Data suggests companies are holding on to employees as part of longer-term strategic thinking in uncertain economic times.

BY STEVEN I. WEISS, SENIOR STAFF WRITER@STEVENIWEISS

For Inc.

Photo:  Getty Images

A who’s who of economists just added a reason to the long list that explains why you’re having such a hard time hiring right now: A phenomenon called “labor hoarding.” Rather than laying off employees during these uncertain economic times, companies are hanging onto talent. What gives?

KPMG chief economist Diane Swonk, former chair of President Obama’s Council of Economic Advisors Jason Furman, and others describe a trend in which employers decide to ride out the uncertainty with higher payrolls–in order to avoid the long-term costs of hiring and training new people when the economy rebounds. Labor hoarding marks a shift in business owners’ go-to strategic response to recessions–namely, cutting your labor force to preserve short-term profits.

“As the cost of losing people to layoffs and firings has grown, the number of layoffs and firings has fallen,” says Julia Pollak, chief economist at ZipRecruiter. “Labor market dynamics have fundamentally changed: time-to-hire, recruiting costs, and hiring costs have all grown substantially.” And while layoffs are low, employees are still quitting at a high rate. That means companies are “already generating vacancies more quickly than they’d want, and their hiring processes are struggling to keep up,” says Pollak. (You can read a full rundown of labor hoarding in Sam Ro’s website TKer.)

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