Today, March 3rd, is Employee Appreciation Day. As we celebrate employees and recognize the difficult work environment of the past several years, let’s take a closer look at the current state of play for today’s workforce and examine key takeaways that employers can incorporate in the new year.
Competing Trends
According to recent data from the U.S. Chamber of Commerce, there are roughly 2 unfilled jobs for every 1 unemployed worker in the United States. Unusually, however, this tight labor market isn’t necessarily a good thing—much of the gap can be attributed to plummeting labor force participation. In just 3 years since 2020, a record 2.8 million workers have left the labor force.
Simultaneously, a wave of mass layoffs is sweeping the U.S., as inflation remains stubbornly high and interest rates continue to rise. In tech, for instance, layoffs totaled a staggering 140,000 in 2022. So far in 2023, this number is already 120,000 and growing.
The New Normal
The COVID-19 pandemic accelerated mainstream adoption of remote and hybrid work models, and this trend is here to stay. A staggering 87 percent of workers considering a job change are interested in hybrid or fully remote roles. Among office workers, a third of employees say they are even willing to consider a pay cut if it means being fully remote.
Additionally, the freelance market has taken off, with the total size expected to climb from $4.43 billion in 2022 to over $12 billion in 2028. The number of freelance workers is expected to rise from 70.4 million to 90.1 million in the same period. As salaries fail to keep pace with inflation and the increasingly unaffordable housing market, more and more workers are tapping into the flexibility of freelance work. Younger millennials and Gen Z-ers now accept multiple streams of income as the norm. In fact, 48 percent of all Gen Z workers are freelancers, viewing independent work as more stable and less vulnerable to layoffs.
Emerging Technology
Over the past 2 months, news headlines and the internet have been buzzing following the release of Microsoft’s open artificial intelligence (AI) platform, ChatGPT. And while there are significant technology gaps that need addressing before such AI technology can be a true workforce disruptor, rumors are already swirling as to which jobs and sectors AI could render obsolete. From coders to content creators to financial analysts and even teachers, AI threatens upheaval of the labor force as we know it.
Key Takeaways
Retention
Make no mistake, the current business climate is far from ideal. With gaps in the workforce coinciding with companies’ need to cut back, retaining essential employees is more important than ever. If yearly raises and bonuses can’t keep pace with inflation or aren’t enough to satisfy the evolving modern worker, emphasis on enhancing the workplace experience and prioritizing targeted noncash incentives is essential.
Structured Flexibility
Freedom unchecked isn’t viable, but over-rigid, detached-from-reality, cookie-cutter office hours and work requirements aren’t, either. Companies must consider at least partial adoption of remote or hybrid work models, catered appropriately to different verticals and job functions. Workplace expectations are changing rapidly, whether the private sector likes it or not. Modern employees are willing to change jobs in a heartbeat—the current labor gap supports their ability to do so—if they detect an unwillingness from employers to at least meet them halfway.
Workforce Development and Upskilling
Between layoffs and emerging technologies, employees are increasingly seeking companies that offer meaningful development programs and opportunities for advancement. Data proves that employees will stick around if they are given the opportunity to continually learn and acquire new skills. In fact, this is one of the most sought-after benefits in the modern workforce. Whether disruptive AI technology will upend the labor force to the extent projected by some advocates remains to be seen, but it is a fact that workforce development improves retention, reduces turnover costs, and boosts loyalty.