Tuesday, February 2, 2021
A year ago, we were experiencing the longest economic expansion in U.S. history. While the pandemic has reversed that trend, pushing the unemployment rate up to 14.7%, with nearly 33 million American workers getting jobless benefits – about five times the peak during the Great Recession – we’re starting to see signs of a stabilizing workforce.
New data from our second annual Workforce Management Benchmark report shows overall workforce volatility improved significantly in Q4. Despite the rollercoaster impact of the pandemic on the labor market which caused the U.S. Talent Retention Risk (TRR) ScoreSM (our proprietary and predictive measure of workforce volatility) to spike 14% to its 2020 peak in June, we exited the year in relatively stable territory with volatility up only 3% since last January.
The unemployment rate has also dropped to 6.7% since its peak in April. While this is nearly double where we started the year, it’s a positive sign, especially with vaccinations underway and experts anticipating a slow economic recovery as a result.
Other signs of improving employee sentiment from our benchmarks include:
This bright spot still comes with uncertainty for many industries. More than 60% of major sector categories ended 2020 with above average workforce volatility. Arts, Entertainment, and Recreation was up 14%, and Accommodation and Food Services was up 6%, in volatility over 2019. Teachers (+175%), Doctors (+108%), Administrators (+61%), and Nurses (+27%) all had the most significant year-over-year volatility jumps. And we are facing new workforce challenges – workers continuing to migrate outside of cities, remote work creating national competition for talent, and ongoing economic and labor market jolts – will likely shape 2021.
The value of data: A quick look
Finance, for example, is the most volatile job category in the U.S. right now, 90% above the national average. For organizations looking to snatch up finance talent, now is a good time to recruit these workers, as they’re very likely to be open to new roles and unsolicited recruiting messages. These companies may choose to focus their talent search in the San Francisco-Oakland-Hayward area, as it’s the most volatile MSA in the country, and its close neighbor San Jose, to capture the part of the market flocking to the suburbs.
Companies with workers in finance roles should target these employees with retention-based messaging. Leading employers are tapping AI to help decipher which messages – company resiliency, business stability, strong leadership, career growth, positive work environment etc. – resonate most with their workforce so they can minimize the risk of losing critical talent to their competitors.
2020 certainly taught organizations the importance of agility and resiliency. While things are looking up for the labor market, we need to stay vigilant. Employers that leverage and interpret data in 2021 to better understand the state of the evolving workforce will be better positioned to make confident, strategic decisions that capitalize on new trends and opportunities, and build an optimal workforce to handle whatever shocks could be on the horizon.
Check out our complimentary annual benchmark report for more on the current state of the U.S. labor market and employment volatility.