The stress on companies to find workers goes far beyond any one industry and affects almost every corner of our economy. The chronic – and long-lasting – worker shortage will create new opportunities for the people that understand these dynamics and the companies who employ them.
The spot market for labor disappeared several years ago, as job openings outnumbered those seeking work. Most unemployment rates remain far below historical levels and worker mobility continues to decrease. The Labor Participation Rate continues its decline as more people leave the workforce than enter. The pandemic made things worse as 11% more people retired last year than anyone expected and over six million people – mainly women – remain out of the workforce to care for family members.
Little indicates that this will change in the coming two decades. Our demographics show the ongoing aging of our population and women’s fertility rates continue their decades-long decline below the level needed to organically replenish our population. The one plentiful source of new workers – immigrants – remains trapped behind our collective unwillingness to address immigration in a meaningful way.
Unless birth rates bounce back in some miraculous fashion, this will be the new reality for our work force. Leaders’ reactions to this situation will determine how successful their entities will be. Companies cannot afford to lose good employees – and maybe some that aren’t that good – because there is no one available to replace them. Effective recruiting remains essential in this labor market, but it is not a path to long-term success. Success also requires solid retention strategies that go beyond wages because larger, more profitable companies will have the ability to pay more.
Successful companies build strong workforces by focusing on their employment brand – the reasons the best talent wants to work for them. They put together comprehensive, non-traditional employment packages that include flexible schedules, involvement with company decisions, and reasonable compensation. In other words: they give their employees a sense of purpose. The very best find ways to reorient their organizations around this sense of purpose to improve the world while making money. These actions put the company in a position to grow, creating new career pathways.
The tight labor market lets most people decide where they want to work. Talented people are in short supply. Those with in-demand skills can pick where they work – and for whom. Those willing to learn and change can forge entirely new career paths. While older generations held one or two careers in their lifetime, younger generations are pivoting their careers trajectories at a much higher rate.
As such, matching talents with organizations remains a much more fluid proposition. Companies are learning new ways to attract and retain talent, while workers become more aware of available opportunities. Record quit rates over recent months show the flux in the workforce as talent moves to places with the best opportunities.
Technology plays a major role in these transitions, as individuals can see the available opportunities and receive insider information on how well the reality matches the job’s promise. Employers have the same advantage, being able to gather more independent information on their employees. Technology transforms jobs and work – and will continue to evolve – making ongoing skill upgrades critical for both companies and their people.
Great opportunities flood the landscape – but so do the scams. Be careful! New technology can be used for good or evil. Make sure you understand whether the technology affecting you makes you better or puts you under the control of someone else. Understand that entrepreneurial freedom is great and being your own boss is romantic, but make sure you can make a decent living before you make a leap. Remember that most people want to help, but there are still some who want to take advantage of situations. Don’t enter a proposition that seems too good to be true. Understand your role and how you create value for your partners before you sign on the dotted line.
Overall, despite inflation and other downturns in the economy, it’s a great time to be working. Talent has never been in higher demand, businesses can find opportunities in multiple markets, and doing the right thing is finally being rewarded. Lean into the moment and take advantage of a time that may never return in our lifetimes.