Recent years have brought massive shifts in the global labor market. Rippling effects from the COVID-19 pandemic and geopolitical upheavals continue to echo across industries, while the rise of remote work and generative artificial intelligence are changing the way many businesses operate.
Is it possible to address the needs of employers and employees alike – particularly amid persistent uncertainty about future economic conditions and the market power of workers? The Frontiers of Business Conference: Workforce Disrupted convened corporate executives, top researchers and policy leaders to explore current trends and ways to navigate the precarious road toward a labor market equilibrium. Here’s a sampling of what we heard.
1. Demand for workers is high and supply is low.
At the start of 2023, there were two job openings for every unemployed person in the U.S. While the ratio has fluctuated some, many of the drivers of this imbalance — particularly on the supply side — aren’t likely to go away fast. Barbara Entwisle, Kenan Distinguished Professor in the department of sociology at UNC-Chapel Hill, noted that the aging of America means that more people are retiring out of the workforce than coming into it. This trend accelerated sharply with the wave of early retirements during the pandemic. For younger people, limited access to affordable childcare has posed an increasingly important barrier to re–entering the workforce, said Kenan Institute of Private Enterprise Executive Director Paige Ouimet. At the same time, Williams College Professor of Economics Tara Watson pointed out, immigration caps, Trump-era efforts to dissuade immigration and heavy backlogs in the legal immigration system have stymied the ability for foreign-born workers to counterbalance U.S. labor shortfalls.
In response to these constraints, companies are starting to think creatively about how to remove barriers and attract talent. This has led to new approaches to aligning what firms need and what workers want.
2. Workers want more than just a paycheck.
The pandemic triggered many people to think differently about their lives and how they spend their time. One outcome of this, in addition to spurring a rise in entrepreneurialism and business creation, is that workers are setting new boundaries around what they are and are not willing to do, said DeLisa Alexander, board director of Qlik and retired chief people officer at Red Hat. Increasingly, people want to “bring their whole self to work” and devote their labor toward a purpose that they believe in, not just get a job to pay the bills.
Where and when people work is a thorny issue. Many people, especially those who are caring for children or aging parents, have realized just how much they enjoy flexible work hours and not commuting, and will resist returning to a five-day in-person workweek. Jeff Korzenik, chief economist at Fifth Third Bank, noted that offering flexible hours and especially part-time opportunities could help draw some older people out of early retirement and back into the workforce. Others, especially younger people who benefit from the mentorship and camaraderie of an office environment, are more interested in in-person work. There are also different views on how remote work influences productivity, creativity and company culture. And, of course, remote work simply isn’t possible in every industry.
All of this adds up to conflicting pushes and pulls for companies as they reestablish how they operate in a post-pandemic environment.
3. Demand for new skills is outpacing workers’ capacity to pivot.
What workers are being asked to do is shifting rapidly as businesses take advantage of technological advancements and change how they operate. In particular, developments in AI are changing the game on the tasks and services that machines can perform, and both workers and firms are grappling with the uncertainty around what tasks or positions may be subsumed by AI and where new opportunities may emerge.
As skills become obsolete faster than ever, companies face a challenge in keeping their teams effective, said Bruce Van Saun, chairman and CEO of Citizens Financial Group. Rather than seeking specific technical knowledge or expertise, speakers said, employers are increasingly focusing on finding workers able to collaborate, communicate, work with data, harness technology, learn on the job and understand how the business operates. As a result, companies are rethinking what sorts of degrees and credentials are actually necessary, leading some to “trim the fat” on job requirements in order to cast a broader net when hiring. If it continues, this could lead to a de-emphasis on the four-year college degree and a greater focus on upskilling in-house to cultivate a nimbler workforce, panelists noted.
A takeaway: There’s no one-size-fits-all solution.
In this highly imbalanced and rapidly changing labor environment, speakers stressed that each firm will need to find its own strategy to attract, retain and retrain workers. There simply is no silver bullet that will work across all industries or firms — or even across all teams within a company. PepsiCo Global Senior Vice President Jeff Swearingen stressed the importance of getting a granular understanding of the needs and priorities of individual workers and teams to inform aggregated solutions across a company — and then working to stay agile in the face of future changes while remaining true to the organization’s purpose.
Finally, not all labor problems can be solved within companies. Panelists highlighted how attending to some of the larger issues across society — such as responding to demographic shifts, reforming the immigration system, creating employment pathways for formerly incarcerated people, and rethinking the role of higher education — could help to alleviate some of the pressures companies and workers are facing.