Despite recovery from the COVID-19 pandemic, the U.S. is expected to add only 11.9 million jobs by 2030, according to the Bureau of Labor Statistics (BLS). That number accounts for jobs recovered from the pandemic. This is fewer than in previous decades, but the U.S. will continue to have fewer workers.
BLS anticipates a massive retirement wave from Baby Boomers in addition to the 3.3. million Baby Boomer retirements during the pandemic. The labor force participation rate is expected to drop to 60.4% in 2030, down from 61.7% in 2020.
Every industry will continue to struggle to attract labor and stay fully staffed. Industries will be forced to reduce employee turnover, create a better work environment, attract Gen Z as they enter the workforce, and automate where possible. To remain competitive, employers may have to enhance existing incentives with monetary benefits, culture and flexible work arrangements.
According to Harvard Business Review, organizations are struggling with fairness and equity as they wrestle with flexible work issues and compensation - especially when inflation is considered. If inflation continues to rise, current compensation will be worth less and less in terms of purchasing power. It is expected that some companies will be able to compete for talent through compensation alone while others will not.
Meanwhile, workers are expecting to be compensated based on their expertise and results rather than position. As a result, some employers are reducing the number of hours worked by employees while keeping compensation flat to overcome budget constraints. Employers will need to be creative and flexible in weighing compensation issues.
IFPA is here to help you. Please participate in our compensation study to ensure you are competing fairly for employees. Those who complete the study will receive a free copy of the results.