State of the Economy
(and the ongoing hiring crisis of 2022)

“It’s a recession when your neighbor loses (their) job; it’s a depression when you lose your own.”  – Harry S. Truman

Supply chain issues.  Global Pandemic.  Gas Prices.  The Great Resignation.  The Great Regret.  Recession.  These are all current and scary terms that are affecting everyone right now.  In this article, we’re going to take a closer look at the state of the economy.  We’re going to talk about what got us here.  And we are going to discuss how this could impact your hiring decisions in the immediate future.

A Global Pandemic and the Great Resignation

COVID-19 hit hardest in March of 2020 and an estimated 20 million jobs were lost in the United States in just a few weeks.  Millions of people scrambled to assess their savings, their work options, their bills, their very livelihood.  Businesses shut down (sometimes permanently) as people were encouraged (and ordered) to stay home.  However, this time in lockdown gave people time to think about what was really important to them. They reevaluated their values in their life and made decisions on how they want their jobs to fit into that. As lockdown restrictions waned, people continued quitting their jobs–voluntarily. This phenomenon became known as  ‘The Great Resignation’. 

According to the U.S. Department of Labor, the job market is still hot, layoffs are down, there are plenty of job openings (nearly 2 for every 1 available job seeker), and people are still quitting. Another study done by Gallup finds that 48% of the US working population is either waiting for new job opportunities or they are actively job searching. This creates a subtle uneasiness at work, never knowing who already has one foot out the door.  Instead of investing in programs, equipment, and people to help grow your business, you could be spending tens of thousands to replace workers. 

Gas Prices and Supply Chains

During the Pandemic, people’s needs and desires changed.  This, coupled with staffing shortages, started a chain reaction of difficulty with cargo ships and trucks getting the changing demand of supplies to their destinations.  As the economy began to open back up, it seemed to happen almost as quickly as it stopped.  The backlog of toilet paper, cleaning supplies, non-perishable goods, and masks finally found its way into warehouses.  And there they sit as demand has once again shifted.  The ongoing COVID restrictions in China coupled with a war between Russian and Ukraine have exacerbated the already fractured system.  

For months this year, between 100 and 153 cargo ships have been waiting in oceans and gulfs to offload their haul.  There are several contributing factors to this backlog:

• Several dock workers are in ongoing contract negotiations
• There’s no place to put them as warehouses are full of goods that were just recently in high demand
• As restrictions lift in various parts of the world, business resumes, but it’s harder to ramp up than it was to slow down

And that last point is also what’s contributed to the highest gas prices in recorded history.  Gas prices plummeted during lockdown because no one was driving and oil companies had too much gas in reserves.  Think of all those products sitting in warehouses right now.  Companies can’t GIVE those things away, much less make a profit.  So gas prices dropped to record lows and companies stopped production.

January 2022, things started to open up, and when the window of possibility to return to normal opened, the floodgates burst wide open.  Cars, planes, boats, everything that required gas to go was back out kicking off the cobwebs.  But, you can’t just drill, process, refine, transport, and supply gas overnight.  So, demand skyrocketed and supply was low. Plus, Russia and Ukraine. Also, oil executives were still bringing in record profits.  Recently, gas prices have started to come down, but they’re still affecting people and businesses alike.

The Great Regret

It is estimated that approximately a quarter of the 20 million Americans who quit their jobs in the first five months of 2022 now regret that decision.  The reasons for the regret are not so clear cut.  Many stated that the remote work left them feeling isolated and missing their work colleagues.  But, 42% said that the new opportunity didn’t live up to their expectations.  That doesn’t mean they regret leaving their old job.  They just don’t like their new one either.  So the cycle will continue until businesses adequately meet the changing demands of their workforce.  As we covered in a recent blog, you should strive to “be the place where your employees don’t want to leave.”

Recession

One of the big questions is: are we in a recession, or heading towards one?  Well, honestly, no one really knows.  The numbers don’t add up.  Between positive jobs reports, people still quitting, salaries going up, gas and food still expensive, supply chain problems, foreign policy as well as domestic, cases can be made either way.  According to the Intelligencer, “the reality is the U.S. is not in a recession.”   Another article from CNBC cautiously warns, “that doesn’t mean there isn’t a recession ahead.”

What This Means for You

While your business might not be affected by supply chain disruptions or gas prices, your client’s might be hurting.  Your Acumatica Implementation Consultants work from home.  You don’t rely on cargo ships to deliver your ERP solution.  Your Sage System Administrator isn’t affected by those things either.  But the clients they service might not be growing and expanding which means less work for you.  And their lack of hiring affects your hiring needs as well.

So what do you do in these weird and uncertain times?  First and foremost, you cannot start cutting back on the things that are attracting employees to your company in the first place.  You can’t lower salaries, take away bonuses, reduce PTO, stop with mental health programs.  In a country where wage increases haven’t come close to keeping up with inflation for decades, the worst thing you can do is start offering less for positions you need to hire.  If you do, they’ll just quit and you’ll be even worse off.

Next, you need to take a hard look at your current work staff.  How do you rate and rank their worth to the company?  What metrics do you have in place to measure their performance?  I’m talking about the need to trim the fat and keep your A players.  If an employee is costing you more money than they are making you, there is no better time than to set the standard of expectations.  

Another thing you can do is look into Independent Contractors to do project work instead of making full-time hires.  There can be many benefits to using Independent Contractors.  They often cost your company less than a full time employee.  Also, there is usually little to no ramp-up time to being productive.  Many recruiting companies will also have a staffing practice for such an occasion. 

Finally, you need to have a plan in place.  This is a great time to ensure your recruiting, hiring, and retention program is clearly laid out and executable.  When you are ready to hire, having a solid plan in place will help ensure success in finding and retaining the best talent available. 

I’m not going to lie, it’s weird out there right now.  And no one knows what the future holds.  But, you do have options to help navigate these waters.  And, when you have a solid plan and you provide a great place to work, you’re much more likely to emerge unscathed, no matter what the state of the economy looks like.