Over the past few years, the U.S. job market has experienced volatility associated with the COVID-19 pandemic. While the unemployment rates remain low at 4%, professionals continue to quit their jobs. This trend is pushing organizations to adapt to newer strategies to attract and retain talent. Let’s look at what 2022 holds for the U.S. job market.
Current Analysis of the U.S. Job Market
Number of People Who Quit in 2021
The U.S. Department of Labor claims the number of people who voluntarily quit their jobs in December 2021 was 4.3 million. While staggering, this number was down from November 2021 when 4.5 million quit, breaking a two-decades-long record. For seven months straight, the U.S. saw a soaring number of people leaving their jobs – and the total number stands at an astonishing 38.54 million for 2021. Lower-wage workers led turnovers last year, a trend that will likely throughout 2022.
Number of Current Open Job Positions
Despite a record number of people quitting jobs in 2021, the 2022 U.S. job market remains lucrative. According to the latest data, there were 10.9 million job openings in December 2021, beating the market forecast of 10.3 million. The report from the U.S. Department of Labor revealed that openings increased in several key industries. This includes accommodation and food services seeing the largest rise, followed by information, non-durable goods manufacturing, and local government education. Meanwhile, demand dropped for the finance, insurance, and wholesale trade industries.
Job Seekers Market
The pandemic has resulted in the biggest problem for the U.S. job market—the labor shortage. With a record number of job openings every month not being filled, the gap between the market’s demands and the human capital supply is growing. Many U.S. industries and companies are finding it challenging to fill essential positions. These positions include truck drivers who are responsible for transporting cargo and products, delivery people who drop packages off to customers, and sanitation staff who keep spaces hygienic and clean.
Korn Ferry, a human resources consultancy, recently published their 20-country report. In it, they declared that “the U.S. was facing the most alarming talent crunches of any country.” There are various reasons for this, such as the pandemic, the faltering U.S. talent economy, the rising average age of the U.S. population, and the recent changes in U.S. immigration policies. So, while there are plenty of jobs for grabs, there are not enough takers.
Job Seekers Have the Bargaining Power
More open positions in the U.S. job market have translated into job seekers having the upper hand. This trend will continue in 2022 as the need for skilled workers increases and the hiring rate stagnates. Professional and business services have seen rate of hirings decline throughout last year, and job seekers will continue to take advantage of this slump by negotiating higher salaries and better benefits.
Pay Increases are Expected
As more positions become available in the U.S., employers are more likely to hold onto their existing talent. In 2022, organizations are predicted to increase employee salaries, and companies are already revising their 2022 pay budgets. The Conference Board, a New York-based think tank, predicts a 3.9% increase in wage costs for U.S. companies on average, the highest since 2008.
Employee benefits will be a key focus for organizations worldwide in 2022, and U.S. companies will likely follow suit. Mental health and employee well-being continue to dominate current conversations, and employees are increasingly looking to work in organizations whose values match their own. Benefits and perks beyond compensation will drive the hiring process in 2022. Experts agree that organizations prioritizing benefits and employee well-being will play a significant role in helping end the great resignation in 2022 and beyond.
Work from Home and Hybrid Working on the Rise
Remote work has become the new norm, with 58.9% of the total U.S. workforce working remotely. Furthermore, the majority of employees say they are more productive while working from home. Companies are being forced to adapt to this relatively new work model that employees are demanding. The hybrid work model will also continue to trend upwards.
Diversity, Equity, and Inclusion will Remain a Top Priority for Job Seekers
Social justice issues in the workplace are increasingly making headlines for global news. However, simply talking about the problems is no longer enough. Organizations trying to woo potential employees must prioritize and invest in diversity, equality, and inclusion (DEI). They will have to deliver on their promises of being equal opportunity providers to succeed because employees are now holding employers accountable more than ever.
The Great Resignation
2021 saw nearly 39 million U.S. citizens voluntarily quit their jobs. Forecasts say this trend will continue into 2022, with more mid-career employees opting to resign for better opportunities or to open their own businesses. With deep-rooted factors like immigration policies and economic systems driving this era of quitting, we will continue to see employees in the U.S. leave their jobs in higher-than-average numbers in 2022.
The COVID-19 pandemic has all but upended the global job markets, with the U.S. being majorly impacted. Organizations are now forced to adapt to a rapidly changing market by implementing remote and hybrid work models, increasing compensation, improving benefits, and investing in DEI. However, even with these changes, the great resignation is persisting. With the 2022 job market looking similar to 2021, employers will have to stay abreast of emerging trends, and address employee wants and demands to remain competitive.