Intelligent Hiring Helps Balance The Supply And Demand Of Hourly Workers
The world is experiencing the largest workforce shift since the Industrial Revolution. Unfortunately, companies and individuals are woefully unprepared. While more companies are seeking hourly workers to fill skills gaps or replace employees who have been laid off, there are massive process and people-related inefficiencies that prevent businesses from securing the talent they need
On the process side, organizations struggle to find the right talent because there’s so much friction in their traditional workflows. For example, the HR information and the applicant tracking systems they use are expensive and were not designed for rapidly changing economic trends.
Meanwhile, many hourly workers are so frustrated with their jobs that they’re not committed to their employers. In fact, we recently found the average hourly position must be refilled an average of nine days later. Also, minimum wages have not kept pace with inflation.
The reality is that America’s labor market faces a talent crisis with or without a recession, given a population growth rate of 0.1% and that the net migration level has decreased by 75% since 2016. Migrant workers are essential for some businesses that depend on hourly labor to stay profitable. In addition, many Americans refuse to do some of the jobs migrants typically do, such as farming, construction and service occupations.
Labor-Related Inefficiencies Cost Businesses And Their Customers
Labor-related inefficiencies impact a company’s profitability and customers alike. Businesses struggle to find “the right” talent because they lack access to the data they need to do so. There are also mismatches between job descriptions and what workers do, which causes churn. Further, the talent shortage is affecting business operations across industries.
For example, management consulting firm Korn Ferry expects the talent shortfall to become a chronic problem in 2022. By 2030, the consultancy predicts more than 85 million jobs could go unfilled because there are not enough skilled people to take them, which the company describes as “the 8.5 trillion talent shortage.”
In July 2022, there were approximately 11.3 million open jobs in America, according to the Bureau of Labor Statistics. Just two months earlier, the bureau reported the unemployment rate remained flat for four months at 3.6%—or 5.9 million people—roughly half of the labor supply necessary to fill all the open positions. Baby Boomers, especially women, are retiring early, making the supply-and-demand problem more acute.
As a result, some businesses, such as grocery stores, must offer higher-than-average wages just to acquire talent. Those costs are trickling down to consumers and making inflation worse.
Fundamentally, businesses need a more efficient way of identifying and screening talent. Conversely, job seekers need a more efficient way of finding the jobs they want. In the future, we expect HR software and platforms to dynamically track hourly worker supply and demand in real time.
The Pandemic’s Effects On Hourly Workers
The pandemic had an uneven effect on businesses. While many struggled to survive, others faced an unprecedented demand for their products and services. Businesses in the hospitality, manufacturing, and retail industries were hit especially hard by lockdowns and the general social anxiety caused by Covid-19. For example, many Americans shopped online instead of eating out and traveling during the pandemic, creating greater demand for last-mile delivery services like Waitr and Foxtrot. Meanwhile, the demand for medical professionals surged to combat the health crisis.
Finally, hospitality, manufacturing, and retail industries are bouncing back, though not yet to pre-pandemic levels due to inflation and recession fears. Some of the companies in those sectors and others are trimming their full-time staff and replacing them with hourly workers because they can reduce overhead and increase organizational agility. For instance, Elon Musk announced a 10% reduction in Tesla’s salaried employees in late June. As part of the announcement, Musk stated the net headcount reduction would only be 3.5% since Tesla is replacing the outgoing salaried workers with hourly and semi-skilled workers.
Our July 2022 predictions report, which is informed by our platform data, showed a definite shift to semi-skilled labor in June 2022, as evidenced by hiring and job growth of 171%. We expect this trend to continue. The highest growth semi-skilled positions include nurses, pharmacy technicians, mechanics and Class A truck drivers.
When considering replacing salaried employees with hourly workers for greater organizational agility, note hourly workers can be scaled up or down faster than full-time or part-time employees, despite the high turnover. If a company has not used hourly labor just yet, now is the time to consider the benefits.
The War For Hourly Talent Will Continue
With twice as many jobs available than people to fill them, organizations need to focus on retaining talent so they don’t lose it prematurely. Much to my surprise, our platform data revealed some businesses are refilling the same position 25 to 30 times per year, which disrupts the flow of business and increases overhead costs resulting in profit loss.
To avoid such a fate, organizations need several insights, including what competitive wage metrics are in a specific zip code, even down to a specific street address, how long a candidate’s commute will take and whether the candidate has been offered other opportunities by competitors.
During the Dot-Com Bubble and the Great Recession of 2008, there were massive layoffs, but comparable layoffs have yet to affect 2022’s labor economy. Nevertheless, business owners and executives are starting to panic when they should be focused on accessing a sustainable pool of talent.
Bottom Line
The best way to navigate around hourly labor supply-and-demand mismatches is to have the data necessary to make informed decisions. In our experience, businesses can be more competitive when they’re able to leverage AI and analyze the hiring practices of hundreds of thousands of companies across tens of thousands of U.S. cities and towns. It takes the guesswork out of finding the talent they need, and they can fill positions with qualified candidates faster and at a lesser cost per acquisition.