Business works in cycles that are usually somewhat predictable. COVID threw a monkey wrench in any kind of predictability. Remember back in March and April 2020 when everyone thought unemployment would skyrocket because there would be tons of layoffs across many sectors?
We know things worked out very differently and it makes some sense because it was an extreme situation and it’s tough to predict anything when chaos is the order of the day. The good news is we have all adjusted and new normals have been forming. What does that mean for businesses like yours? People will be returning to work more and more.
Why? Because the money folks squirreled away is running low and reality is setting in.
Let’s look at the history.
March 27, 2020, was an impactful day. The CARES act was signed by President Trump which provided checks to a vast number of Americans but it also did something else. The PUA program provided up to 39 weeks of benefits, which were available retroactively starting with weeks of unemployment beginning on or after January 27, 2020, and ending on or before December 31, 2020.
States were permitted to provide Pandemic Unemployment Assistance (PUA) to individuals who were self-employed (freelancers and gig workers included), seeking part-time employment, or who otherwise would not qualify for regular unemployment compensation. https://wdr.doleta.gov/directives/attach/UIPL/UIPL_16-20.pdf
This quick action was understandable but then a perfect storm emerged.
The individual employee stormcloud looked like this:
- Unemployment payments were backed up; individuals and families received lump sum payments weeks or months later.
- But the bills didn’t pause so folks had to figure out how to live without money. They turned to Doordash, Uber, and freelance work to supplement their income.
- Then the pile of back payments arrived and consistent unemployment payments kicked in. BOOM! This was loads of money in many cases!
- There was enough to live on and gig work added a nice cushion. For many, it was like a paid vacation for the next year. Others took the opportunity to start their own business and try freelancing full-time.
The employer stormcloud looked like this:
- Mass layoffs didn’t happen as much as anticipated as many companies were able to shift gears into providing goods and services that were in high demand during the pandemic. Others were able to quickly enable their teams to work remotely with tons of flexibility.
- Not only did companies survive, but many also grew! These companies found themselves with numerous open positions and often hired gig workers.
These two storm clouds created a situation we’ve been in for a while where there are too many open positions and not enough people looking for work. The employee market is putting tons of pressure on companies to implement progressive workplace programs, offer loads of benefits including paid training, and pay people at much higher rates than before COVID. Not every company can or wants to do all these things and even businesses that have done them are still struggling.
Times are changing.
The scales are starting to level and it’s expected that fall and winter will bring more people back into the job market.
Here’s what’s happening on the people side of the scale.
- Inflation – enough said.
- The ups and downs of freelancing and gig work are harder to weather as the reserve cash dwindles and no more is coming down the pipeline.
- Folks want security for their families and realize the best option is getting a steady paycheck from a reputable employer.
Things are shifting on the employer side too.
- Budgets are tighter due to downward economic conditions so businesses are buttoning up and eliminating some open positions.
- Companies are not spending as much on freelancers. Tighter budgets and competitive labor markets are driving employers to spend wisely on retaining actual employees.
- Leaders know who they want and are not willing to settle for just anyone – they understand the detrimental impact of a bad hire. They’ve been getting by with fewer people so they can be patient a bit longer.
By early 2023, it’s expected that the scales will begin to tip in favor of employers. People will need to pay off the holidays and delivering groceries in the cold and snow won’t be as appealing the second or third year in a row; especially when it’s not simply supplemental income.
Is your company ready to take advantage of the changing times? Are you prepared to put your best foot forward to attract the best employees? If you’re not confident in your answers, we’d love the chance to partner with you so you’re primed and ready!