2023 Promises Another Tight Labor Market: What Source2 is Watching
January 19, 2023
Starting a new year is traditionally an opportune time to reflect on the previous year and look ahead to growth in the future. Many set goals or resolutions for themselves – drinking more water, exercising more, being more present, taking more trips, etc. In the ever-changing world of high-volume recruitment and retention, both candidates and employers also set goals, whether that be increasing diversity in the workforce (from the employer side) or earning a higher wage (from the candidate side).
At Source2, a national high-volume recruitment and retention firm specializing in mid- to large companies, our experienced and dedicated talent acquisition professionals have been keeping a close eye on the trends they forecast will be key in 2023. In no particular order, the top talent acquisition trends Source2 is watching as 2023 unfolds are:
Impact on Business Performance
When the labor market is squeezed, the chain reaction of impacts is felt far beyond that of the employers looking to fill positions. Unfilled positions lead to two negative outcomes. First, the opportunity cost of lost volume for most companies is immense. Second, the option of requiring existing employees to pick up the slack is fraught with negative consequences. Overtime pay quickly adds up, as do the levels of frustration of those employees who feel overworked and burnt out, resulting in increased turnover. These challenges are exacerbated by reduced productivity, compromised quality, greater levels of job-related accidents, and missed deadlines, all of which could have disastrous impacts on the reputation of a business.
Compensation Driving Moves
While the tight job market in 2023 looks to be adjusting to more ‘red hot’ versus ‘white hot,’ the job seeker knows they are still very much in the driver’s seat, and inflation is a main cause for desiring an increased salary. We’re monitoring state government policies impacting pay transparency and job board salary range disclosures. We also know that with compensation being the #1 reason people are seeking alternative jobs, we can expect job hopping to remain a trend in 2023 as a way for candidates to increase their salaries by as much as 30 percent.
The U.S. labor market will remain tight as the number of individuals entering the workforce or currently seeking employment is significantly lower than those exiting the workforce. This trend is fueled by several factors, including a large portion of Baby Boomers retiring and skilled workers opting to leave the workforce or start their own companies in the gig economy, where they have more control over their schedule and pay. Restrictive immigration policies are starving the economy of new labor. In our November blogwe discuss 'fair chance hiring,' which is built on the premise that everyone deserves fair consideration for jobs. This remains front of mind for Source2 and leading talent acquisition professionals as a potential option to offset candidate supply shortages in the labor market.
A Focus on Diversity, Equity & Inclusion (DEI)
DEI is becoming increasingly important for job seekers, with 72% of workers aged 18-34 saying they would turn down a job offer or leave a company if the company's leadership does not actively invest in and support DEI initiatives. A report released late last year by Indeed and Glassdoor noted: "Diversity, equity, and inclusion will remain top of mind, as employees continue to deeply care about these initiatives, as well as the progress employers are making, or not.” As the new year gets underway, Source2 client managers have underscored this point, stating they have had several clients ask to place more of an emphasis on diversifying their candidate pools in 2023 and beyond.
Streamlined Hiring Process
This is a trend that has proven consistent over the past 5+ years, as a more mobile and connected workforce seeks hiring processes that meet them where they are. Beyond the discussion of virtual - or remote - working, virtual hiring processes from the start of the candidate journey through onboarding are here to stay. Expect technology to drive this trend even further as companies employ automation, screenings, and even artificial intelligence in their hiring processes. As always, the focus on a streamlined process is going to be key to avoiding the dreaded candidate “ghosting” and subsequent fallout.
If the start of the latest Congressional session is any indication, we’re in for another year of tumult in varying aspects of the U.S. and global economies, and the labor market is going to play a key role in how Americans feel the country is working (or not) for them. At Source2, we’re always closely monitoring the latest trends and investing in the tools that provide a competitive advantage to employers looking to attract the best talent to the companies. Reach out to a Source2 Executive today to ask about how your company can leverage Source2 to drive talent acquisition successes.