We are currently living through the most challenging labor economy of our lifetimes — and it’s only going to get worse. Take a look at a few key statistics to illustrate the current state of the labor market:
- There are currently 11.2 million open jobs for fewer than 5.7 million available workers.
- We are seeing the sharpest decline in U.S. labor force productivity since 1947.
- Annual inflation is at the highest rate since 1982.
- The cost of rent is at an all-time high.
- Current labor force participation is at the lowest rate since 1977, a 45-year low.
Rahkeem Morris, CEO of HourWork, recently hosted a discussion about the current state of the labor economy. Here are a few key takeaways from his presentation.
“The primary problem that we’re seeing is there are far more jobs than there are workers to fill them — this was an unthinkable problem even just a decade ago, when economists were more worried about the opposite prospect, that technology would eliminate so many jobs that even those who wanted to work wouldn’t be able to do so,” he explained. “There are far too few workers in the U.S. to meet rising demand, a problem exacerbated by an aging population, low birthrates, and stifled immigration. It could become one of the biggest economic challenges of the next several decades.”
Employee Compensation Struggles To Keep Up
Another key problem we’re seeing in the labor market is that compensation increases are not keeping up with inflation. In fact, compensation increases have outpaced inflation only for leisure and hospitality workers.
“The hospitality industry has experienced the largest increase in wages, about a 15% increase in the wages that people are receiving are in leisure and hospitality,” Morris said. “When you factor in inflation into wages and salary, every single industry has experienced a decrease in their real compensation. Their take-home pay, their purchasing power as consumers, has decreased for every single industry, except for leisure and hospitality.”
Although wages may be growing slightly in leisure and hospitality, those industries are still experiencing historic job loss and unemployment rates in the aftermath of the COVID-19 pandemic.
“You can only increase wages so much, and these are penny-pinching businesses,” Morris said. “And so, what they’re experiencing right now is not being able to increase their wages anymore, and so someone must come in with a cost-effective way for them to be able to manage labor.”
A Shifting Workforce
In the post-COVID-19 economy, a lot of people are turning to gig work, including working for transportation companies like Uber, Lyft, and DoorDash.
“The jobs that have experienced the highest levels of permanent worker increases are in transportation,” Morris said. “Think about things like Amazon Prime and the people who deliver those packages. Also, things like DoorDash and InstaCart. Even though we are not stuck inside anymore like we were during the pandemic, those habits are hard to change, and people are now used to a much more convenient way of accessing all their goods and services.
The Worst Is Still To Come
Although the current labor market is experiencing historical problems, Morris believes the worst is yet to come.
“It’s bad now, but it’s only going to get worse for labor in the U.S., he said. “There’s a whole host of reasons for that, including an aging population, and Covid also meant that people are having fewer kids and an overall restructuring of where people are working.”
Morris feels optimistic that HourWork can play a pivotal role in helping people navigate this challenging workforce.
“We’re in an industry where we could not have timed it any better than what we have done with this business,” he said. “I’m extremely optimistic for all there is to come and what this company has to offer employers trying to grapple with the new normal of the job market.”
HourWork makes recruiting hourly employees easy and fast, doubling employers’ applicant flow by maximizing their existing talent pool. We’ve also built the best retention system on the market so you can stop employee turnover in its tracks. This system works to uncover what matters most to your employees and automatically checks in at key milestones. It improves employee retention by 30% through the use of automated services like pulse surveys to check in with employees, 1:1 with your team members, and exit surveys. Contact us today to learn more.