In light of current labor challenges, we asked David for his input and experienced insight on what factors are really impacting the labor market and what companies’ responses should be.
When you founded Source2 more than 20 years ago, the economy and the labor market were in a very different place. How has Source2 evolved with the times?
We’ve always considered ourselves to be flexible to our client’s needs. What we found is that being highly agile is actually a competitive advantage. Evolution-wise, I’d say we’ve done a good job of keeping ourselves and our clients up to date on constant changes in labor market supply and demand, generational changes in candidate behaviors, the importance of technology in recruiting, and the need for speed.
The pandemic has undoubtedly affected the labor market, but how many of the current challenges do you think were pre-existing?
For years now, many companies have not operated at full capacity in realizing their full revenue potential and customer demands. The pandemic only accelerated existing trends and conditions. Staff shortages result in lost opportunities, increased overtime expenses, and fatigue of existing employees, which leads to even higher turnover. While a recession or other economic slowdown could provide a temporary increase in candidate supply compared to demand, larger initiatives are necessary to get to the root of the issue for a long-term solution. There has been a steady decline in workforce participation for decades due largely to the retirement of the Baby Boomer generation and a broken immigration policy.
Are there generational trends employers should be factoring into their talent acquisition needs?
Employee turnover remains high, especially in the core age demographic of 30-45 years who likely make up a company’s most productive employees. Plus, in younger age demographics, the attitude toward work and career has changed. These populations are more likely to change jobs frequently to advance in title or compensation or to accommodate their desired lifestyle, and though seeking a better work-life balance isn’t a bad thing, the negative side is higher resignation rates, low overall tenure, and higher no-show rates for interviews and work in the first 90 days.
As I mentioned earlier, more people are retiring at a faster rate than previously in history, and for every person who retires, we lose a worker. We all know that Baby Boomers are retiring, but it’s happening at a faster rate, up approximately 50%. While a small percent of retirees are returning to work due to inflation, the numbers are still staggering for those age 55 and older. In 2008, one million people retired from the workforce, whereas in 2020 that number was 1.75 million.
In this ever-evolving labor landscape, what new challenges have emerged that employers need to consider?
People are increasingly seeking work-from-home (WFH) opportunities. Jobs where WFH is possible now account for 45% of all positions in the U.S., and WFH has increased from 23% pre-pandemic to 59% in 2022. Parents continue to face sporadic staffing challenges at daycare centers, and WFH helps alleviate this problem. Further, online learning is up 60% versus pre-pandemic. Where this has an even greater impact is on employees making a career change who can take advantage of the WFH benefits: A WFH position in customer service with flexible scheduling is a more appealing opportunity than a hospitality position working nights, weekends and holidays.
Beyond work-from-home positions, the delivery revolution has had a dramatic impact on candidate supply, particularly for manufacturing, field services, and trade industries. It’s been stated that Amazon’s appetite for hiring and growth is comparable to the shipbuilding industry during World War II.
And on top of all of this, immigration policy of the last several years has reduced the labor pool by over one million people, and this significantly impacts the available number essential workers.
With all this to consider, where you do you think companies’ talent acquisition efforts should be focused right now? What are the best solutions?
This is my 34th year in the industry and 23rd at Source2, and I must say, I’ve never seen a labor market like the one we’re in today. It’s extremely competitive across all industries and skill sets, and it isn’t necessarily working in parallel with economic factors at this point. My advice to any company is to sharpen your employment value proposition and make sure your talent acquisition function is tech-driven, scalable, and reduces the company’s lost opportunities. That’s the best solution. A fully staffed company is a powerful weapon, more now than ever.
If your HR and talent acquisition teams are feeling overwhelmed or you’re searching for more scalable solutions, a partnership with Source2 could make sense for you. Connect with our executive team at email@example.com for more information and to discuss the specifics of your business situation.