2023 Grand Challenge

Workforce Disrupted:
Seeking the Labor Market's Next Equilibrium

The Kenan Institute's annual grand challenge marks a concerted, yearlong effort to examine — and drive solutions to — the most complex and timely issues facing business and the economy today.

In 2023, we examined recent seismic shifts in the labor market, some related to COVID-19 and others with causes stretching back further. The corporate demand for talent has evolved to reflect new markets and the need for different worker profiles, while many employees, having discovered the benefits of remote work, have different views of their employers and new desires for future careers. Where, we asked, does the world's workforce go from here?

Letter from the Director

Paige Ouimet

Executive Director, Kenan Institute of Private Enterprise

For our 2023 grand challenge, the Kenan Institute explored our disrupted labor force — a challenging topic but one that we have leaned into by bringing together academic experts across fields as well as business leaders and government representatives to better understand the U.S. labor force.

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.

Participating Faculty

These University of North Carolina at Chapel Hill faculty members helped push the work of the grand challenge forward by writing insights and commentaries, presenting at business roundtables or speaking at the Frontiers of Business Conference. The participation of academics from both UNC Kenan-Flagler Business School and the broader university allows the institute to bring a variety of research to bear on the grand challenge topic.

Stan Ahalt

Dean, School of Data Science and Society, UNC Chapel Hill

Sekou Bermiss

Associate Professor of Strategy and Entrepreneurship, UNC Kenan-Flagler Business School

Greg Brown

Distinguished Professor of Finance and Sarah Graham Kenan Distinguished Scholar, UNC Kenan-Flagler Business School

Mike Christian

Professor of Organizational Behavior, Kenan Institute of Private Enterprise

Gerald Cohen

Chief Economist, Kenan Institute of Private Enterprise

Barbara Entwisle

Frank Hawkins Kenan Distinguished Professor of Sociology, UNC Chapel Hill & Training Program Director, Carolina Population Center

Mary Margaret Frank

Dean, UNC Kenan-Flagler Business School

Kurt Gray

Professor in Psychology and Neuroscience; Adjunct Professor in Organizational Behavior, Kenan Institute of Private Enterprise

Abhinav Gupta

Assistant Professor of Finance, UNC Kenan-Flagler Business School

David Hofmann

Professor of Leadership and Organizational Behavior, Urban Investment Strategies

Mohammad Hossein Jarrahi

Associate Professor, Urban Investment Strategies

Jim Johnson

William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship, Director, Urban Investment Strategies

Camelia Kuhnen

Professor of Finance, UNC Kenan-Flagler Business School

Tim Kundro

Assistant Professor of Organizational Behavior, UNC Kenan-Flagler Business School

Eva Labro

Michael W. Haley Distinguished Professor of Accounting and Area Chair of Accounting, UNC Kenan-Flagler Business School

Mark McNeilly

Professor of the Practice of Marketing, UNC Kenan-Flagler Business School

Shimul Melwani

Assistant Professor of Organizational Behavior, UNC Kenan-Flagler Business School

Marie S. Mitchell

Professor of Organizational Behavior and Edward M. O’Herron Scholar, UNC Kenan-Flagler Business School

Paige Ouimet

Executive Director, Kenan Institute of Private Enterprise; Professor of Finance and Associate Dean of the Ph.D. Program, UNC Kenan-Flagler Business School

Elad Sherf

Sarah Graham Kenan Scholar, Associate Professor of Organizational Behavior, UNC Kenan-Flagler Business School

Bradley Staats

Ellison Distinguished Professor of Operations, Senior Associate Dean for Strategy and Academics, UNC Kenan-Flagler Business School

Jayashankar Swaminathan

GlaxoSmithKline Distinguished Professor of Operations, UNC Kenan-Flagler Business School

Appointed on an annual basis, the Distinguished Fellows work to support the Kenan Institute's exploration of its grand challenge theme. As part of the institute's look at the challenges created by changes in the nation's labor force in 2023, they have produced papers on topics stemming from their interests and research. We hope you'll take time to read this collection of insights produced by our global scholars and experts:

Distinguished Fellows

Whither Technological Innovation, Business Dynamism, and Productivity Growth?

Key Takeaways Read Paper

John Haltiwanger

Dudley and Louisa Dillard Professor of Economics, University of Maryland, and 2023 Kenan Institute Distinguished Fellow

Mega-threats as Workplace Disruptors: How Can Organizations Respond to the Effects of Mega-threats on Employees?

Key Takeaways Read Paper

Angelica Leigh

Assistant Professor of Management and Organizations, Duke Fuqua School of Business, and 2023 Kenan Institute Distinguished Fellow

Culture and Environment for Learning and Development of the Next Generation Workforce in the Age of AI and Robots

Key Takeaways Read Paper

Arvind Malhotra

H. Allen Andrew Distinguished Professor of Strategy and Entrepreneurship, UNC Kenan-Flagler Business School, and 2023 Kenan Institute Distinguished Fellow

The Effects of Pay Transparency: A Brief Review

Key Takeaways Read Paper

Ricardo Perez-Truglia

Associate Professor, University of California, Berkeley, Haas School of Business, and 2023 Kenan Institute Distinguished Fellow

The State of the Workforce: North Carolina a Market Leader

Key Takeaways Read Paper

Thomas Stith

CEO, The Michael Thomas Group Inc.; former president, North Carolina Community College System; and 2023 Kenan Institute Distinguished Fellow

An Economist's Guide to Immigration Reform

Key Takeaways Read Paper

Tara Watson

Professor of Economics, Williams College, and 2023 Kenan Institute Distinguished Fellow

2023 Frontiers of Business Conference

The Frontiers of Business Conference: Workforce Disrupted convened 330 corporate executives, top researchers and policy leaders to explore current workforce issues and solutions for navigating the precarious road toward a labor market equilibrium.

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2024 Frontiers of Business Conference

October 10, 2024 • The Carolina Inn, Chapel Hill, N.C.

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Watch for the Announcement of Our 2024 Grand Challenge Theme in January!