With the easing of COVID-19 restrictions, the U.S. economic engine is starting up. Unemployment is continuing to drop from a high of 15 percent during the pandemic to 6 percent where both large and small businesses now are hiring—but scrambling to find qualified workers. The latter is reflected in a recent survey by the National Federation of Independent Businesses that reported 44% of companies are unable to fill job openings, a record high for this survey.
Consumers who fled to online purchasing under COVID-19 now have greater freedom to shop outside of their homes to their personal joy. This growing consumer activity on main street USA is stimulating large and small businesses to hire—and this is behind Ace Hardware’s recent announcement of their plans to onboard thousands of workers in anticipation of a very busy summer. The company and its independent retailers expect to hire over 30,000 full-time, part-time and seasonal positions at their Retail Support Centers (RSCs) as well as start hiring at their 5,000 locally owned stores across the United States.
“As an embedded cornerstone in neighborhoods across the country, we’re humbled to be able to hire thousands of people to work right in their own community,” said John Venhuizen, President and CEO of Ace Hardware Corporation. “Our employees earn competitive pay, great benefits, and importantly, learn how to provide exemplary customer service skills while working together as a team.”
Ace’s hiring plans reflect what is occurring across the country that The Conference Board addressed in their recent study. Gad Levanon, Labor Market Vice President, describes the unique short term hiring squeeze that is now unfolding during the post-pandemic recovery, as well as the long term structural challenges that continue from before the pandemic crisis.
“Just as job losses in the COVID-19 recession were unprecedented in speed and severity, the post-pandemic recovery has set off a historic set of recruiting difficulties,” he said. “Some of these reflect unique factors likely to fade by the end of 2021, easing acute hiring troubles. But they are accompanied by a return—or even acceleration—of the same long-term drivers behind extremely low unemployment before the pandemic. Together, these short-run and structural causes will keep labor markets tight until the next recession.”
The Conference Board identified a number of factors contributing to the current labor shortage, specifically to this unprecedented recovery. Surging demand for labor is occurring at a time of stagnant labor supply that was seen in the recruiting difficulties of April and May of 2021. In prior recessions business growth slowly drew workers back into the work force. But in the current hiring rebound for both large and small businesses, they are having to pivot quickly to keep pace with consumers who have been unleashed from lockdowns.
This economic burst of hiring was reflected in The Conference Board®-The Burning Glass® Help Wanted OnLine® (HWOL). It reported a rapid growth in the volume of online job ads over recent months. They then saw a rapid rate of hiring in food services, tour and travel guides, entertainment attendants, and hotel—that also extended to construction and freight transportation as well.
On the supply side a number of factors are dampening work participation. Quit rates remain historically high, attributed in part to working-age adults not re-entering the workforce due to concerns prompted by the pandemic such as fear of getting infected, as well as childcare and remote schooling, elder care, and high federal unemployment benefits.
Other economic factors are in flux. For instance, higher wages typically abate labor shortages, and according to the Employment Cost Index, Q1 2021 saw the fastest wage growth in 20 years. With businesses stressing to meet rising customer orders, they are seeking other strategies for recruiting, retention, and wages. Their arsenal includes use of employee referral programs, staffing firms, technology to target candidates, and a shorter recruitment process with fewer interviews and faster hiring decisions.
While services industry employment was hit hard, housing saw a rise in home values due to lower interest rates. For baby boomers this offered a way for them to retire and leave the workforce. In addition, the working-age population overall is shrinking for the first time in US history—one additional factor placing a long-term downward pressure on the unemployment rate.
The study also indicated that the recruiting and retention activities of workers in blue-collar and manual services jobs are difficult and tied to both short- and long-term trends. While demand for them is now growing, the supply is low due to a high infection risk in combination with elevated unemployment benefits relative to the market wages. This is slowing their re-entry into the workforce that is leading to wage acceleration—that is now fastest in blue-collar and manual services jobs. This sector is catching up to other areas such as technology where unemployment and wages were relatively unaffected.
This unique recovery is presenting greater employment opportunities to workers who are in lower paid jobs, as was reported in The Conference Board Job Satisfaction Survey It revealed that those having more choice in where they can work are experiencing greater job satisfaction.
While great relief is being felt around the country over declining infections and death rates, much remains unclear about the future. Large and small businesses are working through the challenges associated with hiring workers back post pandemic, but they are also facing long term workforce structural issues that existed before the pandemic. In addition, how Americans work and their personal lifestyles will continue to adjust over time in response to the pandemic’s impact, and for many anxiety remains over what the “new normal” will be.
Read about COVID-19’s Lasting Impact Shown in Columbia Business School Research on Work Preferences
