The 2021 labor market challenged a belief that was once considered objective truth among employers: High unemployment rates equal robust candidate pools and a generally noncompetitive market for companies looking to hire.
The logic seems sound, so after a year of record-high layoffs and unemployment rates across the nation — peaking at nearly 15% in April 2020 — many expected that a rebounding economy would be met with a surge of previously furloughed and eager job seekers looking for new opportunities. Yet at the intersection of above-average unemployment and job availability rates, labor force participation undermined expectations in 2021. While worker demand has recovered powerfully since the low point of the 2020 recession, labor force participation was reported at 61.9% as of December 2021 — a slight improvement since its dramatic plummet in April 2020, but still its lowest since the mid-1970s. With workers hesitant to participate in the flourishing job market, more than 10 million jobs remain unfilled, while record numbers of employees are leaving their current employment. This supply and demand imbalance slowed the 2021 post-recession economic boom.
According to the U.S. Chamber of Commerce in May 2021, 90% of state and local chambers of commerce leaders reported that a "lack of available workers" was the main force slowing local economic expansion, implying stagnated business growth for both private and public enterprises. While overall unemployment rates steadily decreased throughout 2021 — from 5.9% in June to 3.9% in December — the number of potential workers available is at a record low of 1.6 per job opening, with only .65 unemployed workers per opening as of November.
A variety of factors came into focus in 2021 as leading influencers diminishing employee retention and labor force participation, including:
Among those actively participating in the job market, employees experiencing stress and burnout, and widening job availability, could be leading motivators driving worker quit rates. MetLife's 19th Annual U.S. Employee Benefit Trends Study 2021 reported that 70% of workers feel burnt out and anxious at work — an increase of 25% since the 2020 report. And according to Federal Reserve Bank of St. Louis, workers are quitting at the highest levels in over 20 years.
Additionally, half of the 2,000 workers surveyed in Prudential's 2021 Pulse of the American Worker Survey reported that the pandemic has enabled them to better control the direction of their careers. Motivated by factors such as compensation, work/life balance, and a lack of growth and learning potential in their current jobs, 53% of surveyed workers said they would change career paths if they were able to find the right opportunity.
Savvy employers will capitalize on this opportunity to adapt and bring in professionals who are eager to explore new career paths, while those unwilling to evolve and meet employee and job seeker expectations potentially risk facing massive talent shortages in this market. Employers can begin tapping into the growing pool of job-switching candidates by broadening their hiring profiles and considering individuals from a wider variety of backgrounds.
Given the broad range of worker behavior determinants and hesitancy among many to accept full-time employment, employers who want to compete for talent in 2022 should seek to understand and provide what candidates are looking for.
People are aware that there's an increasing demand for workers. Throughout 2021 and into 2022, they're showing increasing selectiveness when considering their options. Companies that are winning in hiring top candidates are those that are flexible and willing to adapt as they learn more about evolving job seeker trends in today's market, which include:
Gaining a deeper understanding of the factors that may sway a job seeker from choosing one job opportunity over another will put employers in a better position to attract talent. Armed with the right knowledge, employers can re-evaluate and adjust their current offerings to make themselves more appealing and competitive against companies that have already pivoted to address emerging job seeker expectations.
Although general trends in what workers want can be identified, they often vary based on skill level, industry and job type. As an example, when considering communication, team building and collaboration preferences, entry-level call center employees typically want to work from home, whereas higher-level accounting and finance professionals often prefer to be in an office environment.
Companies should therefore discover what their own employees and candidates value in job opportunities and strive to meet them at least half way. That might mean revisiting employee value propositions (EVP) and benefits offerings according to what's best for your people, which often translates to what's best for your company. Additionally, companies should develop and implement effective recruiting plans, which often involve strategies that are individualized to the candidate.
Job seekers understand that the market is driving premium value for reliable workers, so organizations must be agile to compete. Many innovative employers are therefore moving toward individualized recruiting tactics to appeal to the widest range of job seekers who have varying needs. While some people enjoy interacting with coworkers in the office, for example, others dread the daily commute and are more productive working from home.
An individualized recruiting plan involves assessing job seeker and employee needs on a more personal, case-by-case basis. So instead of turning away a qualified candidate because they're seeking more flexibility than what a company typically offers, an individualized recruiting plan allows room to work with them to meet their needs. If a potential employer is willing to be flexible and compromise, job seekers are more likely to recognize them as an employer of choice and become a committed member of their team.
Individualized recruiting also allows companies to broaden their hiring radiuses. While in-office work requirements limit sourcing strategies to an immediate locale, flexible work options allow recruiters to expand their efforts by tapping into a variety of markets where cost of living may be markedly lower, which typically impacts candidate pay rate expectations.
Understandably, for companies that are used to operating out of a single location, it can be scary to consider managing employees who work out of multiple states, but depending on business and hiring goals, it could be well worth the investment. It allows organizations to expand candidate networks and attract and leverage the skills of high-performing employees from across the entire country.
Reflecting on the 2021 market has led many employers to rethink how unemployment, job availability and worker participation rates work together to impact labor trends. With competitive market forecasts rolling into 2022, employers should continue to evolve and strategize how to best attract talent by seeking to understand impactful market and worker behavior trends, and implementing proactive and individualized recruiting strategies.
This article is taken from an excerpt of Aston Carter's white paper,
The Labor Market Paradox of 2021 and What Employers Can Do About It.