Labor Market Trends
The U.S. labor market continues to be a major headache for business leaders. Current job openings continue to outpace unemployed individuals despite millions leaving or those forced to leave during the pandemic. In addition, low labor participation rates have contributed to less productivity and greater inflation, major issues plaguing the U.S. economy.
Despite this, there is finally some good news. The rise in labor force participation could mitigate the labor shortage and alleviate some of the building inflationary pressures. It’s worth watching how the Federal Reserve responds to these developments, as it will contribute to whether the U.S. enters a deeper recession or experiences a softer landing.
The U.S. labor market continues to be a source of concern. Companies must have strategies to navigate the challenges presented by inflation, the potential for a recession, and changing consumer spending patterns. Here are three approaches that can help businesses retain and acquire top talent. Simultaneously they can help businesses proactively adapt to changes in the job market, and stay competitive in an evolving business environment.
NOW IS THE TIME TO ATTRACT TECH TALENT FOR LABOR MARKET
Mass tech layoffs are only a part of the story. Other sectors outside of tech are ramping up recruitment efforts. It’s puzzling: If the economy is headed toward a recession, why are many industries still hiring and growing?
It’s because consumer spending on services—including car rentals, hotels, and transportation—is surging in demand as these industries recover from the pandemic. As a result, job opportunities continue to grow even as the economy slows down.
Industries like clean energy manufacturing, semiconductor manufacturing, pharmaceutical, and healthcare are also experiencing high levels of growth as they adjust to a new normal. Some of the fastest-growing occupations in data processing, hosting services, semiconductor manufacturing, mental health services, and pharma manufacturing are all experiencing an increase in demand—and wages.
DOUBLE DOWN ON UPSKILLING HIGH-POTENTIAL EMPLOYEES
During a recession, companies may be forced to make difficult decisions about workforces, including implementing layoffs or hiring freezes. However, another path could be for organizations to focus on upskilling their high-potential employees instead of letting some go. This helps the business retain valuable talent, a top priority for CEOs in 2023. It also prepares employees for new opportunities within the organization, positioning them for future success.
Investing in employee development can also help the organization stay competitive and adapt to market changes. In the long run, upskilling high-potential employees can lead to improved productivity, increased innovation, and a stronger, more resilient workforce.
ENGAGE FREELANCE WORKERS TO FILL SKILL GAPS
A third of HR leaders plan to increase their freelance budget in 2023. Supplementing the workforce with contingent workers can help companies meet their workload needs, boost productivity, and get tasks quickly done—especially to meet short-term or urgent needs.
Fortunately, the supply of contingent workers looks ready to meet the demand. Eightfold AI’s analysis estimates a 25 percent increase in contingent workers in the U.S. this year.
Sania Khan is the chief economist at Eightfold AI, the AI-powered platform for all talent, and the author of Think Like an Economist. She previously worked for the U.S. Bureau of Labor Statistics.
“The 3 trends shaping the U.S. labor market in 2023″
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