Key Insights 

• Anticipated shifts in tax, healthcare, and trade policies during elections can lead companies to adjust or pause hiring for key roles.  

• Hiring activity typically drops by 0.5% during US election years but can increase post-election with favorable economic outlooks.   

• Federal and state hiring trends fluctuate based on political leadership shifts, with notable increases or decreases after elections.  

• Search firms that adjust to market fluctuations secure top talent, even in uncertain times.  

In the ever-changing landscape of recruitment, executive search firms often face the challenge of adapting to a variety of external factors that can significantly influence hiring trends and strategies. Among these, political elections and market instability stand out as key determinants that can shape our recruitment process. Understanding the impact of these factors is crucial for search firms to remain resilient and responsive. 

The Impact of Political Elections on Recruitment

Political elections can create a climate of uncertainty, influencing hiring decisions across multiple sectors. Here’s a deeper look at how key election-driven factors impact hiring: 

Regulatory Changes

The anticipation of regulatory shifts can make companies hesitant to hire for key roles, particularly in sectors like healthcare, finance, and manufacturing. 

For example, in 2018, changes to the U.S. tax code led to an increase in business profits, with 65% of CFOs in a Deloitte survey reporting plans to increase hiring in the subsequent year. In contrast, ongoing debates over healthcare reform have contributed to hiring slowdowns in the healthcare sector, where employment growth dropped to 1.6% in 2020 compared to 2.6% in 2016 (Bureau of Labor Statistics). 

Economic Outlook

Business confidence tied to election outcomes directly impacts corporate hiring decisions. 

Historically, election years in the U.S. have seen slight declines in job growth, with an average decrease of 0.5% in hiring activity during presidential election years (Federal Reserve). For example, in the months leading up to the 2020 U.S. presidential election, private-sector job openings saw a dip of nearly 10% due to uncertainty surrounding the economic policies of potential administrations (Glassdoor Economic Research). On the flip side, post-election periods of strong economic outlook, such as after the 2004 elections, saw a 2.7% increase in job growth as businesses anticipated favorable policy environments (U.S. Chamber of Commerce). 

Public Sector Hiring Trends 

Elections have a more direct influence on public sector hiring due to shifts in political leadership and policy priorities.   

• Federal hiring – The size of the federal workforce fluctuates significantly with changes in administration. For instance, federal employment rose by 6% during the first two years of the Obama administration (2009-2010), with 150,000 jobs added, particularly in healthcare and energy sectors (OPM Federal Employment Reports). In contrast, under the Trump administration, federal employment shrank by 3% between 2017-2019 as part of broader government size reduction efforts.

• State and local hiring – State and local hiring can be even more responsive to elections. In 2019, following gubernatorial elections in 12 states, 9 states saw a 4-8% increase in state government employment as newly elected governors implemented new programs (Bureau of Labor Statistics).

• Policy-driven hiring –Public policy changes can lead to sharp variations in employment. For example, after the Affordable Care Act (ACA) was passed, healthcare employment grew by 2.2 million jobs between 2010 and 2018, driven by increased government funding for healthcare services (Brookings Institution). Similarly, infrastructure-focused agendas, such as those pursued under the Biden administration, are expected to boost employment in public works and related sectors by up to 1.5 million jobs over the next decade (American Jobs Plan report).

By understanding these trends, companies and job seekers alike can better navigate the hiring landscape during election cycles. Leading up to the election, we’ll be diving into its effects on hiring and how to navigate the changing landscape. Stay tuned for parts 2 and 3 of Cory’s Corner coming in the following weeks.