The Federal Reserve’s ability to execute rate hikes while successfully delivering on its dual mandate to maintain price stability while ensuring maximum employment is top of mind for everyone today.
Data from the St. Louis Fed for the past 40+ years has some great news for us! In ALL previous rate hike cycles, unemployment rates continue to decline for several years after every single rate hike cycle kicks off.
Brian Moynihan, CEO of Bank of America, who’s been at the helm since the aftermath of the great recession, confirmed that in as many words at the World Economic Forum in Davos by stating that the tight labor market conditions are expected to stay around until the end of 2023.
If you’re a hiring manager today, it’s probably not something you want to read.
So why is the tight labor market expected to continue, despite increasing coverage around job cuts in certain industries, and how can you set yourself to succeed in this new normal with the right expertise at the right time? Read on to find out.
Employee-centric Market Expected to Continue Despite Uncertain Economic Environment
The employee’s market over the past year has contributed to the Great Resignation/Realization and rising wages. Add to that the inflationary pressures from supply chain issues, rising shipping, and raw materials costs, and you’ve got the perfect storm that’s triggering cost-cutting measures at companies with workforce cuts being the first area certain companies have decided to focus on.
Unilever, Paypal, Wells Fargo, are some examples of that trend. While companies that experienced tailwinds during the pandemic are cutting back, others in recovery sectors are unable to keep up with talent needs.
Leisure, hospitality, and airline sectors are at the forefront of the talent crisis today. Looking at the latest Labor Bureau statistics shows why. While there are nuances associated with the type of skill, experience level, and the industry, the number of unemployed persons per job opening are at record lows.
Number of unemployed persons per job opening, seasonally adjusted
Let’s take the airline sector as an example. Companies in the sector are facing unprecedented headwinds today due to their inability to recover from the cuts they were forced to make in pilots and ground staff roles. They also had to scale back on their corporate strategy, operations, and technology departments. They are bound to be beneficiaries of the talented individuals now available on the hiring market.
So what does this mean for employers still combating talent shortages if the tight labor markets are expected to continue? It’s time to look for creative ways to find talent.
The Remote Independent Workforce is Key to the Future of Work
High-performing teams are addressing their talent needs by onboarding the most in-demand skills on-demand on platforms like Graphite.
While this increased adoption has been led in part by knowledge workers preferring the independent work model, it has also helped companies to onboard the right expertise quickly at lower costs.
Data from IRS and Gallup on individual 1099 tax filings from the last two decades, combined with predictions made by leading strategists, helps us paint a clear picture of where it’s been and what lies ahead.
The Rapid Growth of the Independent Workforce
But why is the independent workforce growing so quickly, and why must leaders take note of this on-demand talent acquisition model?
This paradigm shift has been in the making for around two decades, led by:
- Individuals seeking higher control on when, where, and how they work
- Disruptive technology platforms enabling companies and independent workers to seamlessly connect to get work done
The first wave of growth can be attributed to the digital gig-economy platforms that disrupted the local ecosystems associated with food delivery and local transportation (namely Grubhub, Uber, Lyft, etc.).
The next wave came from gig-economy platforms such as Upwork and Fiverr that made an impact on a global scale, yet they were centered around transactional projects and skills.
The third wave, what we live in today, is where knowledge workers with deep functional expertise in areas such as corporate strategy, finance, market research, and supply chain strategy, among others, are joining the ranks of the independent workforce.
They are solving the toughest problems businesses face today by joining high-performing teams on-demand for project-based work.
We’ve seen this firsthand on our platform. In Q1 2022, companies spent 90% more YoY on onboarding highly skilled independent experts, and the number of vetted independent experts joining our platform was up 40% YoY.
The Unprecedented Growth in Amounts Companies Are Spending to Onboard In-Demand Skills On-Demand
Growth in Highly Specialized Independent Experts Joining Graphite
As more and more employees quit their jobs in favor of greater flexibility, companies will have to start rethinking how they build their workforces, now and in the future. It’s likely that the independent workforce will continue to grow based on growing the applications of new business formations and the increased use of online platforms to build a healthy pipeline of work.
Companies that successfully understand how independent workers fit into their workforce ecosystem and how to use them strategically will not only be rewarded with growth, but also a workforce that is agile and flexible enough to respond to future risks and evolving business needs.