Labor Market Trends & The War for Talent
As the economy recovers from the pandemic, one key indicator is getting a lot of attention - the job market. In many sectors, competition for top talent never waned, while others saw historic unemployment.
So, what do the latest labor market trends indicate now? The talent wars are yet again heating up, and companies are scrambling to get ready. Some sectors are seeing increased competition thanks to employment shifts, where large numbers completely changed industries during the pandemic. Others are seeing shifts impacting their ability to attract and retain talent, such as the widespread adoption of remote work, or increased need for new benefits to enable workforce participation, such as child and elder care.
As much of the economy reopens and many key industries along with it, it’s important to understand why these shifts are happening and what it will take to compete for top talent in a fundamentally evolving workforce. It’s also important to understand that this uptick in demand for workers comes in a time of a greatly reduced U.S. workforce, as many employees cannot or are not willing to return to work under the same conditions they had prior to or even during the 2020-2021 pandemic.
So what factors are at play, and which industries are most likely to feel its effects the hardest? Let’s examine the trends that have contributed to increased competition for top talent.
Job Growth Missed the Mark in May (And April)
While the unemployment rate effectively fell from 6.1% to 5.8% and 559,000 jobs were added in May of 2021 (The U.S. Bureau of Labor Statistics), recovery is turning out to be much slower than expected. New job creation fell short of economists’ forecasts in both April and May, despite the fact that there are still a record 8.1 million job openings left unfilled (Reuters) and the beginning of June saw 28.6% more job postings compared to the baseline of February 1, 2020, i.e. pre-pandemic levels (Indeed Hiring Lab).
So what is going on?
There isn’t a single answer. Several factors have been cited as reasons why workers aren’t reentering the workforce in their expected numbers, such as lingering childcare issues and the demands of remote schooling, which have kept a disproportionate amount of women from participating in or reentering the workforce. Others include lacking social infrastructure and fears of exposure to Covid-19 in unsafe working environments.
Whatever the reason, a great many workers appear to be not able or ready to re-enter the workforce in a time when workers in many industries are in high demand. A recent poll run by the U.S. Chamber of Commerce found that six in ten respondents (61%) claimed they were in no hurry to return to the workforce, and three out of ten did not plan on returning to work at all this year.
Reopening the Economy Triggers a Scramble to Hire
“The U.S. economy is set for a hiring boom in the months ahead as the coronavirus recedes,” according to Bloomberg. Due to mass vaccination campaigns, restriction reductions across various states, and continued government expenditure in the economy, many industries are answering the call of consumers eager to spend on products, services, and experiences again by restaffing their operations at record speed. The U.S. Bureau of Labor Statistics reported that notable job growth was occurring in industries such as leisure and hospitality, public and private education, and in health care and social assistance.
The services sector, in which over two-thirds (79%) of Americans work, was among the hardest hit during the pandemic. Unsurprisingly, it is now also poised to see the greatest expansion, with job growth of the sector hitting all-time highs in May as more positions open back up across the industry (AP News). However, persistent labor shortages are considerably threatening this growth. According to the National Restaurant Association, the staffing levels of full-service restaurants this February was still 20% or 1.1 million jobs below pre-coronavirus levels in February 2020.
Similarly, small businesses are struggling on the hiring front. According to the NFIB’s monthly job report, “...a record-high 48% of small business owners in May reported unfilled job openings. May is the fourth consecutive month of record-high readings for unfilled job openings and is 26 points higher than the 48-year historical reading of 22%.”
The Competition for Talent Across Industries Intensifies
With more job openings than available job seekers in many industries, employers are competing within and outside their industries to attract and retain qualified workers by offering better-paid or more attractive opportunities.
That’s why many companies like Amazon, McDonald’s, and Target have been steadily raising wages (both hourly and salaried) as a way to attract workers while others are now offering providing in-demand perks such as flexible or remote work arrangements and more robust benefits packages. And because job seekers have more bargaining power now than in recent years, they can afford to be picky.
A Prudential study found that “one in three American workers would not want to work for an employer that required them to be onsite full time, [while a] quarter of workers plan on looking for a new job when the threat of the pandemic decreases” signaling a period of great labor market volatility for the remainder of 2021. In the end, the winners in the upcoming war for talent will be companies with the budgets and/or creativity to differentiate themselves from other organizations in their space.
Virtual & Hybrid Recruiting is Helping Companies Compete in the Talent Wars
One way that top employers are leveling up to compete in the talent wars is through the continued use of virtual recruiting. Data shows that 70% of employers expect to do more virtual/remote hiring in 2021 and 2022 since they offer equal or better outcomes than in-person hiring events. And as more employers become more agile, more effective, and more efficient at sourcing talent from anywhere thanks to virtual hiring tools, already competitive talent pools will become even harder to access for any company too slow or unwilling to adopt them in time.
It’s never been more important for companies who want to survive (and thrive!) during the war for talent to take a proactive role in maintaining and building out their talent pipelines with the use of virtual hiring events. For more information on the benefits of virtual and hybrid recruiting for TAs and recruiters, check out the Brazen 2021 Hybrid Recruiting Report.
Like this post? Try these!
- 5 Ways Virtual Hiring Events Help Recruiters Compete in the Talent Wars
- The Brazen 2021 State of Hybrid Recruiting Report