Worker shortage puts more demand on staffing firms

Drop in the labor force participation rate still is an issue.
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David Robb. Courtesy Express Employment Professionals of Grand Rapids

Now, more than two years after the start of the pandemic, some employers are trying to regain stability in their workplace, but they are missing a key component: workers.

The demand for workers has increased as employers struggle to find candidates, according to some employment experts.

David Robb is co-owner and managing partner of Express Employment Professionals of Grand Rapids, a staffing company that helps people find jobs in industries including manufacturing, warehouse distribution and professional business services.

Robb said there is a drop in the labor force participation rate compared to years prior to the pandemic, when there was a tight labor market that saw the local unemployment rate hover around 2.5%.

At the start of the pandemic in 2020, Robb said the unemployment rate increased to about 15% for the first two months, which he said was driven by layoffs, and as a result, demand for workers decreased.

Robb said Express Employment Professionals does evaluation hires where individuals are on the Express payroll before a company hires them.

“At any given time, we’d have 400 to 500 people working on our payroll until they get hired at a company,” he said. “The number that we had working for us was cut in half almost overnight with the pandemic, so there was definitely a big drop in demand. There were a lot of uncertainties. A lot of people couldn’t work. A lot of companies were shut down.”

Robb said after about three months, things started to turn around quickly, and a lot of companies wanted to hire again throughout the summer of 2020.

“When they started hiring (again), there were a lot of issues in trying to fill positions and getting people to come back and really, I would say ever since then, demand has steadily been increasing, increasing, increasing on the company side, but we’re seeing kind of a slow, prolonged process to get people to return to work,” he said.

Robb said there just aren’t enough people in the workforce anymore.

“Two of the big factors that we saw over the past two years in trying to get back to where we were was there were a lot of the government stimulus programs and extended unemployment and things like that, which aren’t really in play anymore,” he said. “Sometimes people will mention those, but those aren’t in play anymore. They were definitely a factor in stretching things out and people not returning to work as quickly as they potentially could have due to the opportunities that were there, so that definitely elongated things a little bit. But the bigger factor that we’ve seen is the drop in the labor force participation rate. So, just the number of folks in the labor force has really taken a drastic drop, and that is a national phenomenon, but locally as well, we are seeing the same trend. 

“Today, we are sitting at, depending on what exact region you look at or what estimate you look at, we’ve got probably 15,000 to 30,000 (fewer) people in the workforce in our area than we had in 2020 before the pandemic. If they are out of the workforce, they are not on unemployment or anything like that. They’ve left the workforce. They are not looking for a job. So that is really where we are feeling the most pain. We don’t have the people that we had before, so even to be at the unemployment level we were at pre-pandemic, we don’t have those people.”

Although there is a decline in the number of people in the workforce compared to the pre-pandemic employment numbers, the individuals who are in the workforce and are looking for jobs have a wide selection of openings from which to choose.

Ashley Ward. Courtesy Kayla Ezinga, Hire for Hope

Ashley Ward is founder and CEO of Hire for Hope, a boutique talent consulting and recruiting firm that works with locally owned businesses in the manufacturing, retail, food and beverage, and professional services industries.

Like Robb, Ward said there is a lack of individuals in the labor market. As a result, companies must revamp their strategy for attracting candidates.

Prior to the pandemic, Ward said the labor market was a “company market,” where employers had the opportunity to choose from multiple candidates whom they believed could fit into their workplace culture. That has changed due to the reduced labor market.

“A lot of candidates now have their choice of multiple organizations, so it has been interesting,” she said. “I have actually never seen so many candidates decline offers in my career. Now that they have their pick of several offers, it is really driving up demand and it is also driving up company spend on perks, benefits and total rewards programs. There is definitely a huge focus on that, and since candidates have their pick, they are really focused now on their individuality. They have more of a voice, I think, in the process than ever before. Candidates are being clear on what they want and what they are looking for, so organizations have to get creative to be able to attract those candidates that have very specific needs in mind.”

Ward said pre-pandemic, Hire for Hope would post an average of three open job positions per month. That number now is up to seven on a monthly basis.

“Prior to the pandemic, we would only have one offer go out for that position, and I would say 95% of the time, the candidate would take the offer,” she said. “Now, we are having offers go out, and I am seeing only about 50% to 70% of candidates accepting the offer, so we’re really having to go back to the drawing board and find additional candidates in some searches, which has never been a historic trend.”

Ward said she believes the demand for employees will remain consistent in the near future as organizations pivot to specialized positions and get creative in finding candidates, including going beyond recruiting firms and into skilled trade schools to find candidates and also sponsoring candidates from overseas by trying to get them working visas.

To be competitive in the market, Ward said she encourages her clients to stay up to date with compensation data and analyses per quarter because it is adjusting quickly, and they risk losing employees who are top performers because they are being underpaid. 

“Right now, in this market, they can change companies quickly and go big and increase their salaries right away, which is interesting,” she said. “In my career, I have never seen an individual change position(s) (just) for a higher salary and be satisfied. There are usually other elements or variables that they’re considering.”

Ward said she also is encouraging employers to make their decisions quickly.

“We have lost out on opportunities due to our clients not moving fast enough,” she said. “They just drag their feet or take their time to give us feedback on the candidate and make an offer, and by that time, I’d say within 24 hours, we lose 10% of the candidates that we have engaged with because there are so many opportunities for them out there. The faster that we can move and the faster we can act throughout the pre-hire process, the better.”

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