The Certainty Of Uncertainty

When I was a teenager. soon becoming an adult in the 80's my football coaches at every level; middle school, high school, and college would always tell me "No Pain! No Gain!" When the 90s hit and I was off in my career of helping business owners separate themselves from the pain of the myriad of employer administrative responsibilities and exposures they had with being an employer. My foray into the Employee Leasing industry now called the PEO industry started in 1987. Although the phrase "No Pain! No Gain!" became a phrase that has shaped me athletically, personally, and professionally over my years, I was in the business of removing employer-related administration, cost, and liability pain from my customers.

Over the past 30 plus years, the anecdote of a business entering into a co-employer relationship with a PEO is still proven the be an incredible "pain killer" for businesses. These businesses also find that they now have a lot more time to spend on the productive parts of their business. The growth of the PEO industry over the past 30 years is proof that the business case is both valid and valuable to the business and that over 80% of clients that enter into a co-employer engagement never go back to handling these tasks internally again. NAPEO (the national association of PEO's) states that from 2008 to 2020, the number of people employed in the PEO industry grew at a compounded annual rate of 7.6 percent. This is 7 percent higher than the compounded annual growth rate of employment in the economy overall during the same period. Those are some pretty revealing statistics.

So what's with the "Pain" every employer is still dealing with in the market today? ... even those that are with a PEO? To say the world of employment has changed in the past few years would be an understatement. To say it is never coming back to normal would be prophetic yet sadly predictable. Today employers are dealing with higher labor costs, higher turnover rates, in a market with very few choices in finding employees. The Great Resignation is real and it has been brewing for years as the Gig apps enabled individuals to control their own schedule. COVID19 accelerated the habit and created a storm that nobody was built to fix. Traditional services like Staffing companies can't even find labor and while PEO's can manage your employer-related task it doesn't help that your wages and cost keep going up and they were never built to help you find employees.

So what IF... What if you could get ahead of the storm and use this PAIN for your GAIN? Innovation and opportunity are born in hard times but a typical reaction to?difficult times?is to hunker down and wait for everything to go back to "normal". What will you do?

While there is uncertainty all around us in the labor markets, insurance markets, economic markets and socially, there are certain trends and strategies that can help you thrive instead of surviving these times. Here are a few:

WC Rates:

Workers' Compensation rates in California follow a fairly predictable trend line. Even the trend line above indicates that a turn upwards is around the corner. But here is why I think the market will harden over the next 5 to 7 years and rates return to the peak years in 2003, 2004. The commercial markets over the past couple of years have experienced underwriting losses. COVID exasperated the actuarial predictions and insurance companies are weaving through the data on the impact it will have on their individual companies. Actuaries depend on data that follows a normal trend line. When abnormalities are thrown into the system the numbers are skewed and the results can be much higher than expected. These abnormalities create unexpected losses that predictably affect the worker's compensation market in the years to follow. Now is the time to partner with a company that can create immediate cost savings as well as certainty.

Labor:

Gig apps have changed the way people engage in work. The U.S. Bureau of Labor Statistics (BLS), unemployment was already low in the U.S. at the end of 2019, pre-pandemic, at approximately 3.6%. While unemployment more than doubled by the end of 2020, during the height of the pandemic, it returned to almost 2019 levels, coming in at approximately 3.9% by the end of 2021. Unemployment had been coming down for some time since the “Great Recession” in 2008. Coincidentally, UBER was born in 2009 and created a new way of working and gave people the power to work when, where, and how much they wanted to work all in an app. Traditional companies are competing for Employees that want greater flexibility in how and where they work and better wages. These same employees realize everything has shifted and they are finally in the driver's seat and the basic law of supply and demand is on their side.

So How can you Adapt adapt to this new reality?

Employers will need to embrace technology that connects your workforce to your schedule through a mobile app. This technology will not only connect employers to their employees but will create automation in workflow and fulfillment. The problem is the technology to create your own ecosystem if you will of employees all connected on a mobile app can be a very expensive investment. Too much for businesses that employ less than 500 employees.

If you would like to find out how I can help you