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Worker shortages due to the Covid-19 pandemic may be a thing of the past, but that doesn’t mean the job market is exactly like it was in 2019. Some trends have accelerated and new ones have been set in motion. Here’s what to pay attention to as you plan your staffing needs.
Remote work is stabilizing
According to the latest census data, 30% of Americans aged 18 and over spend time working from home. Among those aged between 25 and 54 – the best working years – the percentage rises to 38%. About half of these people work from home five days a week.
These numbers were much higher during the pandemic, but are now essentially stable. And while the data includes self-employed workers and others who may have worked from home before the pandemic, it still represents a huge increase. In 2019, the percentage of Americans working from home was only about 6%.
With so many people expecting remote and hybrid ways of working, companies will have to rely more on flexible schedules, split positions and job sharing to fill their payrolls and meet their goals. Additionally, training workers to fill multiple roles will become more valuable, so that production can continue regardless of who is in the office or factory.
Related: Where will the economy go next? What to watch out for in 2024
The churn rate is finally slowing down
In 2020, the average tenure of American workers – the time spent in their current job – fell to 4.1 years, the lowest number since 2008. Both of those years included recessions, in which more people were losing their jobs. But the recent low has persisted into 2022, thanks to people switching jobs and increasing their pay in a tight job market.
This is all changing now. In January, the percentage of workers leaving their jobs fell to 2.1%, the lowest rate since 2018, after peaking at 3.0% most recently in April 2022. The hiring rate also dropped. back to 2018 levels. The sum of these rates tends to peak around 6% in a normal economic cycle, as was the case in 2005 and 2019. Both employers and employees are now showing more caution.
Indeed, less churn – fewer hiring, fewer firing – means uncertainty. And despite the economy’s strong fundamentals, an outsider might see a couple of reasons for concern: a contentious presidential election coming later this year and a stock market that appears overvalued by historical standards. Even with a low unemployment rate, workers are no longer as eager to relocate.
From a business perspective, this is a great time to invest in existing employees. Since workers are less likely to leave, returns to training are more likely to stay within the company. It’s also a good time to launch projects that require a team to work together for the long term. Companies are increasingly hiring flexible workers for long-term assignments rather than one-off shifts. On the Instawork platform, where I work, the share of shift bookings for long-term assignments has doubled in the last six months.
Related: These 5 economic trends will drive consumer spending in 2024
Wage rates are stabilizing
Although the unemployment rate is up only half a percentage point from its lows, job opportunities are down by about 25%. The labor market is gradually loosening and wage increases are starting to decline. These increases peaked at around 7% year-over-year in July 2022, but have now fallen to around 5%, just a couple of percentage points above inflation.
Wages usually rise a little faster than inflation due to the increasing productivity of workers. Indeed, we may see unusual productivity gains in the near future as AI spreads throughout the economy; the same thing happened when the internet, mobile telephony and fiber optics arrived on every worker’s desk. Pressure on wages could therefore return soon, albeit for different reasons.
With inflation largely under control and wage increases moderating for now, forward-thinking companies will be thinking about locking in labor costs for the next few years. Companies with union labor can do this through contract negotiations, while other companies can do this by setting pay scales and planning cost-of-living adjustments.
Older people are leaving the workforce again
In November 2023, the share of people aged 55 to 64 who were working reached an all-time high of more than 66%. For several decades, increasing life expectancy had led people to extend their careers to stay active and finance their retirement. The trend reversed during the pandemic, thanks to health concerns and a rising stock market, among other factors. But then higher costs from inflation and interest rates pushed older adults back into the workforce.
And now the trend could reverse once again. In December, this rate fell by more than half a percentage point, the largest drop since 2010 outside of the pandemic. With the stock market hitting record highs again, inflation falling and interest rates poised to follow, there’s less pressure on people to delay (or get out of) retirement.
Related: The 12 Best Jobs for Retirees and Seniors
Additionally, a significant share of older adults who remain in the workforce choose flexible jobs rather than full-time jobs. The average age of professionals working shifts on the Instawork platform in February was 38.5 years old, with 8.4% of shifts completed by professionals aged 55 or older. This percentage has returned to the level it was five years ago, before the pandemic.
This is an important insight for recruiters. The most experienced talent in the job market has not disappeared; you just need to access it in a different way. By offering flexible hours and temporary positions, companies can still hire older workers to guide and mentor younger staff. The job market is still quite tight and it is essential to exploit every possible source of talent.