The red-hot labor market might be coming off its boil. Here's what jobseekers need to know about looking for work in an economic downturn.

 Are you out of your mind to even consider quitting your job and looking for a new one right now?

With high inflation, rising interest rates, and Russia's war against Ukraine, the economy looks shaky. What's more, job openings are falling, while layoffs are creeping upward. Those factors are enough to give any job seeker pause.

And yet, the labor market is still remarkably strong even as recession fears loom. Employers added 263,000 workers in September, fewer than in prior months though more than was normal before the pandemic hit. Meanwhile, there are roughly two open jobs per every available worker and the unemployment rate stands at 3.5%, a historic low.

"There's strong hiring demand from employers across the board," James Neave, the head of data science at Adzuna, a job-search engine, told Insider in an email interview. "In my opinion, looking to change jobs in this economic environment is by no means reckless."

Still, many experts, Neave included, acknowledge that the going could get harder for jobseekers if the economy slows and more companies institute hiring freezes and layoffs following the lead of Gap, Peloton, and JP Morgan. According to a PwC survey in August, half of US companies anticipate a reduction in overall headcount, while 52% foresee pausing new hires.

"The job market may cool down in the coming months as companies respond to the very recent changes in the economy and the pace of hiring may start to ease," he said.

So if you're in the market for a new job, what should you do differently? While standard job-search advice applies in good times and bad — scour your network, do your homework, and perfect your elevator pitch — experts recommend making a few key adjustments to your search. Here are some tips.

Manage your negative emotions 

Looking for a job is an opaque process filled with disappointment and rejection. That's true regardless of the state of the economy. As a job seeker, your challenge is to manage your emotions and not overinterpret negative pieces of information — which include everything from the latest CEO spouting off on the likelihood of a recession (see: Elon Musk) to a certain hiring manager not returning your email in a timely manner. 

Managing negative emotions is harder in a downturn because the news cycle can be overwhelming, according to Anthony Klotz, a professor at the University College London School of Management. "Being in a negative mindset is not ideal for a job search."

A person at his desk, overanalyzing and frustrated.
Managing negative emotions is harder in a downturn because the news cycle can be overwhelming. 
Courtesy of Melody Wilding

That's why you need an emotional-regulation strategy. Set a strict schedule for how much time you spend on your job search each day. Give yourself weekends off and make time for activities and people you enjoy. Do your best to maintain a calm demeanor and a positive attitude. "You need to psychologically detach from the job-search process and the news," Klotz said.

Expand your target list of employers 

In a tight labor market, employers do what they can to widen their potential pool of qualified applicants. Some are more apt to take a second glance at job candidates who might otherwise get overlooked, including, for instance, people recently out of prison or women looking to reenter the workforce after taking time off for caregiving. 

In a contracting economy, widening your potential pool of employers is not a bad approach for job seekers. Klotz recommended expanding your target list of organizations to include industries that might not be glamorous or companies that aren't household names. "It would be foolish to put constraints around your search by saying, 'I'm only going to work for a Fortune 500 company,'" he said.

"You shouldn't undervalue the many wonderful small- and medium-sized companies where smart, dedicated people work."

Get a job or take a class to plug the gap 

Many employers harbor biases against people with gaps in their résumés, unfairly or not. These biases are harder to overcome in an economy when employers can afford to be choosier.

"Employers want to see activity — they want to believe you're doing something," Toby Haberkorn, a recruiter in Houston, said. 

If you're unemployed, Haberkorn advises taking a temporary position or a freelance or contract job to ensure your work history looks solid. Enrolling in a course is another way to plug a résumé gap and demonstrate your upward trajectory.

"An added benefit is that the side job or class gives you a welcome break and release from the stress of looking for a job," she said. "At the very least, you'll develop new skills and meet some new people — and those people have connections."

Be where your future colleagues are

Finding a job is about who you know because companies fill the vast majority of open positions — upward of 70% — internally instead of advertising them to the public. That figure may be even higher in a downturn when employers grow more cautious about hiring. 

Hiring manager job interview holds resume
Taking a temporary position or a freelance or contract job ensures your work history looks solid. 
SDI Productions/Getty Images

The upshot is that now is an opportune time to grow your network. "You need to be where your future coworkers are," Megan Mayer, a trainer and job-interview preparation coach in Pebble Beach, California, said. 

She advises becoming more active in your industry's professional organizations or volunteering with a pet nonprofit where your desired colleagues also volunteer. Offering your help and expertise builds trust and credibility. "You'll be able to forge deeper relationships and showcase your reliability, enthusiasm, and social skills," she said. 

"And when a position opens up at their company that might otherwise be closed to outside applicants, it could be yours if an insider personally recommends you for the role." 

Know your walk-away point

Job seekers have recently had more leverage and as a result, have felt emboldened to demand more from their prospective employers. "When companies are vying to get you, you ask for all the things on your wish list: higher compensation, flexible work, a better title, and growth and development opportunities," Karen Weiss, the director of career readiness at Pepperdine's Graziadio Business School, said.

But the dynamics shift in an employer's market. "Instead, it becomes more of a series of questions: What am I willing to do? What's my walk-away point? And when am I willing to settle for a not-so-perfect job?"

Some soul-searching is also in order. You need to think about your short-term needs — including the basic income requirements to pay your bills versus your long-term professional goals. Consider what you want to do and reflect on your deal breakers. "When the pickings are slimmer, you go to plan B," Weiss said.

But remember, nothing is forever, and a non-ideal job eventually might lead to something better. "No matter what, the economy will pick up steam again."

This story was originally published on June 23, 2022. 

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