What Happens to Customer Service When Unemployment Hits Historic Lows?

A low unemployment rate is cause for celebration. It means people are working, paying taxes, and bringing home the bacon. That’s why most people see the current 3.6% US unemployment rate as fantastic news – it’s an astronomical improvement over the 10% unemployment rate after the 2008-09 Great Recession.

But there’s a hitch for folks who are tasked with hiring, especially those hiring for contact center teams: when more people are working, there are fewer active job seekers. It’s of little surprise, then, that 45% of US employers report difficulty in filling jobs. For larger companies, that rate is 67%. In particular, customer service agents are among the most in-demand roles in the US, making them extremely difficult to fill. As a result, finding available, high-quality talent to fill jobs for US-based contact center operators – whether staffing in-house centers or outsourced - is increasingly challenging.

But there is good news. While the US unemployment rate is, as we’ll discuss in more detail below, concerningly low, its relationship with the Canadian unemployment rate is consistent – that is, for over two decades, the Canadian rate has sat a little higher, currently at 5.8%. This seemingly small but significant difference positions Canada as the perfect place for outsourcing – especially for companies who are looking for onshore solutions.

What Full Employment Means for Contact Centers

Most economists consider an unemployment rate below 5% as “full employment.” In other words, almost everyone who is willing and able to work is employed. It’s a term that often goes hand-in-hand with the label “zero unemployment.”

Essentially, with the US rate at a near-50 year low of 3.6%, this means that the vast majority of people who make up the unemployment rate are unemployed because they are unable or unwilling to work. So, US employers are faced not only with a smaller available labor pool, that pool tends to be made up of people who are also less qualified than the available labor pool of ten years ago. Add the fact that there are more US job openings than unemployed Americans, and the dilemma is clear.

In spite of some of those persistent negative stereotypes about the contact center industry, delivering an optimal customer experience does require business acumen, technical/digital skill, and emotional intelligence – and that’s just for starters ( more info on the ideal agent profile here ). The best agents are educated, have great communication skills, want to do meaningful work for great brands, and are pumped up about the opportunity to make a difference in people’s lives. For talent acquisition teams, the challenge now is to woo people who are already employed into ditching their jobs and coming to work for you. If you’ve been in the trenches of hiring for US call centers, it’s hard not to toss a cynical “good luck with that” remark out there.

But in Canada, with an unemployment rate above the “full employment” line, at 5.8%, there are still able-and-willing-and-qualified candidates available for work. If you look to metropolitan areas in Canada, the rate is even more attractive – 6.6% in Halifax, Nova Scotia, for example. And this workforce is also well-educated – over 70% of adults in Halifax have post-secondary education. This creates a rich talent pool of people who fit the ideal profile of a contact center agent.

The Dilemma of Rising Wages in the US

Economists tell us that when wage inflation occurs at a faster rate than the pace of price inflation ( as is the case in the US ), a company’s margins decrease, making it harder to keep up with rising wages. That spurs employers to dip into that less talented labor pool, and that, in turn, inevitably impacts productivity and quality of products and services. In the contact center, the customer experience often suffers as a result, which directly reflects on the integrity of the brand and reduces customer loyalty (for more insight about the true cost of losing a customer, click here ).

Again, in Canada, this is less of an issue. With greater access to available talent, the competition isn’t quite so cut-throat, and wage growth subsequently occurs at a more balanced pace, on par with cost inflation. As such, there’s no need to turn to less-qualified talent or consider exponential increases in compensation. The extra bonus to outsourcing to Canada is that the US-Canadian exchange rate is highly attractive to American companies, at 1 US Dollar to 1.33 Canadian Dollars. That means your money goes further, freeing you entirely from the challenge of rising US wages.

The Wait to Find Good Candidates

Even if US employers do decide to increase wages to attract more contact center talent, those candidates aren’t going to show up overnight. Unfortunately, time to hire is on the rise – a current average of 42 days , leaving many positions open for longer than ever before .

This is partly due to the lack of talent, but also a result of how candidates are responding to the competitive US job market. More companies are experiencing “ghosting,” where candidates simply disappear in the recruitment process, chasing after new opportunities without following up on others. When this happens further into the process, after scheduling an interview or even making an offer, employers end up back at square one, lengthening the process even more.

The amount of time spent in the recruitment process directly impacts a contact center’s KPIs. For example, if the team of frontline agents is short-staffed, that’s likely going to result in longer ASA, especially during peak volume hours, days, or seasons. Agents under pressure may struggle to achieve first-call resolution or succeed in creating a positive customer experience.

There’s also the immeasurable impact – the stress that an under-staffed team experiences is detrimental to employee morale and engagement. And while happy employees make for happy customers, the opposite is also true. Ultimately, your customer experience could be at risk.