New analysis by Staffing Industry Analysts (SIA) shows that as the unemployment rate remains low, employers will need to get more creative in recruiting qualified workers to fill the more than 1.5 million jobs that go unfilled each month.
Examining the latest jobs numbers available from the U.S. Bureau of Labor Statistics in a recent webinar, Tony Gregoire, Research Director at SIA, pointed out that the economy added 224,000 new jobs in June in such industries as healthcare, professional services and government. Year-over-year, this figure represents a 1.5% increase.
“Since 2017, the number of job opening has been exceeding the level of hires,” Gregoire said. “We are looking at about one million more job openings at the end of a month compared to the hires made over the month. In terms of one company in a steady state, it takes more than one month to fill the openings.”
It doesn’t look like the gap is going to close any time soon, he added. “It is taking longer for employers to fill openings. This is clearly consistent with a talent shortage.”
As supply continues to outpace demand, companies are getting more creative. We are also in an environment where people working temporary jobs are converting over to permanent jobs. “The best thing about this is that it shows the value of staffing firms as recruiters, people able to find candidates for their clients,” said Barry Asin, President, SIA.
While each region of the U.S. is experiencing the shortage, Asin said that it is substantially more pronounced in the Midwest.
Untapped Talent Pools
Ticking up slightly in June, from 3.6% to 3.7%, the national unemployment rate remains at or near record lows. Given that there are not that many people to be found in the ranks of the unemployed, recruiters have to draw more people into the labor force.
Now, about 80% of Americans aged 25-54 are employed, a figure that took longer to recover compared to pre-recession levels (2007). The remaining 20% of this age group is not employed or in the labor force. In 2000, about 82% of Americans aged 25-54 were employed. “So, there could possibly be more people who could be drawn into the labor force,” Gregoire said.
Asin agreed. “One thing that may have changed: The population has aged. But, there is room to grow,” he said. “The key is to look at people outside the 25-54 age group, or get the last 20% of the age group into the workforce. Keep in mind that the management approaches and needs of a multigenerational workforce will vary. To read more about managing a multigenerational team, check out the recent Genesis10 blog - Be Adaptive - Key to Successfully Managing a Multigenerational Team
“We are seeing more creativity from staffing firms looking at all types of people, and clients are more open,” Asin added.
To meet growing demand for software developers, Genesis10 created Dev10, an intensive program focused on training a select group of college graduates. Since launching Dev10 last spring in the Twin Cities, 66 people have successfully completed the training and are working for Genesis10 clients in banking and financial services, manufacturing, healthcare and retail. Of these consultants, 60% are gender and ethnically diverse. In 2019, Dev10 expanded into Charlotte and Dallas to meet market demand.
Genesis10 clients have said that they are impressed not only with the high caliber and high potential of Dev10 Associates, but also with their level of productivity and contribution. One client shared that, with just two months on the job, the Dev10 Consultant was completing work comparable to senior developers.
There is another way to get more people into the workforce: Money. Wages didn’t recover until 2017, rising just 2% year-over year, said SIA’s Asin. In 2018, wages started to increase, by 3%, as a result of the tax cut, which is beginning to wear off now. “Still, because hiring is so robust, the labor market is giving workers plenty of choice,” he said. “This is putting pressure on companies to do something about wages.” Recently, Harley Lippman, Genesis10 CEO, discussed with the Wall Street Journal the pressures that the market is feeling to raise technology wages.
Workforce Strategists and HR have their hands full as they tackle workforce constraints. Unfortunately, there is no silver bullet and a multi-pronged strategy will need to be developed. Not only do strategists have to focus on identifying capability requirements, skills gaps, and developing tactics to close the skills gap without overpaying for talent, but they also have to be concerned with the brand image of the company and evolving the company brand purpose to connect with a workforce that is spanning multiple generations.
Also read Ami's blogs:
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