It’s that time of year when business leaders forecast and budget for the New Year. And that means pulling out the crystal ball to try to predict trends and prepare contingencies. We’re all watching the Fed raise interest rates to try and control inflation. Depending how hard the Fed pulls the interest rate lever, it could impact jobs and the gig market. Here’s what we’re watching for the New Year in terms of 2023 staffing trends.
What to Watch in 2023
The most recent jobs report in September shows the unemployment rate edged down to 3.5%. That sounds positive until you start peeling back the details related the current post-pandemic, economic landscape.
Headlines this year addressed increasing pay rates resulting from a decreased job seeker talent pool. Where did people go? A September New York Times article dissects this question. The deep dive into data shows:
- More women are returning to the job market than men.
- College-age students are job hunting at a pace on par to pre-pandemic times.
- People of retirement age who were staying in the workforce dropped out at disproportionate rates and haven’t returned.
- The gap in number of workers seeking jobs is down due to COVID-related deaths, with some 260,000 working aged people dying.
- And, a report from the Brookings Institute released in January 2022 shows some 16 million people have long-COVID with about four million leaving the job market.
This year has been focused on pandemic recovery. With less people seeking jobs, it seemed to be a buyers’ market. In March, a record 11.5 million jobs were available due to businesses reopening, returning to workplaces and the public becoming more comfortable returning to travel. The jobs open rebound appears to be falling with the August BLS report showing 10.1 million open jobs. What do all these stats and facts mean for the New Year?
A shrinking economy historically does not add jobs. Those of us who lived through the 1970s painfully recall high inflation and an aggressive Fed that rose interest rates, which hit 20%. By the early 1980s inflation fell to 3%. But jobs were a causality with nearly 4 million people becoming unemployed. We hope the current Fed board keeps this in mind as they try to control inflation.
2023 Staffing Trends
Looking back through history and recent years, our team see three key staffing trends on the 2023 horizon.
Workers will reenter the job market: Bureau of Labor Statistic data shows the number of people who want a job has increased from February 2022. At that time the level of 5 million. The September report shows 5.8 million job seekers. Shortages for skilled and semi-skilled labor will still exist, but I think shortage will be impacted by expiring state COVID assistance measures. As extra benefits continue to conclude, more workers will need to re-join employment rolls.
Wage increases will plateau: As recession takes a firmer hold of economy in 2023, wage increases will start to plateau with limited growth. The cost of wages increasing is one factor behind inflation. Coming out of pandemic lockdown, the demand for workers was high and employers increased wages to lure new talent. As the economic figures in this article outline, the number of jobs open is falling. This limited growth will support steady wages.
Staffing partners will fill peaks: During a recession, business leaders look at line items to determine how to manage finances. Too often, headcount is cut with employers trying to do make do with less people. Company leaders who might need to downsize the workforce will use staffing partners labor to fill in the “peaks” within their revenue flow. Start those conversations with a staffing partner early to be prepared.
LGC has been making temporary and permanent placements since 2003. The expertise we’ve gained over the last 20 years makes us the right staffing partner for a variety of industries. Reach out to us today to learn how we can supplement your 2023 hiring plan.