What employers can expect from tomorrow's labor market

While there is undoubtedly an undercurrent of uncertainty, the labor market does appear to be stabilizing. In this article, we'll discuss today's challenges combined with data about future market shortages to provide you with recruitment strategies that will work well beyond this year.

Today's challenges

Tenure

While people staying isn't a typical problem, it can be tough to hire talent at the top of their game if they aren't open to moving on. Right now people are staying in roles, largely due to uncertainty.

"Resignations were the lowest in four years, a sign that Americans are growing less confident in the jobs market."¹

If you want to compete, you will need to work very hard to sell your company's benefits.

The struggle continues

Certain industries like manufacturing and government are already struggling.

"The rise in vacancies was led by the construction industry, with 138,000 job openings. There were 78,000 unfilled positions in state and local government, excluding education."¹

This continued difficulty means that you must be willing to embrace new strategies for recruitment. The same old song and dance isn't working anymore.

Going down

In a bit of good news for job seekers, layoffs are actually declining. However, from an employer perspective, that means the available talent pool is smaller.

"Layoffs declined by 105,000 to 1.608 million. There were decreases in layoffs in the retail trade and healthcare and social assistance sectors as well as at hotels, restaurants and bars."¹

There are some exceptions to the rules though, so be sure to take note of the sector-specific data. 
 

"Layoffs, however, increased in the professional and business services industry. Small, medium-sized and large employers all reported a decline in layoffs."¹

Generational differences

Different priorities are present in today's market given the declining number of Baby Boomers and Gen X'ers and the rise of Millennials and Gen Z workers. Post-pandemic, many now want²:

1. Increased flexibility
2. Better benefits
3. Companies focused on teambuilding and culture
4. Companies that care about them or give them purpose/meaning

You'll need to consider highlighting these areas if you want to hire efficiently.

Inflation

While inflation has cooled slightly, it's still present and is driving a need for higher wages. This means that like the housing market, you'll need to put forward your "highest and best" offer to earn job seeker attention.
 

Upcoming labor shortages

Unfortunately, labor shortages are standard now and will persist.⁴ That's because people are leaving the workforce voluntarily (retiring, caring for family and more⁵) at high rates. Less people, less hirable bodies.

As you can see from the U.S. Chamber of Commerce graphic below⁶, there are many industry shortages, but none is as critical as professional and business services.

Healthcare is often noted as an area with shortages, but there are only a few areas with severe issues at this time. By 2028, the shortage will be most acute for nursing assistants as we will be short 73,000 of them and for specific geographies. For example, there will be shortages for registered nurses in New York and other eastern states and physicians in California, Texas and New York.³

As stated above, manufacturing has already been in a tight spot for some time and will likely continue in this way.⁷
 

Shifting to find new talent

Flexibility

Speaking of manufacturing, that industry is already pivoting to deal with the shortages.⁷ One of the first ways is by being more flexible with their workforce.

"In a recent survey conducted by NAM, 46.8% of surveyed manufacturing executives pointed out that their company offers flexible scheduling to production workers. Other forms of flexibility offered to production workers include remote work, compressed workweeks, and the opportunity to swap or split shifts.8"

Rewards

A tactic that is growing is popularity beyond manufacturing is rewarding your workforce with better compensation.

"Per Deloitte analysis, between Q1 FY2022 and Q1 FY2023, there has been a 4% rise in the average hourly earnings of employees. Notably, there has also been a 19% reduction in the average number of voluntary separations over the same period.⁹"

Development

In general, your business will need to start developing the talent you need in-house or work with people to upskill them in some way. 
 

Back and forth

If in-house talent building doesn't work fully, you will need to focus in on what employees want to woo them from existing ones, unfortunately creating a constant tug of war experience.

Strength and reliability

Above all, you must inspire confidence in your company's stability to pull in the hires you need. People want to work somewhere they can trust will still exist in the future. One where they can build a career.
 

Proactively building up the pipeline

While it isn't an immediate fix, playing the long game is a sustainable strategy. You can do this by:

1. Offering internships, ideally, paid ones.
2. Creating apprenticeships.
3. Partnering with educational programs to get in front of early talent first.
4. Cross-training to address gaps in advance of them existing.

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The future is wide open for employers who are willing to be agile and creative. And while tomorrow's labor market might be more challenging than what you may have dealt with in the past, it's a comfort to know that there are ways you can shift and adapt.

If you'd like to discuss other ways of filling your pipeline and finding fits for niche roles, Beacon Hill is always here.

Citations:

1. No signs of US labor market deterioration as job openings rebound
2. How to hire and maintain a strong multigenerational workforce
3. 5 Health Care Workforce Shortage Takeaways for 2028
4. Labor shortages are the new normal
5. ‘Largest labor shortage the country has ever seen’ looms, report warns
6. Understanding America’s Labor Shortage: The Most Impacted Industries
7. 2024 manufacturing industry outlook

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