Inflation threw a wrench into pandemic recovery, and with interest rates rising and the threat of a recession looming, the 2023 labor market could look very different than it does today.
Major tech companies have announced tens of thousands of layoffs in recent weeks while mortgage interest rates are at levels not seen in two decades, putting a damper on growth. Pandemic-induced supply chain issues have forced many manufacturers to lay off workers. The Federal Reserve has said it will keep raising interest rates until it has tamed inflation, which until last month was running above 8%.
Amazon announced it has begun winnowing its corporate ranks and plans to continue the process into next year, The Associated Press reported (Nov. 14). The New York Times reported (Nov. 14) some 10,000 Amazon jobs likely would vanish—about 3% of the workforce.
Meta’s Facebook and Instagram announced it would lay off 11,000 employees, 13% of its rosters, and staff reductions also were announced at Lyft, Stripe, and Snap, among others.
Elon Musk’s erratic takeover of Twitter saw half the company’s employees laid off immediately and scores have since resigned, leaving the company with about 2,700 employees and about 1,000 of its 5,500 contractors, CNBC reported (Nov. 13).
“What we’re experiencing now is the early effects of what is expected to be a multidecade workforce crisis.” – Oliver Staehelin, chief strategy officer at Harver
The labor market is confusing. At the end of September, there were 10.7 million job openings and the turnover rate was about 3.7%. The unemployment rate remained at historically low levels—3.7% in October. To complicate the picture, surveys indicate Gen Z doesn’t look at work or career development in the same way their elders did, preferring to earn their money as influencers and gig workers.
Part of the problem is the gap between skilled and non-skilled workers: the former, in demand; the latter, not so much.
“What we’re experiencing now is the early effects of what is expected to be a multidecade workforce crisis. There simply aren’t as many working-age people in this generation as there were in prior generations, and in the hospitality industry specifically, many workers left the industry altogether following the pandemic to secure more reliable jobs,” Oliver Staehelin, chief strategy officer at Harver, told The Food Institute.
“The current labor market has highlighted some systemic problems that the industry is working to address and while recruiting during a labor shortage will be top-of-mind, retention will also be a great source of competitive advantage going into the new year. As companies strive to increase productivity while keeping costs down, ensuring employers hire for quality will be a top priority in 2023.”
The result is companies looking increasingly at automation to fill the gaps. At its warehouses, Amazon is planning to reduce its human workforce by installing Sparrow, a robot the company hopes will help speed deliveries, The Guardian reported (Nov. 11).
Haley Hartmann, senior associate at Reputation Partners, noted Gen Z—those born between 1997 and 2012—wants more than a job. Members demand that employers care for their physical, social, emotional, mental, and financial well-being; they want flexibility and work-life balance, a diverse and inclusive workplace, a sense of purpose, and professional development opportunities.
“If Gen Z employees don’t feel heard, seen, or cared for, organizations risk losing them to another company or to unionization,” Hartmann said. “Part of the attraction of unions is they want to join a movement where social causes, such as DE&I [diversity, equity, and inclusion], pay equity, and unbiased policies are part of their workplace values. Employers who fail to meet these basic needs will find themselves in a similar position this time next year—struggling to retain employees or navigating unionization efforts.”