We began by enlisting key research faculty at UNC Kenan-Flagler Business School, and UNC more broadly, as well as appointing six experts to serve as our 2023 class of Distinguished Fellows. We then hosted top business and policy leaders for roundtables, workshops and one-on-one discussions throughout the year, creating a feedback loop that not only fostered insightful exchanges but also ensured our work remained grounded in the real-world problems facing businesses today.
Our labor markets have been in the midst of an unprecedented disruption. COVID-19 upended the status quo, permanently altering what employers — and employees — need to succeed. We have seen a shift in the demand side: what firms are looking for from their employees. One key contributor is the increasing reliance by firms on technology and the resulting demand for more tech-skilled employees. At the same time, we are also seeing changes in the supply of available workers and what they are looking for from employers. The pandemic not only drove millions to exit the workforce but also shaped the career objectives and motivations of those who remained. Work from home is a great example. There is strong demand from employees to work from home. They believe they are more productive at home, at least in the short run, and have a strong desire to avoid the hassles of commuting. Firms are having to adapt to this and either manage a team of employees spread out geographically or enforce a return to the office and manage any resulting employee turnover. Another key trend we are seeing is a desire by employees to work at a firm with a purpose.
What happens when we put this all together in an overheated economy where there are other structural changes, such as an aging demographic and a lower participation rate in the workforce? We end up with the labor shortage we have all seen over the last year and particularly this mismatch — between the skills that employers want and the current workforce. Our goal in exploring this complex topic is that by better understanding the current equilibrium we see in our labor market, we can better understand how best to adapt to the new normal and how to best anticipate what will come next.
Before diving in, I want to acknowledge this report as the culmination of a year's worth of work, which has included Kenan Insights, commentaries, webinars, events and more. Contributors across academia, industry and policy have provided their expertise to help us better understand the nuances of the U.S. labor market, and it is important to note that the report does not reflect the full views of every contributor but rather serves as a collection of their research and experience. Just as important to our work are the Kenan Institute staff who took on the essential tasks such as data collection and analysis, literature searches, website development, event coordination and more. So, as you consider the results of our work, I hope you will join me in offering a well-deserved thanks to everyone who has taken part in this effort to generate world-class, evidence-based and actionable advice for businesses and policymakers. We hope you will find value in what we view as a small step forward in our collective journey toward deeper understanding of our disrupted labor markets. As always, your feedback is most welcome; I invite you to reach out either directly to me or to any of my colleagues to share your thoughts or continue the conversation.