How To Deal With The 2023 Labor Shortage

There’s no beating around the bush here: 

most employees want more out of their jobs. They won’t settle for less but are seeking more flexibility than ever before. Those are all good things though, and it’s on employers to step up the game if they’re to overcome the labor shortage that’s still going strong in 2023.

Thankfully, there are a few ways companies can successfully retain and attract employees if they’re proactive with their approach. 

Before we get to the methods of combating the labor shortage, let’s first define it and look at the underlying causes.

What Is The Labor Shortage And How It Came To Be

In simple terms, a labor shortage is a gap between the labor needs (i.e. job openings) and the number of employees willing to provide this labor. To put it differently, there are more job openings in the US than there are people to fill them.

According to economists, there are many indications that this will continue well into the future, especially as we have to handle the looming recession and the ever-present inflation.

But the origin story of this “labor villain” is more interesting as it can be connected to a certain pandemic (which we don’t really need to name at this point). 

The events of 2020 made everyone rethink their lives. Now, people are more likely to pursue their passions and goals and as a result, they are more likely to look for jobs that give them a sense of purpose. Even back in 2020, people were quitting their jobs (amidst a wave of layoffs, mind you) in an effort to find something they really care for.

Nowadays, employees require more freedom to do things their way, which is directly linked to the rise in the prominence of remote work during the pesky pandemic. There was no going back once most people working in cubicles figured out they can do their job with no difference while wearing pajamas with the reruns of Friends blasting in the background.

Last, but certainly not least, workers now want to be properly compensated for their efforts. While this is most apparent in the service industry, it quickly spread to almost every industry in the US.

It’s also worth noting that the current inflation and the rise in costs of living are also contributing to employees seeking higher wages. 

How To Combat The Labor Shortage

Since the labor shortage won’t go away on its own, you and your HR personnel have to take action to attract top talent and retain your current employees.

You can try some of these strategies:

1. Raise the salary

The driving force behind the quit rates, and ultimately, the talent scarcity, is insufficient compensation. So before trying other strategies, you should look into ways to raise your hourly wages, since it’s the bare minimum you can do to avoid staffing issues.

2. Provide exciting perks

You can pretty much avoid the full impact of labor market troubles by providing potential (and your current) employees with the perks they are excited about.

According to research, more than half of Millennial participants reported that the quality of the benefits package played a significant part in their choice of an employer, while over 60% revealed that benefits and perks play a key role in their choice to stay at the company. 

Still, not all perks are the same. Modern employees need to look for benefits that go beyond just the health insurance. Here are some that most, if not all, workers will appreciate:

• Flexible PTO
• Child care assistance
• Tuition reimbursement
• Employee wellbeing programs
• Pet insurance
  
  

3.  Focus more on hybrid work

By this point, embracing hybrid work is a no-brainer. If you haven’t implemented remote working in your organization, you are missing out. 

It is one of the biggest factors candidates consider when comparing employers. According to a recent study, around 65% of respondents revealed they prefer working remotely full-time and more than 30% said they are seeking hybrid working environments. This means almost everyone wants remote work, in some capacity or another. 

Such results are not surprising, as the option of working from home allows employees to improve their work-life balance,  have more time to pursue their own passions, and practice self-care.

4. Improve your company culture

The best company culture is one in which every employee feels valued, communication is direct and honest, and the higher-ups offer guidance that helps the entire team thrive. Furthermore, a culture that promotes employee input and involvement significantly boosts employee engagement. 

Achieving this will indeed take a lot of time, but it’s worth it as your current and future employees will feel valued and be able to feel a sense of accomplishment for doing more than just working for the company. 

As a plus, opening up the lines of communication and implementing ideas that your employees came up with will boost retention rates, as well as innovation in your organization.

5. Upskill your employees

In some industries like tech, top talent was always hard to come by, even before the labor shortage. These days, the challenge is dialed up to 11. However, you can minimize its impact by creating your own talent. Look at your current employees and invest in reskilling programs and future education to prepare them for future roles. 

In case you don’t have favorable internal candidates, you can recruit people who may not have the necessary skills at the moment but are eager to learn. 

6. Recruit with diversity in mind

Diversity is not just a buzzword, it’s a tangible difference-maker. During the ongoing talent shortage, companies that embrace diversity in recruitment can gain a competitive advantage. 

Why?

It’s simple. Candidates, especially younger ones, want to work for companies that welcome people from different backgrounds. In fact, three out of five candidates value workplace diversity when deciding whether they want to work in a company or not. 

Make sure you remove biases in your hiring practices, compensation, and promotion decisions, and you’ll be well on your way to becoming a truly diverse organization.

Survive The Uncertainty

Despite the fact it’s impossible to tell when the labor market will recover, businesses that look within and find ways to address the universal pain points most candidates report will survive with minimal damage. 

By paying close attention to what your employees and talent want, you’ll be able to meet their demands and position yourself as a company worth working for. So in a way, it’s not about waiting out the labor shortage - it’s about taking action and facing it headfirst.