The Two Assumptions Damaging Your Staffing Results Now

In every market we serve, we see companies struggling to generate the results they need when it comes to staffing—be it full time or temporary help. When we look at these companies, we  find that they have made two assumptions that are the root cause of many of their challenges. 

These two assumptions are: 1). Labor is plentiful, and 2). Labor is cheap. 

Labor Is No Longer Plentiful

Labor was plentiful in 2009 and 2010, at the height of the Great Recession. Every year since 2010, the number of people unemployed has declined while the number of job openings has increased. The labor markets we serve are at levels that we haven’t see in decades, and levels that many of the people working inside companies that need staffing have never experienced. 

  • In Columbus, where we are headquartered, we’ve seen unemployment drop from 10.2% at the height of the recession to 3.8% a few months ago. 
  • In Phoenix, you have to go back to 2006 to find unemployment rates as low as their current 4.5%. 
  • In Charlotte, the Bureau of Labor Statistics main reports don’t include data before 2006, so we can’t find anything close to their record low 4.5% unemployment, down from 12.9% at its peak in 2010. 

With the Baby Boomers retiring, labor participation levels at levels unseen in decades, and men dropping out of the labor market altogether, labor is no longer plentiful. In fact, the truth is quite the opposite: labor is now scarce. 

More than ever, your employee value proposition matters. Our internal surveys also show that how you treat new employees is going to matter a great deal to how well you do with the people you do bring on. 

The assumption that labor is abundant is no longer true. 

Labor is No Longer Cheap

Many companies in the markets we serve haven’t raised their pay rates in years, and some haven’t raised their rates in many years. Many of these companies have business models that assume labor is cheap and that it will remain so. 

In our more than three decades in business, we have never experienced so much built up wage pressure. In Columbus, as one data point, we have seen average starting pay rates increase by over $1.00 per hour in the last 18 months (the equivalent of $2,080 annually). This wage pressure is only growing. 

We’ve recently helped more than a dozen companies align their pay rates with the new reality. We are working with two dozen more who use staffing to strategically and creatively help them with the business case justification for increasing their pay rates. 

The New Systemic Reality

The challenges in the labor market right now are many, and they are systemic. There are no easy answers, and there are no quick fixes, but there are actions that you can take to improve your results now. 

The new reality is that labor is no longer plentiful, and it is no longer cheap. As employers, we are going to have to change our approach to recruiting, hiring, staffing, and retention. 

If you’d like to see our data and our ideas about how to succeed in this ever-tightening labor market, email us directly here.