It’s what Americans have been waiting for:
- Personal and disposable income is trending up .04 percent in May, allowing people to feel more comfortable spending on goods and services.
- Consumer sentiment is at a 3-month high, led by optimism about job growth and retention.
- Claims for unemployment benefits continue to drop to near-record lows.
- In most states, the labor market is considered fully tapped. Even the numbers of those considered long-term unemployed have declined. May unemployment figures were at an 18-year low.
Great news, right? Unfortunately, not for everyone…
For hiring managers with increasingly urgent personnel needs, positive jobs growth means a shrinking labor pool of permanent and temporary workers, leaving many small and large businesses desperate for help. Despite this positive economic news, could the tightening labor market end up hurting your business?
The demand for contingency workers
A bull stock market, moderate wage growth, steady employment, and tax reductions have resulted in confidence about our economy that consumers and businesses have not experienced in years. This translates into dollar signs for retailers, manufacturers, and value chain partners.
But with 6.6 million unfilled jobs in May, mostly in IT, finance, insurance, healthcare, and social assistance (BLS.gov), companies are competing for workers to fill white and blue-collar positions. Normally, these labor gaps are filled by the 5.9 million contingent, 2.6 million on-call, or 1.4 million agency contract workers (May 2017, BLS.gov report).
Contingent workers, or temps, account for between 1.3 to 3.8 percent of total employment, but their availability is receding as well. Many of these folks–jobless during the recession, or Millennial workers choosing short-term labor contracts to fit their lifestyles–now see the current situation is an opportunity to snap up full-time employment.
The American Staffing Association reported that staffing agencies had experienced demand not seen since 2007. Staffing jobs rose 1.8% in the four weeks ending 7/1/2018, and temporary employment demand ending June 17 was 1.3% higher over the same period in 2017, despite hiring conversions which hindered growth. What this means is that finding, and hiring, temporary and permanent workers are becoming increasingly challenging.
Don’t get drained by shrinking labor pools
Whether you are acquiring short-term or long-term human capital, making a hurried choice can be costly. Short-term workers fill an immediate need, and therefore, must add value right out of the gate. Long-term talent requires years of training, experience, and resources to inspire the kind of loyalty and productivity that results in a valued employee. Therefore, finding good workers and keeping them is especially important in a shrinking, competitive labor pool. Here are some things to try:
- Pay more to attract and retain. gov data shows average weekly wage increases being diluted by increases in the Consumer Price Index. With a wage growth of .03 percent, the real gain for the employee is only .01 percent after inflation. In real terms, there has been minimal salary gain since May 2017, stimulating churn as talented workers realize they have the upper hand in job negotiations. With the 21% reduced corporate tax rate and growth in capital investments, why not evaluate your salary and benefits packages to make them more competitive?
- Customize benefits. In addition to higher wages, nothing makes workers happier than customized benefits packages. So, respond to what is most important to workers by offering a menu of options. Younger workers want job flexibility, education loan assistance, growth opportunities, and healthcare. Older workers value retirement benefits, fitness, healthcare, and flexible hours as they wind down to retirement.
- Look from within. Older, more productive workers are retiring at roughly 10,000 per day. But allowing willing baby boomers to “sunset” can be a great option, as it retains productive folks longer while ensuring their valued experience gets transferred on to next-generation employees.
- Non-traditional labor pools are filled with untapped talent. These include the long-term unemployed (jobless for at least 27 weeks), retirees, the disabled, those with a GED, and people with minor criminal records (see our blog on Giving Ex-Offenders their Next Chance). Accessing these labor pools might necessitate additional vetting, including working with state unemployment, retiree organizations, and social services, but the payoff can be finding untapped skills and abilities as you help your community support the lives of disadvantaged workers.
- Plan ahead for labor shortages. Identify talented workers who only choose to work temporary jobs and keep track of them through human resources and your employment agency. Hire as available as part of your preferred short-term labor pool.
- Finally, find a reliable staffing agency that specializes in the type of talent you need. A professional employment agency spends its time sifting through industry-specific candidates for both short-term and long-term needs. A reliable partner like Partnership Employment can help you fill temporary jobs in data entry, reception, accounting, administrative, IT contract work, retail, warehousing, or inventory, to relieve the stress of labor shortages, and then work with you to identify the talented and skilled additions to your permanent workforce.
Bureau of Labor Statistics, (BLS.gov)
U.S. Commerce Department, Bureau of Economic Analysis (BEA)