms of their executives. However, the dwindling numbers of younger populations, coupled with restricted access to advancing roles shows that the next generations leader’s may not be as prepared as our current market of executives, thus demand for new leadership will be greater than ever.
New Release – Bureau of Labor Statistics: Employment Projections 2018-2020