Workers Will Keep Their Power In The Job Market Despite Recession Fears, Study Says
Glassdoor and Indeed’s 2023 hiring and workplace trends report forecasts competitive labor market conditions enduring well beyond any near-term fluctuations.
(Bloomberg) -- Workers are set to have an upper hand in the job market as demographic changes make it harder for employers to hire and retain staff, according to a new study by economists at Glassdoor Inc. and Indeed Inc.
An aging population and reduced immigration have led to a smaller pool of workers overall, according to the joint report, which analyzed employment trends across the US, Canada, France, the UK, Germany, Australia, Japan and China. As a result, staffing in certain industries will remain challenging for years to come.
Fears of a potential recession next year may temporarily curb businesses’ hiring in the short term, the report said, with recent mass layoffs at tech giants like Meta Platforms Inc. and Amazon.com Inc. sending shockwaves through the industry. But long-term effects are likely to skew market power toward job-seekers, according to the study.
“In a moment like this, with so many headlines about layoffs, it perhaps feels a little bit weird to talk about long-term hiring challenges. But the reality is, it is precisely in moments like this when it's easy to lose the trees for the forest,” said Aaron Terrazas, chief economist at Glassdoor. “It’s easy to conflate the near-term cyclical with long-term structural challenges in the labor market.”
In particular, the effects of an aging workforce, already accelerated by the pandemic, are becoming more acute as the median baby boomer turns 65 this year. “The baby boomer retirement has been a slow moving train wreck for the past 20 years,” Terrazas said in an interview. “The retirement crisis, in the background before the pandemic, suddenly landed.”
Moreover, workforce-age populations are expected to shrink dramatically in the US, UK, Canada, Germany, France and China, with the report noting, “the stage is set for constant recruiting challenges.”
Despite speculation earlier this year from economists that inflation would force some baby boomers back into the job market, it hasn’t held up, Terrazas said. A recent study from Indeed found that the rate of retirees re-entering the workforce had slowed, even as new retirements continued to increase.
This population shift is compounded by a drastic reduction in immigration. The US has an immigrant worker deficit of about 1.4 million relative to the pre-pandemic trajectory, Terrazas said. That means that hiring will continue to be a struggle for sectors like health care, food service and hospitality that tended to rely on immigrant labor.
As a result of these shortfalls, in order to remain competitive, the report’s authors write that employers will need to be flexible with in-office expectations for remote-capable jobs, offer attractive pay and benefits, cultivate a healthy company culture and renew focus on diversity, equity and inclusion initiatives.
“It's a scary moment for a lot of companies right now. But the companies that are going to come out at the end of whatever is coming in 2023 successfully are the ones who keep their eye on the longer term trends. You don't plan a business for next quarter, you plan a business for the next 10 years,” Terrazas said. “And so these moments of crisis, these moments of fear, are actually the ideal moments to think about: What are people overlooking? What's going to happen after the fire is out, after the immediate urgent needs are met?”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.