The U.S. economy couldn’t possibly be stranger than it is now. Employers are adding more jobs, but there are still tons of openings, especially in service industries, coupled with rising inflation and recession fears. Several trends leading us in this direction were already in motion prior to the pandemic, which exacerbated the situation when people dropped out of the workforce for fear of getting COVID-19. For years, baby boomers have been retiring or aging out of the working population.
More Americans also are choosing remote or gig work over traditional service industry positions that have gone unfilled. In addition, young people between the ages of 25 and 34 (especially those who don’t have college degrees) are more likely to be single and living with their parents and, therefore, have less need to earn an income. A growing number of those who are younger than 25 are choosing to enroll in higher education rather than enter the workforce. On top of that, the flow of new immigrants being granted H-1B visas narrowed between Donald Trump’s presidency and pandemic lockdowns.
A super-tight labor market is pushing up wages, as well as the price of goods and services. And you can’t have significant job growth and low inflation. That’s the quagmire that we find ourselves in now. Moving to a more worker-centric, gig-based economy deconstructs what employment looks like. This gives employers an opportunity to adopt a new flexible paradigm that not only takes into account the need for higher wages and better benefits to be more competitive, but also flexibility. The lesson for leadership is to be nimble in terms of how they respond to these changing market forces.
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