With the US economy reopening, job openings reached a record 9.3 million in April, according to the US Department of Labor. Yet, an ongoing shortage of candidates for those jobs has been a cause of great angst for staffing firms and their end clients. As a result of the shortage, overall US job gains have been somewhat constrained, with nonfarm payrolls rising by 278,000 in April and 559,000 in May despite the US economy still being some 7.6 million jobs lower than in February 2020, before the pandemic began.
This article briefly outlines the current candidate shortage, as well as examine some reasons why the situation is likely to improve in the near future.
The current shortage of candidates has been described by some light industrial staffing executives as among the most extreme conditions they have ever experienced, including going back several decades. Why? Many analysts point to “structural” factors that have been difficult for business-level tactics to solve: legitimate health/safety concerns related to the pandemic that have made candidates reluctant to accept on-site jobs; lack of schools/childcare preventing candidates who are parents from working; and the “extra” federal unemployment benefits ($300/week on top of state benefits, and eligibility expanded to gig workers) extended to early September.
Illustrating the severity of the situation, a net 69% of industrial staffing firms in our May Pulse Survey reported an increasing trend in unfilled orders. In addition, the vast majority of industrial and office/clerical staffing firms described high rates of candidates not showing up for interviews or for work assignments (“ghosting”), requiring a much greater level of staffing firm effort to achieve the same targets in interviews and positions filled.
Given such challenging conditions, staffing firms and their clients have shown creativity in attracting workers, including the use of unprecedented signing bonuses in the retail and hospitality industries.
Nevertheless, there are some strong reasons for optimism that candidate supply may soon be on the rise:
1. Coronavirus cases have greatly declined across most of the US, with total daily new cases falling below 15,000 per day, the lowest levels since shortly after the pandemic began. Although conditions vary by state, the decline of virus cases is starting to make some candidates more comfortable in returning to work.
2. The decline in cases has allowed many states to roll back restrictions and fully reopen their economies, including New York and California this week. The reopenings include schools and childcare centers that are freeing up parents to return to work.
3. Twenty-five states are in the process of terminating the “extra” federal unemployment benefits mentioned above over the next few weeks. In many cases, these states are ending both the $300 weekly payment and the expanded eligibility for gig workers/self-employed. A handful of states, including Arizona and Oklahoma, are offering instead to award bonus payments to individuals that return to work, creating a very different type of incentive.
A last topic worth mentioning is that this year’s war for light industrial talent may increasingly play out on candidate smartphones, as job search and hiring manager behavior continues to shift toward the convenience of self-service platforms and mobile apps. In our recent in-depth report on temporary staffing platforms, we examine the rapid growth in traction from this model, and also track a growing number of staffing platform as a service (SPaaS) technology providers to staffing firms.
If the pandemic has taught us one thing, it is that business conditions can change very rapidly. In looking at the weeks and months ahead, industrial staffing firms may be wise to consider whether they are ready to fully take advantage of potential increases in candidate supply as the year unfolds, and how these changing dynamics are likely to affect their operations and their clients.
