The impact of the coronavirus (COVID-19) pandemic on the U.S. labor market is unprecedented. Not even the Great Recession of 2008 saw the country approaching the same levels of disruption or downturn we have endured throughout the spread of this disease. To conquer the obstacles before us requires more than hope and waiting. As workforce solutions leaders, we have the experience and resources to develop solutions to overcome the employment crisis.
Shifting Workforce Trends and Impacts of the Pandemic
“The magnitude of job loss in March and April 2020 had no precedent since the end of World War II,” the U.S. Bureau of Labor Statistics (BLS) wrote in its December report. “Early in the crisis, many expressed hope that, with government support, employers and employees could quickly return to prepandemic employment arrangements. However, as the COVID-19 crisis continues, more employer–employee bonds break, amplifying the economic and societal damage.”
“More than twice as many jobs were lost between March and April 2020 as were lost during the entire 2007–09 period, and only a third of those jobs recovered quickly in May and June, largely through recalling laid-off workers,” the report continued. “It is not yet clear how quickly employment will fully recover. It took more than 5 years for the labor market to recover after the end of the Great Recession.”
However, even as a wider distribution of vaccines rolls out, Americans should brace themselves against thinking the world will simply return to the established norms of life before COVID-19. Infectious disease experts at the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) have repeatedly tried to reinforce the idea of a “next normal,” a new iteration of social, cultural, and economic standards we must adopt. Science officials such as Anthony Fauci have suggested it will require 70% to 85% coverage of the population for things to return to normal—and that could take up to seven years. So, it’s important to look at what changes we must anticipate, not just at what changes have occurred.
The pandemic has thrown a lot of accepted axioms out the window. The current talent crunch is one of them. Generally speaking, high employment has historically indicated more available job seekers for every job opening. That hasn’t been the case during the coronavirus outbreak. In fact, many people on unemployment aren’t actively looking for work. It’s odd, yet there are reasons.
A lot of people are actually furloughed, which means they’re holding out for the signal to return to their jobs.
The increase in unemployment benefits, combined with the fear of contracting the disease and the lack of childcare options, have made workers less anxious to jump back into the labor force.
There were nearly 10 million mothers of young children in the labor force in 2019. Now, women represent the highest group of workers displaced by the pandemic. A report by the Center for American Progress “estimates that the risk of mothers leaving the labor force and reducing work hours in order to assume caretaking responsibilities amounts to $64.5 billion per year in lost wages and economic activity.”
The increased necessity of automation in our era of social distancing has also hindered the growth of small to midsize businesses and communities of color, according to a McKinsey global survey of 800 executives. Beyond that, the report explained, “People with the lowest incomes and educational attainment have been disproportionately affected, putting strains on achieving inclusive growth and potentially raising income inequality.”
While remote work is here to stay, it doesn’t solve the problem for every type of role, as the BBC noted after interviewing dozens of labor experts and business professionals around the globe: “The greatest challenge that we face regarding work is what happens to the 60% of workers who can’t work from home - Elisabeth Reynolds: Executive Director, Task Force on the Work of the Future, MIT.”
Goods and Services Have Swapped Places
In standard recessions, we usually witness a significant drop in goods while the consumption of services soars. Once again, the pandemic has defied historic assumptions. Writing for Forbes, Gad Levanon pointed out that “most job losses were in service industries hurt by social distancing: entertainment, travel, lodging, full-service restaurants, elective healthcare, and childcare. On the other hand, spending on goods is booming, especially in leisure-related goods.”
Lower Income Talent Adversely Impacted
In its data, Pew Research Center discovered that white-collar workers fared better than lower-income talent— those laborers in the “goods” category we just mentioned, including retail, industrial, and other related industries. “Lower-income adults who were laid off due to the coronavirus are less likely to be working now than middle- and upper-income adults who lost their jobs (43% vs. 58%),” Pew said. “Adults ages 18 to 29 are less likely than those 30 to 64 to have returned to their previous job.”
Preparing for the Next Normal
To better assess how our post-pandemic labor landscape may appear, Gartner interviewed over 700 HR and finance leaders. The research firm then spoke with more than 4,000 employees and HR executives to identify the long-term impact of COVID-19 on the future of work. Emerging from the survey, Gartner revealed nine probable trends and implications that business leaders should anticipate for their organizations.
An increase in remote workers, along with the acceptance that telework arrangements will continue to grow and become indefinite realities.
Increased use of employee data to help maintain productivity, performance, morale, and collaboration in a more virtual workplace.
Greater role of the employer as a social safety net.
Wider use of contingent workers in the next iteration of the gig economy.
Critical skills no longer being synonymous with roles, especially important as remote work will necessitate a workforce that can think on its feet and make solid decisions regardless of position.
Some talent finding work more humanizing, while others struggle with the increase in automation as a dehumanizing element.
A focus on crisis response as it distinguishes top-tier employer brands.
Prioritizing resilience as much as efficiency.
Added strain to employee engagement, culture, and value proposition. This also affects already stilted diversity and inclusion initiatives. In the New York Times, Nelson Schwartz noted that “as a result of the coronavirus pandemic, 27 percent of companies put diversity and inclusion efforts on hold, according to a survey by the Institute for Corporate Productivity, a research group.”
How the Staffing Industry Can Help
Hiring and Recruiting
This is the best time for companies of all sizes to enlist the support of staffing agencies, for contract or direct-hire positions. Finding exceptional talent requires a commitment to launching targeted, marketing-centric recruitment efforts: today’s job seekers aren’t poring over want ads or searching traditional job boards. And because these next-generation workers have placed a greater emphasis on an employer’s culture and vision, branding becomes an integral part of those campaigns. These are the strengths that staffing agencies bring to bear. This is their bread and butter.
With their resources, experience, and reach, staffing agencies have the ideal hiring solutions for any class of worker. In short, they represent new hope for beleaguered employers. A staffing firm’s professionals are 100% committed to the processes of sourcing and recruiting. They generally have fewer assignments to focus on than internal recruiters. They’re also unencumbered by the demands placed on corporate recruiters who may be pressed to make hasty hiring decisions to meet deadlines. Staffing professionals have the time corporate recruiters don’t to invest in canvassing and marketing to the best candidates.
Enhancing the onboarding process is the foundation for driving contingent labor advocacy and sourcing strategies. At ProcureCon, the topic was most profound for the industries that have risen to new heights in response to the “new normal” of COVID-19: industrial and logistics, IT, and healthcare.
To propel onboarding programs to achieve superior levels of success, staffing suppliers can take a more active, and interactive, part in the process. Candidates who are listened to, nurtured, understood and taken through a comprehensive onboarding process at the first point-of-contact will engage quickly. They undertake the work with a greater understanding of expectations, solid knowledge of the objectives to be achieved and insight to the client’s culture and business environment. Staffing firms have long been tasked with conducting onboarding, and they have the bandwidth and experience to drive the effort. Their teams routinely spend time learning about the company and the expectations for the program prior to onboarding. This includes participating in department needs analyses, voice of the customer sessions, and discovery meetings. When the staffing provider will serve as the employer of record, allowing them to run the onboarding experience helps them develop deep bonds with their workers, reinforce the employment relationship, and reduce confusion that leads to co-employment risks.
Staffing professionals have pushed ahead to forge new destinies as niche workforce management and payrolling experts instead of transactional generalists. Direct-sourcing, the Human Cloud, online recruitment platforms, talent ecosystems, and marketplace models similar to Amazon have introduced new dynamics into the mix. The point is, hiring and managing remote workers has been the bailiwick of staffing companies for years. And their approaches offer valuable insight into creating a bustling and delighted workforce for the new normal.
Employer of Record Solutions for the Gig Economy
As huge swaths of lower-wage workers struggle, the staffing industry has opportunities for them. Industrial clients, for example, often turn to staffing firms to provide labor and payroll as employers of record (EOR). The arrangement reduces overhead costs and risks, particularly as payroll providers have made strides in covering high-hazard environments with superior levels of workers’ compensation insurance. Clients can leverage EORs to alleviate burdens such as payroll processing and funding, tax deposits and filings, I-9 and E-Verify compliance, unemployment insurance, employment contracts and paperwork, and worker’s compensation. An EOR arrangement can be a time- and cost-saving windfall, liberating internal staff from human resource functions, onboarding and offboarding processes, benefits administration, payrolling, workers’ compensation, and compliance issues.
Workers continue to enjoy flexibility in determining their schedules, projects, and client engagements, but without the risks of misclassification, lack of HR support, or insecurity of benefits. Clients still reap the rewards of cost savings by not having to migrate talent to their internal payrolls. The money saved by outsourcing these functions can be reinvested in business growth or innovation.
Passive Candidate Recruiting
Back in 2011, LinkedIn reported that 83 percent of its fully employed members identified themselves as passive candidates. “It seems to me that if you’re not an expert at recruiting this 83%, you’re missing the 800-pound gorilla,” said Lou Adler, best-selling author on hiring tactics and CEO of The Adler Group. Today, that sentiment rings even truer.
The process of recruiting passive candidates poses significant challenges and has been the source of frustration for organizations uninitiated in the art. Capturing the interest of ideal yet passive candidates requires piquing their attention, keeping them engaged, and presenting an offer alluring enough to win them over without breaking the bank. Success in online “cold calling” through social networks takes a great deal more than a fearless attitude, stamina, and ability to post messages; it requires preparation, a deep understanding of branding and unparalleled expertise in the best practices of sourcing—the world in which your staffing partners live and thrive.
New Solutions from Old Friends
Despite conventional wisdom, a pandemic is not an equal opportunity discriminator. The disease took very different tolls across the workforce depending on a person’s job category, role, financial status, access to healthcare, and other demographic factors. We must solve for the challenges today if we are to attain a “new normal” in the near future. As a broad example, consider that only 40% of Americans can effectively telework. If we don’t figure out how to address the remaining majority, the path to our new normal will be beset by incredible obstacles. For staffing providers, none of these issues are new or insurmountable. And they have consistently evolved their tools, methodologies, and approaches. For candidates and clients alike, the staffing industry may hold the key to success.