As the U.S. labor market remains constrained, employers face persistent challenges in matching hiring intentions with available workers, as highlighted in a recent report by professional services consulting firm RSM U.S. A substantial majority (97%) of senior executives from middle market businesses (MMBs) surveyed in October 2023 expressed concerns about the lack of qualified workers, with 66% anticipating difficulties in staffing open positions in 2024.
To navigate these challenges and maintain productivity amidst market fluctuations, businesses are urged to adopt a multifaceted strategy encompassing digital transformation, compensation and benefits, and human capital management, as emphasized in a press release by RSM. Survey findings reveal that MMB executives are indeed embracing this approach, with technology investment taking precedence. Nearly 60% of respondents plan to invest in automation or IT within the next year, primarily aiming to enhance employee efficiency and productivity rather than replacing labor outright.
Moreover, MMB executives are employing various recruitment and retention tactics, with a focus on enhancing human capital management through compensation and benefits adjustments. Over half of respondents increased compensation in Q3 2023, and a significant majority (68%) intend to do so in the coming six months, projecting an average wage increase of 5.5%.
Curtis Dubay, the Chamber’s chief economist, highlights the shrinking labor force as a prevailing challenge for businesses in 2024. Adaptation strategies include investment in technology, upskilling and reskilling initiatives, and embracing workforce diversity by hiring veterans, military spouses, individuals with disabilities, and retirees seeking re-entry into the workforce.
Despite earlier concerns about a potential recession, the job market outlook appears more favorable for Q1 2024, according to recruiting experts. The latest Job Openings and Labor Turnover Survey suggests a potential uptick in hiring activity.
In a tight labor market, job seekers wield significant bargaining power, seeking workplaces aligned with their values and offering autonomy and flexibility, according to a December Workforce Report by iCIMS. The rise of flexible work models, endorsed by 47% of MMB executives, reflects a shift in organizational culture, with 60% acknowledging its positive impact.
Furthermore, companies have successfully addressed remote work challenges, with a decrease in reported mental health issues among remote workers. While the prevalence of remote or hybrid work arrangements has decreased, its normalization underscores ongoing adaptation to evolving work trends.
