Is Your Hiring Process Too Long? Six Strategies to Speed it Up.

Is your hiring process getting in the way of hiring the best candidates? Sometimes, we get into a hiring rut, and those bad habits may be preventing you from making a great hire.

How can you shorten your hiring process? “One of the first lessons I learned as a young recruiter was, ‘Time kills all deals,’” according to Mary Newgard, a senior search consultant. “Rarely do candidates or hiring managers mean to slow down the process, but it happens.”

Newgard offers these six ways to “push the pace in the hiring process.”

  1. Give Permission to Abandon Your Process. If you find a great candidate and the hiring manager believes the candidate is a great fit, go ahead and make an offer. Don’t lose good people because they haven’t gone through two or three rounds of interviews.
  2. Write Simple, Easy to Update Job Ads. You want your job ads to deliver qualified candidates. Keep the ads short. Make sure to add specific job qualifications and then post it. This more condensed version of the job ad can be quickly updated or refined during the search or for the next similar position.
  3. Deputize One Person to Screen Resumes. Having one person screen resumes provides consistency in selecting candidates for interviews.
  4. Automate Information Gathering. Consider what processes in the hiring process can be automated – correspondence emails, critical screening information, and some interview questions. Don’t let more than 24 hours pass between communications with ideal candidates.
  5. Scripting Interviews. Your hiring managers aren’t HR generalists, too. They may not know all the interview rules. Providing a script or list of Do’s and Don’ts prepares hiring managers, keeps interviews on track, and avoids EEO issues.
  6. Combine Hiring Teams for Similar Positions. For similar job openings, combine job ads and interview activity as much as possible.

Be prepared to move quickly with hiring decisions by having salary ranges, optional benefits, and other negotiating points at the ready. This will prevent more time wasted.

If you don’t want the hiring process to linger on and on, review your hiring processes and see where you can abbreviate steps. In this era of “instant gratification,” job seekers crave constant communication and a quicker process. Look for opportunities that will improve your hiring process.

We Can Help With Your Open Positions

Slowing down the hiring process costs time and money, and you might lose out on top talent.

If you want better results, talk with a Casey Accounting & Finance Resources team member today.

4 Tips For Mining Your Employee Alumni Database to Fill Open Positions

The need for skilled talent remains high, yet recruiters struggle to find candidates to fill their open jobs. With more companies requiring employees back to the office, economic challenges, fewer opportunities for remote work, and “the Great Resignation” waning, where are recruiters finding talent? It might surprise you that employers are communicating with their former employees – those who left for so-called “greener pastures” and those who retired –  to see if they’ll “boomerang back” to their former company.

According to an article in ALM Benefits Pro, “4 out of 10 employees who quit their jobs during the pandemic now admit they were better off at their old job, according to a multi-country survey by workforce solutions company UKG.” Harvard Business Review also recently noted that “statistics around the prevalence of boomerang employees vary by industry, but a hot-off-the-press study conducted by HR analytics firm Visier between 2019 and 2022 found that 28% of “new” hires were actually boomerang employees who couldn’t stay away more than three years.”

Wooing Back Former Employees With These 4 Strategies

Here are some things to win back former employees. Oftentimes, a conversation with the former employee on why they left and how they’re doing may shed some light on what it will take to rehire them:

  1. Employee Culture: If you already have an awesome culture, congratulations! Many boomerang employees return because they miss the caring culture and work/life balance. If your culture needs improvement, work on the “low-hanging fruit” and move forward from there. Perhaps the former employee would like to be part of the team to enhance the company culture.
  2. Alignment of Mission and Values: ALM Benefits Pro notes that the “the advancement of diversity, equity and inclusion (DEI) and environmental, social and governance (ESG) initiatives, employers are really being compelled to take a look at their own DNA — who they are as a company, what they stand for, whether they have the right talent on board.” Employees want to feel respected and valued for their contributions.
  3. Colleague Experience: If we’ve heard it once, we’ve heard it thousands of times – employees oftentimes love the people they work with but find the environment intolerable. When evaluating your employee culture, reassess benefits and perks, professional development and growth opportunities, and peer resource groups as options to improve the environment.
  4. Considering Retirees/Mature Employees: While some of your former employees may have retired, there are also many mature employees who would be valuable assets to your employee diversity. ALM Benefits Pro urges company executives to “rethink stereotypes of older employees as being less capable, less able to adapt and learn, and unwilling to roll up their sleeves and dig in. Organizations that eliminate age bias from their cultures and hiring practices understand and appreciate the merits of hiring mature candidates. A recent Deloitte study shows that age brings a sense of security and wisdom to teams that can be used to their advantage.” ALM Benefits Pro asserts that organizations with a “more collaborative spirit and the benefits of diverse teams that integrate youthful vitality with the insights of experience” may “become more innovative, profitable, and likely to reach its full potential.”

It’s a good sign that employers can tap into their alumni database for recruitment purposes, not only to rehire them but to seek referrals. By the way, these tips are important for all employers and could prevent employees from leaving in the first place.

Casey Accounting and Finance Resources is ready to help you with your labor shortages. Contact us today to see how we can solve your workforce challenges.

Taking Vacations Improves Employee Well-Being and Productivity

Even though we’re approaching the end of summer and the beginning of the school year, it doesn’t mean that opportunities for vacation or paid time off (PTO) are over. In fact, there are several studies that indicate the importance of finding opportunities throughout the year to relax and recharge. Rebecca Zucker, executive coach and a founding partner at Next Step Partners, recently wrote in a Harvard Business Review (HBR) article that “Making sure your employees regularly take time off is key to creating a more sustainable workplace.”

Zucker continues – “every year more than half of Americans give up paid time off. According to the U.S. Travel Association, in 2018, this amounted to 768 million days of unused vacation time, with more than 30% of it forfeited completely. Add to this, the fact that over 50% of managers feel burned out, taking vacation (and actually unplugging) has never been more important.”

Employers need to look at the statistics that outline the benefits of taking time off and encouraging employees to plan regular breaks away from work.

Restoring the Mind, Body, and Soul

Zucker outlined research that points to three areas that benefit from restorative breaks.

1) Mentally. Taking a vacation provides greater opportunity for rest and better sleep (both quantity and quality), which can help employees unclutter their minds to boost creativity. The cognitive impact when people are overwhelmed with work can include cognitive fatigue, difficulty concentrating, forgetfulness, and impaired problem-solving ability, among several other effects.

2) Body. Relaxing on vacation can reduce the levels of stress hormones and allow the immune system to recover, making employees less prone to get sick. Vacation also allows people to reset sleep patterns that can improve mood and cognition beyond vacation.

3) Soul. While it sounds hokey, answers to life’s big questions — like “What do I really want?” or “What’s most important to me?” — are more likely to come to us when there is some space and stillness. An Ernst & Young study showed that for every additional 10 hours of vacation time that employees took, their year-end performance improved 8%, and another study showed that using all of their vacation time increases an employee’s chances of getting a promotion or a raise. Further, according to the EY study, those who took vacations more frequently were less likely to look for employment elsewhere and leave the company.

A key to creating a more sustainable workplace with healthier, happier employees is to discourage the warrior mentality. Employees might be tempted not to take vacation time and show off how hard they work. Many of the studies noted in this article refute this type of culture. “We’re losing out on crucial recovery time that our bodies and brains need — which is why vacations are so very important,” stated Shawn Achor, New York Times bestselling author of Big Potential, The Happiness Advantage, and Before Happiness.

Vacations are a Necessity.

Achor emphasizes the importance of taking vacations to improve overall well-being and productivity. He advocates that vacations are not just a luxury but a necessity for maintaining good mental health and enhancing happiness. He also found that if you plan ahead, create social connections on the trip, go far from your work, and feel safe, 94% of vacations have a good ROI in terms of your energy and outlook upon returning to work.

Taking time off allows employees to recharge and return with enhanced creativity, improved mood and greater productivity, and an increased ability to demonstrate greater value to the company. Encourage employees to fully disconnect from work while on PTO. Not to sound rude, but, Just Go (Get) Away!

Here is the cherry on top. If you need workers to fill in for employees on vacation, contact Casey Accounting and Finance Resources to assist you with those needs.

July 2023 Accounting and Finance Salary Survey Available!

Casey Accounting & Finance Resources has compiled its July 2023 salary data for the fields of accounting and finance. Recruitment is really heating up, and job postings are plentiful. The war for talent is on, so having the most up-to-date information is vital!

With compensation trends changing on a monthly basis, both sides can benefit from having this information during job negotiations. According to Karin Kimbrough, chief economist at LinkedIn, “… the labor market is resilient, even if there’s been a small erosion to its strength, it’s still a tight market with plenty of open roles.”

If you would like to view the salary survey, please click the link to download!

For more information, here are some useful articles:

And here are a few more trends and insights to consider:

Casey Accounting & Finance Resources can help financial professionals who want to learn more about what salary expectations should be. We have compiled our salary survey list with updated facts and figures, including job descriptions for more the most requested accounting and finance positions in the Chicago metropolitan area.

If you would like to view the salary survey, please click the link to download!

Reevaluating Recruiting in Today’s Hiring Market

It feels like changes in recruitment and retention are crossing our news feeds on the daily. That’s because it’s true. When was the last time you revisited your talent acquisition strategy? Last week? Last month? Last year? With so many fluctuations in the hiring market, your answer might be Yes, Yes, and Yes. While we may be exhausted by stories about the economy and possible recession, right sizing, layoffs, hybrid work environments, upskilling/reskilling, stretching your workforce, offering increased salaries, “perfect” candidates, culture, and more, the truth is that all these factors are creating a bit of lava in navigating how we recruit talent.

Looking Ahead

Even if you recently revised your practices, it may be time to be more forward-thinking. Some of the rules have changed. For example, skills may be more critical than experience. Could candidates with more general skills be a better fit to handle a wider variety of tasks if you can only hire one or two people? Maybe long-term adaptability is a better solution for your ever-changing business landscape.

How well are you monitoring your recruitment and retention data, and what’s missing in your data analysis? Most companies are pretty adept at monitoring cost per hire, speed to onboard, turnover, and poor performance. However, if you are just looking at the numbers within their individual silos for increases or decreases without truly analyzing the cause and effect of the numbers as a whole, you may be missing opportunities for significant solutions and improved milestones.

There are plenty of articles and guidance available on the candidate application journey all the way through the onboarding process. While we won’t get into these topics in this article, we would be remiss in reminding everyone that these areas are often overlooked. You’d be surprised how many candidates drop out of the cumbersome application process. Also, investing in your onboarding process may create a positive experience from day one, which translates into highly engaged employees from the start of their employment journey at your company.

How We Can Help

According to Business.com, the cost of a bad hire is estimated at approximately 30 percent of the employee’s salary or more. Talent acquisition isn’t a pristine journey, and you are not alone if you feel your strategy isn’t perfect. Even if you don’t have all the digital bells and whistles, we can offer suggestions to track and get better results.

Let us review your processes and metrics to drive improvements.

  • Review how you’re filling roles. Is the process quick but suffering from low retention or poor performance? Stakeholders only see things like longer project completion rates or slower fulfillment of products or services. These factors affect business improvement.
  • Consider consistent question lists for all interviewers to help predict a candidate’s success in your organization.
  • Benchmark the employees who appear to be the “perfect” candidate to understand the soft and transferrable skills that make them better performers. Incorporate some of this data into job descriptions and interviews.
  • Remain engaged with candidates to assist in future referrals. Likewise, your employee base might be one of the better options to mine for new hires. This “human cloud” resource may help you stay connected to the talent you seek.

If you have limited resources to execute improved recruiting strategies, there are still ways to adapt your long-term talent acquisition strategy.

Call us today to discuss your recruiting challenges. We’ll put on our consulting hats to help create an environment that is adaptable to the unpredictable business climate, and where everyone wins.

Are You Hiring for Culture Fit or Culture Add?

It’s still a struggle to find qualified candidates. We’ve talked about refining your long-standing hiring habits to improve finding qualified and quality candidates to fill your open positions. One area that seems to be getting a bit of airtime is “culture fit.” Oftentimes, we look for candidates that “fit the mold” of current employees – you know – finding candidates whose working preferences and values match the company. What may be happening inadvertently is an unconscious bias when you hire for culture fit. Some experts agree that you might want to consider hiring for “culture add” to not only widen your candidate pool but also improve the creativity, diversity, and thought-provoking dialogs in your department and organization.

Why Culture Fit Falls Short of Being Fair

According to Gallup, many assumptions can be made when hiring for culture fit:

  • It assumes the hiring decision-maker understands and role models organizational values, beliefs, and expected behaviors. Decision makers often come with their own values and beliefs that may not align with the organization’s, further creating hiring bias.
  • It assumes the decision-maker can make a fair, informed selection decision.
  • It assumes that an organization has a level of maturity in its culture journey.

Typically, if the candidate doesn’t fit the culture, they aren’t hired. You may be escorting a candidate who could be a great employee right out the door because of culture-fit hiring practices.

What is Culture Add?

Gallup defines culture add as “a fresh spin on the concept of culture fit. Rather than making hiring decisions that create a homogenous, familiar culture, culture add promotes hiring decisions that focus on the candidates’ unique and beneficial attributes, values, beliefs, and behaviors. It is what they bring to your organization from their distinct perspective and experiences.”

What’s the upshot of hiring for culture add? Gallup explains it like this. If the workforce is shrinking, the fundamental need is for organizations to recognize what they are hiring for and why it matters. The right hiring practices examine not only cultural needs, value systems, and technical competence but also factor in role-specific talent attributes and behaviors for high performance.

In today’s marketplace conditions, 85% of currently employed U.S. workers say they are considering leaving their jobs in the next six months, according to LaSalle Network. U.S. Secretary of Labor Marty Walsh said in an interview at the CNBC Work Summit that he expects job growth should continue into 2023.  However, the demographic data on the U.S. working-age population is concerning, with baby boomer retirements expected to accelerate in the years ahead, compounded by a peak being reached in high school graduates by 2025, limiting both the total size of the next-generation labor pool and the transfer of knowledge between the generations of workers.

The thing to pay attention to here is recruiting and retention. If managers and employees are disengaged, and the statistics hold true, finding and keeping good employees will continue to be a challenge.

Does Culture Add Practices Even Make a Difference With Remote and Hybrid Work?

Some may argue that remote/hybrid work environments destroy a company’s culture. That’s not necessarily true. There’s a common belief that when employees are physically together, they develop important social bonds that simply can’t be replaced by email, Zoom, and Slack.

In fact, 23% of U.S. hybrid workers strongly agree that they feel connected to their organization. Only 20% of all employees strongly agree they feel connected to their organization’s culture.[1]

And leaders have good reason to care. Employees who strongly agree that they feel connected to their culture are:

  • 3.7x as likely to be engaged at work
  • 5.2x as likely to recommend their organization as a great place to work
  • 37% more likely to be thriving
  • 68% less likely to feel burned out at work always or very often
  • 55% less likely to be looking for a job[2]

Gallup’s data shows us that being in the office never equaled a great culture. There are many ways to create connectedness within teams and across companies. Here are some best practices for managing remote teams.

With remote and hybrid work being the preferred option for many employees whose job allows this option, a solution of culture add or a revision of culture fit may still make it possible to add employees who bring value that is lacking in the organization.

We Can Help

Be less concerned about culture fit and more interested in adjusting hiring practices to align with employee talents, competence, and aspirations. Choose that employee who helps move the organization forward. Also, continue to watch for managers and staff who are disengaged and talk to them about the value they bring to your organization.

Let’s discuss the challenges you’re facing. Contact Casey Accounting & Finance Resources today.

 

[1] https://www.gallup.com/workplace/401576/dont-confuse-office-culture.aspx?utm_source=workplace&utm_medium=email&utm_campaign=gallup_at_work_newsletter_send_2_october_10182022&utm_term=newsletter&utm_content=a_new_chapter_cta_1

[2] https://www.gallup.com/workplace/401576/dont-confuse-office-culture.aspx?utm_source=workplace&utm_medium=email&utm_campaign=gallup_at_work_newsletter_send_2_october_10182022&utm_term=newsletter&utm_content=a_new_chapter_cta_1

2023 Accounting and Finance Salary Survey Available!

The labor market remains to be very tight across the board! It is not just direct-hire but contract-to-hire and contract roles.

Casey Accounting & Finance Resources has compiled its January 2023 salary data for the fields of accounting and finance. Recruitment is really heating up, and job postings are plentiful. The war for talent is on, so having the most up-to-date information is vital!

With compensation trends changing on a monthly basis, both sides can benefit from having this information during job negotiations.

Casey Accounting & Finance Resources can help financial professionals who want to learn more about what salary expectations should be. We have compiled our salary survey list with updated facts and figures, including job descriptions for more than 110 accounting and finance positions in the Chicago metropolitan area.

If you would like to view the salary survey, please click the link to download!

How Will the Economic Downturn Affect Hiring?

Are you laying off or hoarding employees? Implementing hiring freezes? Considering salary transparency practices to fill critical positions?

Consider salary transparency as a recruiting strategy? Are we nuts? There’s a method to our madness and we’ll explain more below. As we continue to watch the economy and inflation, we’re also noticing the labor market slowing down – employers are adding fewer jobs, hesitant about hiring if we fall into a recession. On the other hand, employers are also hesitant to lay off employees as would traditionally happen with an economic downturn. Why? Because it continues to be difficult to fill already open positions. Employers are concerned that if they let people go, it may be twice as hard to fill the positions again. Confusing? That’s an understatement.
Overall, the job market is still strong. HR and staffing industry leaders will tell you that this has been the weirdest time in recruiting, and it doesn’t appear to be ending any time soon.

Labor Hoarding

With inflation still climbing, there are signs that companies may be “hoarding” employees. A recent report from Employ, Inc. suggested that some companies may be “labor hoarding” – choosing to keep workers rather than laying them off, hoping to save time and money overall. The report states that 52% of recruiters surveyed said their organizations were retaining employees, even those who might be underperforming or lacked a fit with the company culture. John G. Fernald, a senior research adviser at the Federal Reserve Bank of San Francisco, said that employers would be especially hesitant to lay off workers who would be difficult to rehire once the economy recovers from a downturn, such as those with specialized skills or higher levels of education. In an article published by Vox, economists say there are several reasons employers may be less likely to lay off workers if it is short-lived:
  • Dealing with labor shortages and finding it difficult to hire people.
  • It’s costly to offboard employees.
  • It’s costly to onboard and train workers.
According to Aaron Sojourner, a labor economist and senior researcher at W.E. Upjohn Institute for Employment Research, “You can’t count on a long line of job applicants to just show up whenever you post an opening. I think employers hadn’t felt that so acutely in a long time.” Diane Swonk, the chief economist at KPMG notes that companies are still understaffed. “Even as you scale back, you’re still understaffed, so you’re not going to be firing as many as you would have. There’s also a sense that, if you work so hard to get workers, you want to retain the workers you have.” Fernald also suggests that employers should be especially hesitant to let workers go who would be difficult to rehire. “If you lay off people with valuable skills, well, you’re not going to be able to recover production when demand picks up again,” he said. While layoffs will still happen, Allie Kelly, the chief marketing officer of Employ, said there has been a “clear, growing trend of more companies implementing hiring freezes, although they still largely aren’t laying off workers yet.”

Is There Hope to Fill Critical Open Positions?

Yes, there is. There has been plenty of talk about re-examining hiring processes, modernizing benefits to include things like mental health resources and caregiving leave, and more flexibility in work hours, to name a few. Would salary transparency help? More recently, we’re seeing articles about salary transparency in job postings. Once a taboo subject, research done by Adzuna, a search engine provider, reveals that an increasing number of job seekers want to know the salary attached to the job before they apply for it. 54% of jobseekers turned down a job offer when they finally learned the salary. So, what’s the big deal? Only 3% of U.S. job ads include a salary. And why wouldn’t you want to reveal salary? With more than half of jobseekers turning down job offers, Adzuna calculates that represents about 480 million hours of wasted time on vetting candidates, interviews, and negotiations. All for naught. Positions go unfilled, and the process of recruiting and interviewing starts all over again. Adzuna’s survey respondents also delivered this information:
  • 28% of people feel no salary or a lack of salary clarity on job ads is their biggest frustration when looking for a job.
  • 33% of job seekers would not attend a job interview before knowing the salary the employer is willing to offer.
  • 86% of U.S. employees would be open for their colleagues to know how much they earn
  • 73% think employers making salaries more transparent would make the workplace more fair.
So, is there a downside? Again, yes there is. But only if you ignore current employees’ salaries and needs. According to Harvard Business Review (HBR), there are consequences of salary transparency – fallout with disgruntled employees whose pay is not equal to a new colleague. But eventually, the consequences go away after pay equities are established therefore establishing more employer/employee trust, fairness, job satisfaction, and found to boost individual task performance by taking a more holistic approach to reward-related human resource practices. More information can be found here: https://hbr.org/2022/08/research-the-unintended-consequences-of-pay-transparency How can we help? Casey Accounting and Finance Resources is here for all your sourcing and outsourcing needs. If you’re struggling with your recruiting strategies, call us today!

Is the Workforce Shrinking Before Our Eyes?

In the second part of this two-part series, we share research from Emsi, the leading provider of labor market data, on the vanishing workforce.

In the first part of this two-part series, we shared insights from the National Bureau of Economic Research (NBER) on why the economic and labor numbers are unfamiliar with the ongoing talent shortage. You can find that article here. 

If you are in HR, a hiring manager, or running a business, you are not alone in your struggles to find workers. Wage inflation, the persistence of the Covid-19 pandemic, and workplace fatigue are all contributing to the challenge of hiring and retaining employees. In the past, when talent acquisition created anxiety among recruiters, we knew it was just a rough patch we’d all get through. Emsi’s research suggests that we’ve entered a “sansdemic” (without people), and the “hire more people” directive we’ve heard before isn’t going to help. Emsi reports the workforce is “vanishing” and will continue to disappear for decades to come. It’s not just a matter of a low labor force participation rate (LFPR), which measures people working or actively seeking work; it is a lack of available prime-age workers.

What’s Really Happening?

The last few years have been tumultuous with the pandemic. A February 2020 study by Manpower reported that a record 70% of US businesses reported a talent shortage – more than double the 32% who were having difficulty in 2015. With the Covid-19 shutdown, unemployment rates soared. In the past, when unemployment was high, talent was plentiful. But, in the frenzy of shutdowns and layoffs, and employees working from home, coupled with extended unemployment benefits and stimulus packages, workers didn’t jump back into the workforce pool. The result – millions of people not working and millions of open jobs unfilled. Esmi reports the LFPR has dropped to lows not seen since the recession of the mid-1970s.

Companies are trying to combat employee exoduses with strategies that include “internal mobility, reskilling and job redeployment…open to part-time workers, employees who live and work remotely, and workers who need training to perform…improving employee experiences with culture and wellbeing programs to make a company (and the job) more enjoyable and rewarding.”

But these tactics won’t be enough because there won’t be sufficient numbers of prime-age workers, and Covid-19 isn’t to blame. Emsi notes that this is “history catching up to us. We’ve been approaching this cliff for decades,” and there are a growing group of researchers and writers who are noticing this same trend.

In brief, Esmi reports that “there aren’t enough millennials and GenZers to fill baby boomers’ shoes”:

  • The mass exodus of boomers (workforce past)…The largest generation in US history remains a powerful cohort of key workers that still hold millions of roles. Their sudden departure from the labor force will gut the economy of crucial positions and decades of experience that will be hard to fill en masse.
  • Record-low labor force participation rate (LFPR) of prime-age workers (workforce present)…Thousands voluntarily opted out of looking for work. The children and grandchildren of baby boomers are not replacing the boomers who leave the workforce.
  • The lowest birth rates in US history (workforce future)…The national birth rate, already in decline, hit a 35-year low in 2019, and the relative size of the working-age population has been shrinking since 2008.

Where did the Prime-Age Workforce Go?

It might be easy to understand that, according to Emsi, 2.4 million women left the workforce from February 2020 to February 2021. Many stayed at home as their children attended school remotely. But Emsi tells us that this fact was overshadowed by another mass exodus – men have been disappearing from the workforce since the 1980s. Here are some additional takeaways from what Esmi is calling an “erosion of the prime-age male workforce:”

  • The prime-age male workforce (ages 25-54) plunged from 94% in 1980 to 89% in 2019. That five percentage-point drop represents over three million missing workers.
  • Millennials are expected to inherit an estimated $68 trillion from their boomer parents by 2030, making them the new, wealthiest generation in history…making millennials less motivated to seek careers of their own.
  • The opioid epidemic is a major culprit in siphoning prime-age men off the labor force.
  • The number of prime-age men willingly opting for a part-time job jumped from six million to nearly eight million in 2019.

Valuing What You Have

With the impending shortfalls, both near-term and in future decades, Emsi tells us that:

  • Education institutions and businesses will desperately compete for recruits who simply don’t exist.
  • The US stands to lose $162 billion annually due to talent shortages.

We need people. We won’t be able to “technology” ourselves out of this jam but recruiting and retention strategies can help slow the impending worker drought.

Conclusion

Emsi summarizes it by saying – “The sansdemic is going to make a tough situation tougher still. Fewer people means fewer new ideas. Fewer students. Fewer people in research and innovation. Fewer skills in the job market. Fewer employees. Fewer products and fewer goods. Fewer opportunities for growth.” Every person is going to be of value and will need to feel valued.

If you would like to receive a copy of Emsi’s research, email us at info@caseyresources.com. Let us help you develop effective retention strategies.

When Will the Talent Shortage End? Maybe Never, and Here’s Why!

In the first part of this two-part series, we share insights from the National Bureau of Economic Research (NBER) on why the economic and labor numbers are unfamiliar with the ongoing talent shortage.

Even though there are plenty of predictors for employment and unemployment, most hiring managers rely on the unemployment rate to determine if their company will struggle to acquire talent. Since the pandemic began, the traditional indicators that usually moved together aren’t. Have they gone haywire? Are magnetic fields affecting the numbers? The answers are no and no.

How to Interpret the Conflicting Numbers

Alex Domash and Lawrence H. Summers, both from the Harvard Kennedy School of Government, have studied all the predictors and indicators and conclude, in their NBER working paper, that the “labor market tightness is likely to contribute significantly to inflationary [wage] pressure in the United States for some time to come.”

They note that, “Economists have typically turned to common slack measures, such as the unemployment rate or the job vacancy rate, to assess labor market tightness and predict nominal wage growth. Historically, measures of slack on the supply-side, like the unemployment rate and the prime-age (25-54) nonemployment rate[1], have moved in tandem with measures of slack on the demand-side, such as the job vacancy rate and the quits rate, meaning that different indicators gave broadly corroborative signals of labor market tightness. Since the beginning of the Covid-19 pandemic, however, the supply-side indicators and the demand-side indicators have diverged significantly. While the unemployment rate and prime-age nonemployment rate remain elevated at late-2017 levels and imply modest degrees of slack, the job vacancy rate and quits rate have surged to series highs[2] and imply a very tight labor market. The unemployment rate does not adequately capture all movements in the labor market that are significant for wage inflation.”

Federal Reserve Chairman Jerome Powell suggests looking at other indicators, like the prime-age employment- (25-54 years old) to-population ratio, to better understand the presumed lack of candidates every company is feeling. So, it’s not just a matter of how many people are employable, it’s a correlation between the population and those who want to work. More on this in a minute.

Does This Have Something to Do With Soaring Wages?

Quite simply, yes. Domash and Summers comment that, “A high vacancy rate signals a high demand for labor and puts upward pressure on wages as firms compete to attract workers. A high quit rate signals that workers are confident enough to leave their jobs to search for a better opportunity, and can put upward pressure on wages since job switchers drive up wages as they move up the job ladder.” Let’s see a show of hands from the hiring managers out there who can relate to this.

Domash and Summers note their research indicates that “estimated wage inflation in the fourth quarter of 2021 is the highest it’s been in the last 20 years.” They also “simulated wage growth in 2022 and 2023 under the assumption that the vacancy rate, the quits rate, and the inflation rate remain the same…nominal wage growth under these assumptions is projected to increase dramatically over the next two years, surpassing six percent wage inflation by 2023.”

Where are the Workers?

Understanding indicators and predictors is one thing, but we are all feeling the pain of finding workers. Here’s the reality. Domash and Summers outline six factors as to where the workers have gone, and chances are, they might never come back. Those factors are:

  • Shifts in demographic structures (population aging specifically) = 1.3 million workers;
  • Covid-19 health concerns = 1.5 million workers;
  • Immigration restrictions = 1.4 million workers;
  • Excess retirements = 1.3 million workers;
  • Reduced incentives to work = 1 million workers; and
  • Covid-19 vaccine mandates = 0.4 million workers.

At the same time, they “project demand-side indicators such as the vacancy to unemployment ratio to continue to be very high over the next year.”

Conclusion

Domash and Summers predict that “the majority of the employment shortfall will likely persist moving forward. Moreover, if employment were to increase due to an increase in labor force participation, it would be accompanied by increases in incomes, and therefore an increase in demand. We believe that labor markets will continue to be very tight unless there is a considerable slowdown in labor demands.” This all suggests that companies need to sharpen their talent acquisition strategies and stay on top of the numbers since the tight labor market is bound to continue for some time.

In the second part of this series, we’ll discuss the “demographic drought” associated with the labor force participation and how it may shrink the available labor pool going forward.

If you would like to receive a copy of Domash’s and Summer’s complete working paper, email us at info@caseyresources.com. Let us help you develop effective talent acquisition tactics.

 

[1] This is equivalent to one minus the prime-age employment-to-population ratio.

[2] As of December 2021, the BLS Job Openings and Labor Turnover Survey (JOLTS) reported a seasonally adjusted

job vacancy rate of 6.8% (a near-record high, and much higher than any vacancy rate before 2021) and a seasonally

adjusted quits rate of 2.9% (the second highest quits rate on record).