If there was any hope during the height of the Covid-19 pandemic that the workplace would one day “return to normal,” 2022 dashed that expectation.
Thank you for reading this post, don't forget to subscribe!Hardly anyone has made it through the last 12 months without their work lives disrupted or completely upended.
Millions of people lost their jobs or changed careers. Some people resumed their commutes for the first time in years, while others, after months spent working from home, discovered they never want to step foot in an office again.
Now, with a potential recession on the horizon, economists and researchers are convinced that 2023 will usher in even more significant changes to the workplace.
CNBC Make It spoke with three experts about the biggest trends that will shape work this year.
Hiring will slow in 2023 — but jobseekers will still hold the power
Even though several U.S. companies have slashed staff in recent months, workers will continue to have the upper hand in the labor market this year.
Layoffs at Goldman Sachs, Google and other notable companies aren’t a sign that the worst is yet to come, Karin Kimbrough, chief economist at LinkedIn, says. Some businesses, mostly in tech, media and entertainment, she adds, are just recalibrating after overhiring at the start of the pandemic, when they experienced rapid, unexpected growth.
“It’s never great to see people lose their jobs, but overall, the labor market is resilient, even if there’s been a small erosion to its strength, it’s still a tight market with plenty of open roles,” Kimbrough says.
In November, the U.S. labor market posted a near-historic low of 1.4 million layoffs — less than 1% of the workforce — and there were 10.5 million job openings, or roughly 1.7 vacancies, per available worker, according to the latest Labor Department data.
While hiring is likely to slow in the months ahead, it’s coming down from record highs — and it shouldn’t result in the epic rates of unemployment that people are fearing. “At most, I see unemployment creeping up to 5% from the current historic low of 3.5% in the U.S.,” Kimbrough says.
Education, government, health care and retail are among the industries where hiring has maintained its momentum, and are poised for continued growth in 2023.
“For the moment, the U.S. consumer is still strong, and is still spending a lot,” Kimbrough adds. “It’s not the time for employers to get ahead of themselves and aggressively lay off workers, cutting off their ability to meet demand.”
Managers will make or break companies’ success
The secret to stopping “quiet quitting” and improving employee retention rates could be hiding in the middle rung of the corporate ladder.
Since the start of the pandemic, managers have reported higher rates of stress and worse work-life balance than the employees they oversee — and according to recent research from Gallup and Microsoft, manager burnout is only getting worse.
While having stressed-out managers is never good, it’s a particularly bad problem to have in a continued tight labor market, Bryan Hancock, the global leader of McKinsey & Company’s talent management practice, says.
“They’re the ones who are driving employee productivity and engagement, balancing employees’ demands for flexibility, and if we think about losing employees, the only way you can really ‘quiet quit’ is if you don’t have an effective manager who’s checking in on you,” Hancock explains.
Given how much harder their roles have become over the last two-plus years, however, managers are leaving their jobs at elevated levels, even as resignation rates for individual contributors have declined from peaks in late 2021 and early 2022, Anu Madgavkar, a partner and researcher at the McKinsey Global Institute, says.
“All of this is creating a manager shortage, which just exacerbates the challenges companies are facing attracting and retaining talent,” she adds.
Great bosses might not be able to stop disgruntled employees from applying to new jobs, but they can often be the deciding factor in whether or not an employee seeks out new opportunities in the first place, a December 2022 report from BCG notes.
Workers in health care, retail, manufacturing, hospitality and similar in-person industries, which represent 70% to 80% of the world’s labor force, are 1.5 times more likely to burn out and twice as likely to leave their job within a year if they’re dissatisfied with their manager than satisfied workers, BCG found.
But, Hancock adds, companies who upskill their managers — training them to be more empathetic, communicate more effectively with employees and lead in a virtual environment — will be the ones that thrive in 2023, no matter what shape the economy is in.
Salary transparency will become the norm in corporate America, not the exception
In 2022, after pay disclosure laws were enacted in job markets throughout the U.S., some major companies, including Wells Fargo, IBM and American Express, announced that they would post salary ranges for all U.S. positions, even if it’s not required.
The salary transparency movement has gained significant momentum in the last three weeks alone as three additional states — California, Washington and Rhode Island — adopted their own disclosure laws. Bills are already in the works with various states and city legislatures throughout the U.S.
“2023 could be a tipping point in making fair, equitable wage practices the norm in the U.S.,” Julia Pollak, chief economist at ZipRecruiter, says. “As pay transparency laws become more mainstream, it’s going to get harder and harder for companies to ignore or avoid this issue.”
By the end of the year, roughly 1 in 4 workers will be covered by a law that requires businesses to be transparent about their pay wages, according to Payscale.
Pay transparency policies could lead to better matching in the labor market, Pollak says, as jobseekers will be “more inclined to apply to roles they would actually want to take” if they know the salary upfront, rather than declining an offer because the pay didn’t meet their expectations.
Such policies can also help businesses be more productive in the long-run, Pollak says, as having formal, transparent pay structures can help companies understand what their competitors are doing, incentivize productivity and retain top talent.
Economists have also pointed out that pay disclosure requirements could help close persistent wage gaps across gender, racial and LGBTQ identities.
The rise of salary transparency laws will have the most “obvious impact” on high-wage occupations in tech, health care, law and similar industries, Pollak adds, where the ranges for different positions tend to be much wider.
Check out:
What the job market could look like in 2023, based on a surprisingly strong end to 2022
The 10 fastest-growing jobs in the U.S. right now—many pay over $100,000 a year
Gen Z and millennials are leading ‘the big quit’ in 2023—why nearly 70% plan to leave their jobs
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