CoolWorks 2023 Employment Outlook
As we dive into a New Year, we thought we’d share our thoughts and predictions, based on what we hope are reasonable assumptions. Of course as with all attempts at forecasting and modeling for the future, we may look back and realize we were totally wrong, exactly on point, or probably somewhere in between. But that shouldn’t stop of us from making some educated guesses. So, please take our guesswork with a grain salt, and if you’re up for considering some speculative outcomes, read on!
Easing of labor shortages will be concentrated to select industries
You’ve likely been seeing the headlines lately: “Google to layoff x% of staff”; “Microsoft cuts x% of workforce”; “Salesforce to downsize x% of employees”; “Amazon will layoff (an eyepopping number).” You get the idea. And do you a see a trend? These are all major tech companies with tens (or hundreds) of thousands of employees.
Another fact that applies to these companies is that all of them largely retained their workforce during the pandemic, and when real interest rates turned negative and their stock prices surged in 2020 and 2021, they seized the opportunities made available by historically cheap capital, and went on hiring binges. However, the cheap money has evaporated, and current efforts to control inflation, primarily higher interest rates, have had two effects that have largely impacted the tech sector: higher borrowing costs and lower equity prices, which have created a financial squeeze that has necessitated these large rounds of layoffs.
So far, the layoffs have been largely isolated to those sectors that saw the most high-flying growth through the pandemic, and other sectors may not experience such dramatic decreases in job openings. Leisure and Hospitality still has not rebounded to its pre-pandemic level of 16.5 million jobs, and the sector is forecast to add 1.9 million jobs by 2031.
When it comes to the labor market as a whole in 2023, many economists are opting for the non-committal term of “normalizing.” And for good reason. On the one hand, there’s a chance we’ll experience a recession this year, which typically involves job cuts and layoffs across the economy and increased unemployment. However on the other hand, the US faces demographic shifts and a shrinking working-age population that is likely to contribute to long-term labor supply shortages. So, will hiring challenges ease in 2023? Most economists think conditions will moderate, but demographic headwinds may contribute to low levels of unemployment for years to come.
Skills-based hiring will continue it’s upward trend
During the Great Recession of 2008-2009, a trend dubbed “degree inflation” crept into job requirements as employers, with a seemingly endless supply of candidates competing over their positions, began adding, or increasing, college degree requirements to jobs that didn’t require them prior to the economic crash.
Today, we’re in a much different place, although some employers have not adapted. (Now’s a good time to make sure your job descriptions don’t require a master’s degree and 5 years of experience for your entry level positions). As hiring conditions have tightened, employers are realizing that arbitrary education requirements are not necessarily the best predictors of candidate success in their positions, and so are retiring the degree based requirements and are adopting skills-based requirements.
Job descriptions and interview questions are examples of hiring content that tend to gather dust and suffer from neglect. After all, it takes a fair amount of tedious effort to draft, revise, and finalize these rather dry materials. Still, regular review and revision are necessary to make sure you’re not targeting the wrong candidates and repelling the right ones. You know what it takes to succeed in the positions at your organizations: do your job descriptions and interview questions help you attract and screen for those candidates? As skill-based hiring remains a dominant trend, take some time to look over how you’re talking about your positions and how you’re learning more about interested candidates in your conversations with them to make sure you’re not screening out qualified candidates because they don’t have certifications they don’t really need.
Quiet Quitting has been around for decades – and will continue
Quiet Quitting made quite a splash in 2022 and caused a bit of an uproar. But here’s the reality of this phenomenon: it’s been around for decades before a TikTok video made it a national conversation topic. It’s just a new name for burnout and disengagement, an employee feeling apathetic or despondent, often as a result of feeling overlooked or unheard in their workplace.
Most importantly, quiet quitting is an outcome. By and large, employees don’t show up at a new job with the resolve to do the bare minimum to get by. They often arrive excited to learn new skills, meet new people, contribute their knowledge and expertise, and grow as individuals. The feelings of disengagement and apathy are generally the result of having their input or feedback ignored, observing that their efforts to go above and beyond – either by themselves or their colleagues – are met with indifference by their managers or supervisors, and arriving at the conclusion that opportunities for learning, growth, and advancement will not be available to them.
Employees will always need to feel engaged, respected, and heard in order for them to feel connected to and fulfilled in their work, but employers can combat burnout and disengagement and help their teams achieve their greatest potential by deliberately fostering an environment of respect, feedback, and appreciation. If you’re looking for some ideas of places to start the conversation, the Society for Human Resources Management cites the following 3 reasons as top contributors to employee engagement:
- Fairness for all employees
- Increased focus on employee development
- Connecting employees to purpose
Regardless of whether any of these predictions hold true in the year ahead, one thing we hope proves true for all of you is that you find great employees, build strong teams, and successfully create a culture where every individual feels included and appreciated.