Economic indicators are sending mixed messages about the 2023 outlook and expectations. The U.S. Department of Labor Statistics issued an expectation-defying report that more than 500,000 jobs were added to the U.S. economy in January.1 But inflation is still a concern as are layoffs in some sectors.
But there’s a bright spot that employers should pay close attention to: year over year wage growth continues to slow significantly. Eastridge’s own wage data, which spans more than 40 industries in the U.S. and internationally, confirms this trend showing a leveling in the 4 to 6% range in the later part of 2022.
What does slower wage growth mean for employers? And what is the best way to take advantage of this trend, given other economic uncertainties? One of the best ways for workforce leaders to take advantage of this trend is by leveraging temporary labor pools. This allows companies to stay ahead of production demands if demand increases, but still have flexibility if there is a market downturn. There are also an array of other workforce tools that can build in options for employers to utilize talent, but still be cautious.
One of the lessons from the COVID crisis was that companies over corrected and lost talented employees. As a result, many companies lost out on revenue opportunities because they didn’t have the staff to meet new orders and production schedules. Absent a sound workforce strategy, they couldn’t meet their sales pipeline, and missed growth opportunities. They also missed out on acquiring talent, or had to pay a premium for that talent in the months that followed.
Staffing partnerships can help here. Organizations can build temporary labor pools now to build a solid foundation on which to dial up or dial down workforce and deliver cost- and time-saving solutions. This can be done by implementing or consolidating your contingent workforce, taking on payroll/ employer of record duties, or outsourcing recruiting altogether so you can focus your time on more strategic projects. Any of these solutions will help to seize new opportunities, while at the same time preparing your organization for downturns or fluctuations in demand.
Looking ahead, there are many reasons to be cautious and preparing for downturns is often good business. However, preparing for a sudden upturn in demand may be just as important. Wage stabilization is an indicator that the right staffing strategy will be essential in the weeks and months ahead. With the right workforce strategies in place, all companies, regardless of size, can take advantage of a potential upswing in the near future.
1New York Times, U.S. Hiring Surges With January Gain of 517,000 Jobs.