Companies are pursuing additional strategies to recruit untapped talent and retain workers as the labor market tightens, according to the Global Labor Market Outlook 2018 report released today by The Conference Board. US businesses in particular are lowering educational requirements for some cohorts of workers and increasing the use of teleworking. And companies worldwide are hiring more women and mature workers, along with increasing automation.

By 2019, labor market tightness could reach levels not seen for decades, especially in the US, China, Japan, UK and several countries in Central and Eastern Europe, according to the report. With the large generation of baby boomers continuing to leave the labor force in large numbers for 10 to 15 more years, labor shortages are likely to get worse before they get better, and may become a drag on growth if governments and employers are not able to accelerate their capacity to produce.

To help counteract labor shortages, the report includes several takeaways for employers, including:

• Education. Reducing educational requirements is gaining momentum in the US. During the financial crisis and in the two to three years following it, the share of workers with a bachelor’s or some postsecondary education increased among new workers. But since 2012 and 2013, this trend of upskilling has mostly reversed. These results suggest that, in recent years, as the pool of available workers became depleted, employers have hired less qualified workers for a given job opening.
• Remote work. The teleworking trend is gaining momentum in the US. In 2016, the US labor market reached unprecedented growth in the share of people that work remotely full-time, with teleworking reaching 3.1% of full-time employees. In 2001, the share of full-time employees who teleworked comprised just 1.2%.
• Compensation. Especially in mature economies, companies holding back on raising compensation should do so with caution. Given today’s labor market, in many instances not increasing pay could lead to higher labor turnover, lower success in recruiting, and less worker satisfaction.
• Women and seniors. Worldwide, employers are likely to increase their labor pools by hiring more women and senior workers. The share of these two population groups in the workforce is increasing in many countries, partly due to legislation and higher educational attainment. Alternative work arrangements offer additional opportunities to hire from these groups.
• Automation. Businesses are now more likely to invest in automation to relieve labor shortages and contain labor costs. When labor was abundant and cheap, it muted the incentive to harvest the benefits of technological progress. In a tight labor market, that story changes.

“While recruiting and retaining talent poses a growing challenge for employers, the picture looks brighter for those on the other side of the equation — the employees,” said Gad Levanon, the primary author of the report and the chief economist for North America at The Conference Board. “As just one example, our latest Conference Board survey of US workers found increased satisfaction with wages and growth opportunities. With more job opportunities available, employees can settle into jobs that suit them better.”