June 3, 2022
The labor market will continue to be a huge challenge for employers for years to come. Learn how your business can continue to grow and be profitable with these tips on how to attract and train staff with the newest episode of TrendsTalk from ITR Director of Research & Development Eric Post.
The below transcript is a literal translation of the podcast audio that has been machine generated by Rev.
Hi everyone. This is ITR Economics director of research and development, Eric Post here. Wanted to talk to you about the labor market, a huge challenge for employers, and certainly something that your business is going to need to tackle if it's going to grow and you're going to be able to continue to be profitable. So what's the scale of the problem? Well, right now, when we look at the data, we see that there's two job openings for every one unemployed person in the United States. And so a really a numbers math problem here for employers before you even take into account, the fact that a lot of those unemployed workers may not have the skills that are required to meet those job openings. So how much longer is this likely to stick around? Well, because it has to do with demographics, baby boomers retiring, smaller generations coming in problems that are really difficult to solve, like childcare, very expensive and very hard to find.
It's going to make it really hard for there to be suddenly a significant change in that math problem of more job openings than unemployed people. And so, as you look to the future, you should be prepared. This problem will stick around, not just in '22 or 2023, but in years to come as well. So it's going to be a longer term problem that you're going to need to tackle. The good news is I have eight ideas for you for how to attract returning and train your staff. So numbers one and two are tough news to hear, but make sure you're staying competitive with your pay and your bonuses and benefits. The labor market is moving really quickly. When we look at wage growth, people grew accustomed to say 3% wage increases for the nation as a whole pre-COVID was a pretty normal rate. It was four and a half percent as of December, 2021.
And by April of 2022, which is the latest data point we have right now, it was already up to 6%. So really a dramatic escalation in wage increases here in the early months of 2022. And so you have to make sure that you're keeping pace with market or otherwise, you're going to have people walking out the door. So let's move on to some non-monetary things. Six other things you can think about. Flexible hours is one. That's going to work for some of you. It won't work for others of you, but clearly remote work has shown that some workers really gravitate toward more flexibility. It doesn't have to be remote work necessarily, it could be flexible at the office work, but the more flexibility you have, workers tend to value that and are more likely to stay at your organization. Again, won't work for everybody, but will work for some of you.
Number four, I think everyone can work on and that is having a great set of managers. People love to stay for a great manager and they will quickly lose ... leave your company, excuse me, if they find that there's a bad manager. So making sure that you have those right people in your manager seats and that you've trained them to the utmost degree will really make your job easier. Number five, a clearly defined career path. People need to understand why they should stay at your organization and grow over the next year, over the next two years, over the next five years, 10 years, what have you. It doesn't mean that everyone needs to see themself in the CEO seat, but it does mean that you need to show some milestones along the way to keep them at your company, as opposed to going somewhere else where they think they have more growth potential.
Number six, varied work. People in general tend to like not to just do the same monotonous thing every day. So whatever you can do to make your workplace more varied, maybe your people have two main types of skills. Have those people do a little bit of one thing and a little bit of the other to mix things up is good. Number seven, encourage feedback and be transparent, especially among the millennial and gen Z generations. This is something that they really value. And number eight strong company culture. Lots of companies have mission statements or core values, but it's really important that those core values are lived and breathed at every level of your organization. Making sure that really you live up to what you want your core values to be. So those are my eight ideas for working in this tough labor market.
Last thing I suppose, number nine, I'll give you one more bonus thing. Don't get discouraged. It's really tough out there and having a positive attitude toward it is really tough as an employer right now, but it's so important to work on this issue and work on it again and work on it again, because if you can have a competitive advantage in the way in which you're attracting and retaining and training your right people, it's going to mean that you have a leg up on the competition. Last thing I'll leave you with is keep in mind the solution to labor is not always more labor. It can be more capital. Some sort of it could be IT investment. It could be a machine or something along those lines. But right now, borrowing funds for that at a fixed interest rate is not the worst idea because when you look at interest rates, real interest rates, they are negative.
That is inflation is running higher than interest rates. So even though we've seen interest rates come up a bit, they're still pretty reasonable. And so to the extent that you can invest in some sort of labor saving piece of capital equipment is something that you should consider. I'll just give you one last example of this and then I'll sign off here. But I was doing a talk with a gentleman who had to hire folks to do towels and bedding laundry of those type types of things. And he was having trouble finding those people. And if he found them, he was having trouble, keeping them, getting them to show up to work and do the work.
So what he did was he borrowed some money and he ended up putting in an automated laundry facility. Automated washing moved automatically, no human involvement from the washer to the dryer, dried, no human involvement from the dryer to a folding station, robotically folded the laundry. And so he was able to save that whole position from having to hire for that whole position. Fixed his costs when it came to that specific thing. And really what I'd ask you is what is your automated laundry solution to your labor problem? Think about that and give some of those things some thoughts, and we hope that you have the best of luck out there in what is certainly a challenging environment for employers when it comes to [inaudible 00:07:11].