After the Coronavirus Pandemic Economic Crisis: What Will the Employment Market Look Like?
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThis changes everything! Or does it? With U.S. and global economies in free fall during the coronavirus pandemic, businesses are asking, “What will this do to the employment market as we navigate through and beyond this crisis?” It’s a reasonable question. Unfortunately, it’s a reasonable question with no easy answers – a question that begs additional questions.
The “Big-Picture” Question:
Before focusing on issues and questions that affect individual businesses and industries, here’s the big-picture employee market question:
Will pandemic crisis economic conditions transform the employment market? If so, who will have more power to influence and set compensation, benefit, and workplace conditions – employees or employers?
The short answer, according to historical and near-term indicators, is that it’s too soon to tell. In recent years, with unemployment levels extremely low, employees have had the upper hand. Now, however, with pandemic-influenced unemployment at post-Great Depression record levels, will employers now make it difficult for employees to demand favorable compensation and benefits?
Ultimately, the answer depends on your industry, your market, your competitors, your business, and your types of workers. When it comes to the economic landscape, staffing, compensation, and attracting and retaining top talent, only you can decide how to navigate key employment market issues.
Key Issue #1: Economic Landscape
For employers, is this a short-term economic disruption, a longer-term one, or a “new normal” economic reset?
While many businesses have failed or are in danger of failing, “some companies that are part of the ‘essential’ economy are rushing to hire new workers, which may temporarily give current staff some bargaining power,” according to USA Today. However, this appears to be the exception.
Will “essential” front-line workers expect increased wages? For example, will restaurant, customer service, and manufacturing workers demand “hazard pay” or “hero pay” for working long hours or directly with the public? Will we value these typical entry-level roles more in the future?
If you are in a hospitality or service industry, will servers now get higher hourly wages? Will you eliminate tipping or share tipping across all employees?
Key Issue #2: Staffing
How can you determine the right staffing levels during and after the crisis?
With revenue falling for many businesses, staff cuts may be necessary. What do you risk by reducing staff you will need again in the future?
Key considerations include whether you should incentivize employees to return to work when they are making more on unemployment. Will you need retention incentives to keep your top talent from being poached by competitors? Will you need to use creative scheduling and allow employees to work from home to accommodate school schedules?
Key Issue #3: Compensation and Workplace Culture
How will changing economic factors affect near-term compensation, HR programs, and the workplace culture?
In a dramatically different economic landscape where the nature and levels of staffing are impacted, how should you adapt your workplace and compensation policies to the “new normal”? For decades, workplace experts and futurists have predicted the rise of home-based workers. The Coronavirus pandemic could finally lead to a significant adoption of work-from-home policies and processes. Compensation policy changes could be significant, too.
Key considerations include whether you distributed incentive/bonus payouts at the beginning of the year. If you haven’t paid out on those plans, can you still afford to do so? What is your liability if you can’t make those payments? Are your pre-pandemic plans still in effect? Will you need to revise them in fairness to workers in a drastically changed economy?
Key Issue #4: Attracting and Retaining Top Talent
What types of workers will you need to stay competitive and profitable? How will you attract and retain them?
According to a recent report by The Brookings Institute, “The likelihood that workers will retain their relationship with employers throughout the pandemic … will be crucial to how quickly the economy recovers.” A recent snapshot showed that “…15% of workers who report being laid off as a result of COVID-19 say it is unlikely that they will return to their job after the crisis is over.”
Key considerations include which employees will be most important to attract and retain. Have you identified essential workers and top talent? What will it cost to retain them?
The Bottom Line:
Will the coronavirus pandemic turn what has long been an employee market into an employer market? With many factors and real-time shifts playing out, it’s too early to tell. Nonetheless, by looking closely at your industry and competitive marketplace, you can begin to see how those factors will affect your organization now and in the future.
The rapid shift in where and how we work will necessitate new approaches to the workplace culture, as well as attracting, retaining, and compensating workers. Tried and true compensation programs that once required only modest annual updates may now need substantially overhauled. In any event, contingencies should be established for this “new normal” likely to endure after the crisis.
Cassandra Faurote is President of Total Reward Solutions, a compensation consulting firm.