More than three years after the first alarm bells were sounded over COVID-19, the effects of the global pandemic are still rippling through the economy. In the past three years, a substantial number of workers have changed careers, gone back to school, or otherwise sought better working situations. This seismic shift in the labor market has upended the hiring process and could have lasting effects on the job market.
In this blog, we’ll evaluate the shift in the labor market and how it might affect today’s job seekers. Here’s what we’ll cover:
The shift in the labor market is a general term used to refer to a number of new trends including a change in the average number of hours worked, the number of people in the workforce, the number of jobs available, and the competition for those jobs.
Since all labor markets are slightly different, for the purpose of this blog, we’ll focus on the American labor market for which there are many statistics including the Labor Department’s monthly jobs report.
It comes as no surprise that the global economy took a hit during the pandemic. The United States GDP fell by almost 9 percent in the second quarter of 2020 – a drop not seen in 70 years. That dip in the production of goods and services was the result of companies adapting to the changing conditions.
Many hospitality businesses, like bars and restaurants, were forced to close, either by temporary shutdowns or because of a lack of customers. Meanwhile, other workers, like nurses or delivery drivers, found themselves on the brink of burnout because of the increased need for their skills and services. For office workers, the pandemic largely meant a transition to remote work. While many employees had been pushing for more flexible working conditions for years, the pandemic pushed companies to give it a shot. Many people discovered they were just as productive with more free time to spend with family.
The combination of all of these situations led to a shift in attitudes towards work and the types of opportunities people began to look for. Furthermore, almost one percent of the American working-age population stopped working during the pandemic and hasn’t returned. Many people retired early, went back to school, or decided to care for family full-time. A lack of workers is one of the biggest factors driving the current shift in the labor market, according to U.S. News & World Report.
The current shift in the labor market is a result of the fact that there are more job openings available than there are candidates to fill them. As of December 2022, there were almost two job openings for every applicant, with an unemployment rate of 3.4 percent, its lowest level in half a decade.
Businesses are struggling to find and hire new workers, with 51 percent of small businesses reporting openings they couldn’t fill. At the same time, many companies can’t keep the workers they do have. A record number of employees have quit their jobs due to burnout or lack of flexibility.
While a lack of job seekers is partly to blame, there’s another factor at play: many employees are working fewer hours at their current jobs, according to Harvard Business Review. The pandemic changed people’s attitudes towards work, with many cutting back hours at the office to spend more time with family or pursue leisure activities.
The current shift in the labor market means that the demand and supply of workers are out of balance. On the surface, there are plenty of opportunities for qualified candidates. Many employees are quitting and companies are actively looking for people to replace them.
However, the reality is a bit more complicated. There is a lot of churn in the labor market and competition for positions is steep. Companies are looking for the single best person to fill their needs. Companies are choosing candidates carefully and making sure to fully evaluate their skills and training so that they don’t lose money hiring the wrong person.