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Labor Market & Workforce Projections for 2022 - Part 1

 
 

 

This blog is the first in a two-part series on HR & Labor Trends. Keep an eye out for the second part which will focus on remote work trends for 2022. 

Unemployment is down, inflation is up, and the supply chain continues to struggle across the globe. Meanwhile, many workers are still choosing not to re-enter the workforce, even after pandemic-driven unemployment benefits have ended. Still, others have exited the job market completely, such as those retiring early. As a result, businesses are increasing wages to try to entice workers back, but rising wages could mean that inflation sticks around longer, since wage costs generally get passed onto consumers. 

 

It’s a complex situation that’s leaving many industries asking: What does all this mean for the labor market as we head into 2022?

 

It’s a question particularly relevant to HR professionals tasked with staff planning. More than ever, it’s important to keep a close eye on the trends if you want to attract and retain the right talent, offer competitive benefits, and ensure your workplace meets modern expectations. Let’s get a quick lay of the land when it comes to the current employment landscape and then dive into what the experts are projecting for 2022 and how you can best prepare. 

 

The Current Employment Landscape

2021 saw tremendous job growth as the United States (U.S.) economy opened up and more companies, especially in the services industry, began to hire again. But even as employment in leisure and hospitality, personal care, and education grows, employment in other industries — like retail, business-related transportation, commercial banking, nonresidential construction, and international tourism — still suffers and may find it difficult to fully recover from the pandemic in the near term.

 

The pandemic has also led to a major labor shortage caused by huge consumer demand that can’t be met by a shrinking labor supply. Some workers are retiring, and large numbers of workers are reportedly quitting their jobs in search of better opportunities and a better quality of life. 

 

This has moved many employers to change job requirements. Some employers are also implementing a $15/hour minimum wage or providing higher salaries, or offering perks like sign-on bonuses and on-the-job training to get workers in the door. But as we’ve already seen, higher salaries can create additional economic challenges, such as adding to the current inflation concern. Another trade-off of higher salaries is that when more experienced workers no longer have the pay advantage they once did over new hires, they’re more inclined to leave, so there could be an increase in employee turnover as a result.

 

With federal unemployment benefits now over, more workers may eventually return to the workforce. But in the meantime, automation, process improvements, and digital transformation are playing a bigger role and allowing businesses to continue to operate with fewer employees. 

 

With so many variables in play, HR has a tough road ahead. Whether growing the workforce is your top priority or your goal is to maintain the one you have, there are indicators that will help you know where to focus so you can strategize and plan your staff effectively. 

 

What’s Trending for 2022

In general, a couple of the big labor trends from 2021 will still apply in the coming year. Think remote work opportunities and the greater flexibility afforded to many employees as a result of the pandemic. While those trends continue, here’s what else is likely to happen in the labor market in 2022:

 
  • Job seekers keep the upper hand. Qualified candidates have the luxury of entertaining multiple offers, and if you have a slow hiring process or one with too many hoops to jump through, you give candidates incentive to turn down your company and take a more attractive offer from a more agile business. 

  • Baby Boomers are retiring. More and more Baby Boomers are retiring, if they haven’t already done so, and this trend is likely to continue in the next year or two.

  • Hiring in economically disadvantaged areas opens up new avenues. Remote work will still be a big trend for 2022, but now it’s taken on new dimensions, such as hiring more workers in rural or economically disadvantaged areas. Doing so may open up a wider pool of talent and bring opportunities to workers who may otherwise not have considered the role and/or organization. 

  • Employee retention remains critical. With so many fluctuations in the labor market that may continue long into 2022, retaining the employees you have now is of topmost importance. 

  • Employee engagement is a differentiator. All kinds of curveballs were thrown at U.S. employees during the pandemic. Suddenly, worries about child care and education, access to health care, and the possibility of layoffs and furloughs loomed at the forefront of many people’s minds. For many, work seemed to have become just one of many priorities that had to constantly be re-evaluated, and some had to make the tough decision to leave work entirely. Engaging your employees by helping them find satisfaction and giving them a path to advancement, while still being able to balance work with life, can help set your company apart.

 

How HR Can Prepare for 2022

With a better understanding of what’s to come, you can lay the groundwork now to meet these trends head-on and ensure a more engaged and competitive workforce. Here’s how you can start to prepare:

 
  • Learn labor compliance across different states. Every state has its own employment laws. Get to know the ins and outs of each so you can hire remote workers in different geographic locations quicker and with more confidence — giving you a leg up over your competitors and helping you mitigate local labor shortages.

  • Update compensation packages. In the same vein, employing remote workers in different states requires wage adjustments. Determine the appropriate level of compensation that allows you to compete for talent but is still fair and sustainable for employees and your business. 

  • Get creative with recruiting. Standing out is key in a tight labor market that’s seen plenty of recent upheaval and worrying shortages. Don’t leave any stones unturned, which might require dipping into new, previously unexplored talent pools and offering more upskilling and career development to new hires. Whatever you can do to adapt recruiting practices now can almost certainly reward you later in an increasingly competitive job market. 

  • Plan for retiring workers. If you have a cohort of older workers eying retirement, start planning now for how you’ll manage when they do choose to retire and you need to fill the subsequent labor gaps.

  • Pay employees faster. With more workers living paycheck to paycheck, the demand for faster pay — such as weekly instead of monthly — is on the rise. One way to meet the demand is to adopt an automated payroll solution that can speed up the process and bring some financial peace of mind to employees. 

  • Rethink management practices. Traditional employee management is shifting toward managing the employee experience. Put the right tools and communication methods in place now that will enable managers to listen to employees, understand what matters to them, and provide positive workplace experiences and opportunities — instead of maintaining old-fashioned hierarchies and structures that tend to be rigid and one-directional. 

  • Make sure your workplace is relevant. It’s no longer just about salary. Today’s employees want to be motivated, perform work that aligns with their values, and be given lots of flexibility. They want to advance their careers and be given the support and respect to do so. Review your workplace culture, perks, benefits, and job postings now to make sure they reflect the changing world of work and the wants and needs of today’s workforce.

 

Stay Organized & Informed

If 2022 is anything like 2021, there may be some twists, turns, and surprises in store. Being able to clearly assess the current gaps in your staff and identify future needs, as well as respond quickly and effectively to change, is much easier with a workforce planning system. With access to real-time data about your workforce, you can better prepare for whatever 2022 may bring while ensuring your workforce stays aligned with business objectives and budgets.

 

The end of the year can be challenging. SyncHR is here to support you with efficient, accurate, and cost-effective workforce management solutions. To learn more about SyncHR, click here. 

 

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John Cuellar

John Cuellar

John is responsible for SyncHR’s product, engineering, and system operations teams. He is focused on streamlining the business processes related to HCM and finance by distributing SyncHR to all members of the workforce and by using patented security and workflow to control these developments. John is also responsible for delivering SyncHR as a cloud based application with “extreme ratio” financial metrics.

He has a background in engineering, workplace applications, and business administration, bringing over 25 years of experience deploying strategic HCM applications. Prior to co-founding SyncHR, John was the CEO of Harbor Technologies, since acquired by Mellon Financial Corporation. Previous to Harbor Technology Group, he spent an internship with the Swiss Bank Corporation in their derivatives pricing and trading group and also worked as a senior manager for the US Navy. John received his Bachelor of Science degree in Electrical Engineering from the University of California at Santa Barbara, and his Master of Business Administration from the Haas School of Business at the University of California at Berkeley.

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