In today’s labor market, there are more jobs than jobseekers. Find out why!
For the past 2 and a half years, the U.S. labor market has seen a strong demand for workers, with the number of open positions numbering in the millions. Even though job openings fell to approximately 8.8 million as of July 2023, there’s still more jobs than job seekers.
Due to this, enterprises continue to experience staffing shortages across all levels of their operations.
To address this situation, firms must come up with effective solutions for their staffing problems.
To do that however, these organizations must understand the factors that led to the labor shortage in the first place.
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An Aging Population and Forced Retirement
According to an Axios article, “more and more Americans are getting too old to work.”
Based on the news website’s research, the percentage of workers aged 55 and above has doubled over the last 20 years and while older Americans can still work, they will retire at some point.
Additionally, it’s been found that improved life expectancy is expected to lead to a decline in the working-age population in countries like the U.S.
Aside from the demographic changes mentioned above, forced retirement is another factor that led to a decline in labor force participation.
More than 3 million adults in the U.S were forced into early retirement at the height of the COVID-19 pandemic. As a result, the number of individuals aged 55 and older exited the labor force.
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Lack of Access to Childcare
According to research from the U.S. Chamber of Commerce Foundation and The Education Trust, between February and April 2020, the U.S. lost approximately 370,000 childcare workers. Due to this, service providers were forced to close or scale down their operations.
Because of what happened to the U.S. childcare system, workers were forced to give up their jobs in order to take care of their families.
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A Decrease in Immigrant Participation in the Labor Force
According to data from the U.S. Census Bureau, only 247,000 immigrants migrated to the country between 2020 and 2021. This is a huge drop considering that over 1 million individuals moved to the nation between 2015 and 2016.
The steep drop in the number of immigrants can be attributed to stricter immigration laws that have been put in place throughout the years. Due to this, it’s become more difficult for foreign-born workers to move to the U.S. and work since they have to undergo a strict screening process for both their citizenship status and job permit.
Policymakers, businessmen, government officials, and researchers have argued that immigration could hold the key to solving the U.S.’ labor shortage. According to them, foreign-born workers can easily fill the open positions in the jobs market if it’s easier for them to secure their immigration status and acquire work permits.
Unfortunately, the federal government has yet to act on this recommendation.
The reasons stated above are helpful in understanding the labor shortage that persists in the U.S. jobs market today. However, knowing why there are more jobs than jobseekers is only half of the equation.
For enterprises to truly thrive in a jobs market that’s hungry for talent, they must implement measures that would enable them to operate in this type of labor environment.
In light of that, here are a couple of measures organizations can take:
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Conduct gap analysis and skills assessment.
Gap analysis enables firms to identify the parts of their business that need further development. Once the data from this process is gathered, organizations will have a clear picture of the areas they need to work on.
The next step is assessing the types of talent the firm needs.
This is where skills assessment comes in.
Simply said, this measure enables organizations to identify the types of talent that are needed from both a strategic and operational standpoint.
A skills assessment is a three-pronged process that includes inventory, budgeting analysis, and data visualization. By making use of this method, firms can simplify the hiring process, thereby making it easier to engage with and acquire talents.
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Make use of contingent labor.
According to data from a 2022 MBO Partners study, 67% of corporations are expected to increase their use of contingent labor moving forward.
MBO Partners defines contingent labor as “all non-permanent workers, including temporary agency workers, internal temporary workers, freelancers, independent contractors, and statement-of-work consultants.”
Searching for full-time talent that can fill critical roles in a tight labor market is a challenging endeavor. Because of this, it’s better and more efficient for enterprises to fill their skills gaps by engaging with independent contractors on a case-by-case basis.
This way, firms can meet their business targets regardless of the situation in the labor market.
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The trends we discussed about the state of today’s labor market can be explained through Return Driven Strategy’s second foundation: Vigilance to forces of change. According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven”:
“Forces of Change can rock the business from all directions. Some forces of change are slow and predictable; some are sudden and unexpected. Others appear to be random.
The fact is that Forces of Change drive the risks and opportunities of all businesses. How well management understands and manages these risks and opportunities will determine the firm’s success or failure.”
Despite today’s uncertain economic climate, companies across all industries are eager to expand their operations in order to meet their business and growth targets. Due to this, the demand for manpower surged at such unprecedented levels.
Unfortunately, there are more jobs than job seekers due to the factors we discussed above.
So, if you want your business to thrive, take note of the insights we shared with you as these will enable you to effectively navigate today’s talent-starved labor market.
If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.
Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.
Hope you found this week’s insights interesting and helpful.
In a past “Return Driven Strategy” article, we talked about the importance of maps for sailors and how this concept applies to the business sector as well.
Learn more about the eighth tenet of the Return Driven Strategy framework in next week’s article!
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