As we look toward the final quarter of 2021, the challenges that many companies have faced throughout the year in finding, hiring, and retaining talent appear more pronounced than ever. Data from the US Bureau of Labor Statistics (BLS) tell the story. At the end of May, there were 9.2 million open jobs, followed by 10.1 million in June, with July increasing to a record-high 10.9 million job openings on the last business day of the month.
Meanwhile, according to the BLS, the number of unemployed persons stood at 8.4 million in August. This gap between available workers and available jobs creates a classic supply and demand challenge. And it appears the result of that disparity has taken hold in a similarly classic response to a situation where demand is greater than supply: higher costs, in this case to employers in the form of higher wages.
The impact to companies of today’s candidate-driven market extends beyond the challenges it poses to hiring employees at reasonable wages. The combination of unfilled positions and increased labor costs can lead to fewer products being produced—which almost certainly means prices will go up for all customers—or businesses reducing their hours, or, in the extreme, closing altogether.
The result for many companies is that it’s extremely difficult to secure the two assets they need the most: talent and supplies. That’s especially true for smaller companies that can’t compete on wages. How long this will last is hard to predict, given the numerous and complex influences on the job market.
But it’s safe to say the current situation isn’t sustainable, especially as higher wages drive up supply chain costs. The inevitable result is likely an adjustment in the labor market generally and labor costs specifically, probably in the second quarter of 2022.
What can staffing professionals do to help companies navigate these challenges? Perhaps the most valuable service we can provide is acting as a trusted advisor and empathetic partner to our customers. We make it a point to be in constant communication with customers, listening to their concerns and needs. Similarly, we need to inform customers about the realities of what’s happening in the market and associated implications on their hiring process. Lastly, we can provide talent that contributes to higher retention and can help elevate a company’s culture, not just fill a seat.
In today’s economic and employment environment, the expertise and perspectives that staffing companies bring to customers are more essential than ever to their success.