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EARLY TAKE ON THE EARLY STAGE OF "POST-PANDEMIC" LABOR MARKETS

EARLY TAKE ON THE EARLY STAGE OF "POST-PANDEMIC" LABOR MARKETS

Although it is too early to describe the end of Q1 2021 as truly “post-pandemic,” we thought we’d take this opportunity to share some observations regarding what we are seeing at this point in today’s labor markets. Some of these changes may, in fact, be enduring others may be temporary. But we are seeing several trends that speak to a different environment than the one we experienced prior to the pandemic i.e. January 2020.

  • Explosive demand for both permanent placement and loan staff services – although we expected to see companies react to increased economic activity with a push to re-hire, the demand picture has exceeded our expectations. How long this will last is anyone’s guess but in light of the increased rate of vaccination activity coupled with fiscal stimulus we expect to see more demand for resources not less. We suspect this increased activity is also responding to an over-reaction by many companies in 2020. This over-reaction consisted of a rapid, and in hind sight, likely excessive reduction in staff levels. Companies are now scrambling to play catch up as demand reemerges and projects get new priority. Interestingly, the demand picture applies to both permanent placements and project-based loan staff assignments.
  • Demand applies across the board – the demand picture is broad and deep. We are seeing needs in the middle market, small company and large public company sectors. We are also seeing demand in manufacturing (our core constituency) as well as service industries. In addition, we are seeing demand at all levels of the organization chart. This includes COOs, CFOs, controllers, senior accountants, tax accountants, human resource professionals, to name just a few. Anecdotally, we have heard frustration from long time clients regarding their inability to attract resources in this environment.
  • The labor supply is constrained – recent reports have documented the exit of many professionals over the age of 55 from the workforce and the difficulties women are experiencing in the current environment. According to the Wall Street Journal, labor participation rates for those over 55 have declined from 40.3% in February 2020 to 38.3% in February 2021; a reduction of about 1.45 million people from the labor force. It is possible that many of these prospective employees have simply moved on to retirement. Women have experienced a massive disruption in their ability to work much less consider new opportunities. According to a recent report from Gallup, labor participation rates for women have declined from 59.2% in February 2020 to 57% in February 2021, a reduction of 2.3 million people. Not surprisingly, the greatest reduction was among women with children. This critical segment won’t recover until schools are fully open. Accordingly, two important sources for companies, professionals over 55 and women (particularly those with children), are significantly constrained.
  • Not all have adjusted their work attendance model – we have had several conversations with clients who expect staff additions to work on site, full time if not now then as soon as possible. While we appreciate the potential benefits of the full time in person approach we are also concerned that this does not recognize the reality of today’s environment. Many people are sincerely afraid to return to a full time, in person work schedule. In fact, many are reluctant to participate in face to face interviews. Others have had the experience of working remotely and enjoy it. They find themselves to be more productive and don’t miss the daily grind of commuting.
  • Companies must thoroughly re-think their labor value proposition – every element of why a new employee would join an organization needs to be re-considered. This includes work schedule, compensation, growth prospects, use of technology, mentoring, infrastructure, onboarding and training. How you professionally and competently perform candidate assessments and interviews in a remote world needs planning and technological support. Perhaps most delicate, how you onboard and assist in orienting new hires in a remote world needs thorough consideration. The remote model has massively disrupted the traditional mentoring approach which assisted new hires in climbing the learning curve, grasping the nomenclature, understanding the organizational dynamics, etc. Solving for this unknown is no small problem.

 

Originally published as a LinkedIn blog post.

04/08/2021

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