With growing economic uncertainty and fears of a potential recession in 2023, one continued strength for the economy, both nationally and in Wisconsin, has been the labor market. The national unemployment rate was 3.5% in December and Wisconsin has generally trended a few tenths lower. Payrolls and wages have continued to grow, even if the
With growing economic uncertainty and fears of a potential recession in 2023, one continued strength for the economy, both nationally and in Wisconsin, has been the labor market.
The national unemployment rate was 3.5% in December and Wisconsin has generally trended a few tenths lower. Payrolls and wages have continued to grow, even if the pace has slowed somewhat.
At the same time, some warning signs have begun to flash with major technology companies like Amazon, Meta and Salesforce cutting thousands of jobs.
“We have feast and famine in terms of what industry you're in and what your circumstances are,” said Molly Thiel, chief people officer at Brookfield-based talent acquisition firm Cielo.
Thiel said Cielo, which serves a variety of sectors including business services, consumer products, health care, media, technology and life sciences, is seeing many clients who essentially over-hired coming out of the COVID-19 pandemic.
However, the divergent views of the labor market continue even within companies.
[caption id="attachment_563051" align="alignleft" width="169"] Thiel[/caption]
“We're seeing a lot of that where the sentiment of the hiring managers within the organizations has continued to be, 'I need more people, I need more people because I have so much work to do,’” Thiel said. “But the financial elements and the corporate elements of that company looking at it and going, ‘I can see down the road, you are not going to need that, I can see a picture that you don't feel right now.'"
Thiel will be among the speakers at BizTimes Media’s 22nd annual Economic Trends event on Jan. 26 at the Italian Community Center in Milwaukee.
In addition to the differing pictures of the labor market, Thiel said there is also an open question of whether the market will favor employers or employees more in the coming year.
“The last 18-ish, 24 months, it's felt like we're at the mercy as an employer of either what our competitors are doing or what the demands are of our employees, who now collectively seem to have much more bargaining power than they used to,” Thiel said. "It's becoming more and more important that we take ourselves more seriously in terms of what we're offering to those candidates as opposed to thinking that they're dying to come work for us."
Some of the increased power of employees has come from the economic conditions leading businesses to hire more while some of it has also come from demographics. Regardless of the direction of the economy, the demographic trends – led by the retirement of Baby Boomers – will continue to shape the jobs market.
“If you look globally, there’s really only one part of the world that will have more labor available than jobs in the next 10 years and that’s India,” Thiel said.
Even when Baby Boomers aren’t retiring, many are becoming more selective when making choices about their work and career. At the same time, younger generations are looking to see that the companies they work for are part of a bigger mission or give back in their communities. Thiel said that’s where a business’ efforts on diversity, equity and inclusion or environment, social and governance matters come into the equation when hiring.
"It is no longer just about the package of cash that you give them and how creative you are with comp, it is about the entire experience working with you and from a candidate perspective, how much of that experience can they have through their process of exploring you as an employer,” Thiel said. “Instead of thinking about an interview process as judging whether or not you want that person to come work for you, you're treating that interview process as almost like a dating circumstance where they have just as much choice.”
Businesses are also facing a need to act differently as they face a potential downturn. Having made significant investments to attract and retain talent in recent years, many businesses are getting more creative to avoid layoffs, Thiel said. Examples include better systems to avoid over-hiring in the future, job or skill sharing and offering additional flexibility in certain roles.
She added companies are also changing how they go about executing layoffs when they do become necessary.
“You do as an employer have to remember, you may very well hire those folks back or you may want to, and they’ve got to want to come back,” Thiel said
It is important for companies to avoid harming their employer brand, Thiel said, noting businesses should seek to be transparent through the layoff process, help employees move on to their next job where possible and be thoughtful about the kind of financial compensation they offer.
“If you’re in the layoff situation, you absolutely need to start thinking about it differently than you have because taking care of the whole person is becoming more expected,” she said.
