4 ways the labor market is currently changing

4 ways the labor market is currently changing

The opinions expressed by Entrepreneur authors are their very own.

Labor shortages caused by the Covid-19 pandemic could also be a thing of the past, but that does not imply the labor market looks the same because it did in 2019. Some trends have accelerated and latest ones have been launched. Here’s what to contemplate when planning your staffing needs.

- Advertisement -

Remote work is leveling out

According to (*4*)the latest data from the General Census30% of Americans 18 and older spend some time working from home. Among people aged 25 to 54 – their prime working years – this number increases to 38%. About half of those people work from home five days a week.

These numbers were much higher during the pandemic, but are now largely stable. And while the data includes the self-employed and others who were in a position to work from home before the pandemic, it still represents a huge increase. In 2019, the percentage of Americans working from home was only about 6%.

With so many people expecting distant and hybrid work, firms will have to rely more heavily on flexible schedules, fractional positions and job sharing to fulfill their payrolls and achieve their goals. It may even turn into more beneficial to coach employees to perform multiple roles, so that production can proceed no matter who is in the office or factory.

Churn is finally slowing down

In 2020 average length of service of American staff – time spent in current job – dropped to 4.1 years, the lowest level since 2008. Both years saw a recession, during which more people lost their jobs. However, the recent low remained until 2022, because of job changes and wage increases in a tight labor market.

This all changes now. In January percentage of employees leaving their jobs fell to 2.1%, the lowest level since 2018, after reaching a high of three.0% most recently in April 2022. employment rate also dropped to 2018 levels. The sum of those rates typically peaks around 6% in a normal economic cycle, because it did in 2005 and 2019. Both employers and employees are now more cautious.

Indeed, lower worker turnover – fewer hires, fewer departures – means uncertainty. And despite the economy’s strong fundamentals, an outsider might see several reasons for concern: a divisive presidential election looming later this yr and a stock market that appears overvalued by historical standards. Even with a low unemployment rate, staff are now not as willing to relocate.

From a company’s perspective, this is an excellent time to take a position in current employees. Because employees are less more likely to leave, training returns are more more likely to remain with the company. This is also a good time to begin projects that require long-term team cooperation. Increasingly, firms even employ flexible staff for long-term tasks, somewhat than for one-off shifts. On the Instawork platform, where I work, the share of shift bookings for long-term orders has doubled over the last six months.

Wage rates are stabilizing

Even unemployment rate rose only half a percentage point from its lows, job offers decreased by roughly 25%. The labor market is step by step relaxing, and a wage increases they begin to drift away. These increases peaked at around 7% year-over-year in July 2022, but are now down around 5%, just a few percentage points above inflation.

Wages are inclined to rise barely faster than inflation attributable to rising employee productivity. In fact, we may see extraordinary increases in productivity in the near future as artificial intelligence spreads throughout the economy; the same thing happened when the Internet, mobile telephony and fiber optic cabling appeared on every worker’s desk. So wage pressure may return soon, albeit for different reasons.

With inflation more or less under control and wage increases slowing for now, forward-looking firms shall be considering locking in labor costs for the next few years. Companies that employ union staff can do this through contract negotiations, and other firms can do this by setting pay scales and planning cost-of-living adjustments.

Older people are leaving the labor market again

In November 2023, the share of individuals aged 55–64 working reached the highest level in history over 66%. For several many years, rising life expectancy has led people to increase their careers to remain energetic and fund retirement. During the pandemic, the trend was reversed, including: attributable to health concerns and stock market increases. However, higher costs attributable to inflation and rates of interest have forced older people back into the labor market.

Now the trend may reverse again. The rate fell by greater than half a percentage point in December, the largest non-pandemic decline since 2010. With the stock market again reaching record highs, inflation falling and rates of interest about to rise, pressure is on people to delay retirement (or come back from it).

Moreover, a significant proportion of older individuals who remain professionally energetic prefer flexible work to full-time work. The average age of execs working shifts on the Instawork platform in February was 38.5, with 8.4% of shifts accomplished by professionals aged 55 or older. This percentage has returned to the level of 5 years ago, before the pandemic.

This is vital information for recruiters. The most experienced talent on the labor market has not been lost; you only have to get to it in a different way. By offering flexible schedules and temporary positions, firms can proceed to rent older staff to mentor and mentor younger staff. The job market is still quite tight and tapping every possible source of talent is of the utmost importance.

Latest Posts

Advertisement

More from this stream

Recomended