In 2022, Workers May Start to Win, But Employers Won’t Need to Lose

Consult your economics textbook: after a sharp downturn in labor demand to which the US and other major economies responded with massive fiscal and monetary stimulus, the big news of our erratic post-pandemic recovery turns out to be a surprisingly large change in labor supply, as workers re-evaluate the cost-benefit of their previous jobs.

This so-called Great Resignation will be going strong as we enter 2022 with over 10 million open jobs, and signs of wage growth and market power shifting to front-line workers for the first time in decades. Despite some hand-wringing about “wage inflation,” this is good news. Why? Because labor markets *should* help both employers and workers to achieve their goals.

Rather than panic about “labor shortages,” let’s assess why our labor market is so brittle and lacks the resilience and adaptability which innovative business prizes in every other domain. An honest reckoning reveals that two decades in which employers pursued ‘hiring efficiency’ - by preemptively excluding an ever greater share of workers from consideration for skilled jobs - deeply damaged the collective talent pipelines of US companies, even as it blocked opportunity and suppressed earnings growth for tens of millions of Americans. It’s been a lose-lose bargain, which left employers vulnerable to the disruptions of the pandemic. Today’s “labor shortage” is evidence of failure - this is the Great Realization.

In 2022’s emerging post-pandemic economy, while workers may start to win, employers won’t need to lose - but they will need to change. Among other things, they’ll need to expand the pool of workers they hire, train, reward, and invest in developing. For example, this will be good news for the 70 million US workers who gained valuable skills through alternative routes (STARs) such as military service, community college, workforce training, and on-the-job learning.? Although lacking four-year college degrees, STARs will get a closer look by many employers in need of their in-demand skills.? This will also be good news for employers who make the change. If the pressure of a “labor shortage” drives their move to more inclusive, skills-based hiring, the smartest employers will have found a wider, dynamic talent pool for the long-run.

You can read on for these insights and many more in LinkedIn’s #BigIdeas2022 by Scott Olster . https://bit.ly/3pA0bUF