The job market economics are clear. Regardless of the COVID distraction of the last several months, the escalating competition for workers and a shrinking talent pool will (again) likely come together, intensifying an employee-in-control marketplace. The need for trained and talented workers is likely to grow faster than their availability, again.
A decrease in unemployment, the shrinking number of available people, and increasing turnover will again soon converge. With fewer qualified workers to fill growing jobs, employees will have even more choice in where they will work, clearly giving the employee the power in the occupational marketplace.
The laws of supply and demand typically apply in the buying, selling, and pricing of goods and services. For example, when excess houses are on the market, prices stabilize or decline, additional incentives are offered, and we have what is referred to as a buyers’ market. A sellers’ market occurs when limited houses are available in a growing geographic market. Prices increase regardless of whether the kitchen, bathroom, and landscaping are upgraded.
So too, economic laws of supply and demand apply to work and the workforce. An employer-in-control market occurs when the supply of workers exceeds the number of jobs available. In this environment, there are plenty of people to do the work that needs to be done, and companies typically have control of the employment relationship, including how they choose to treat and compensate employees. When job availability exceeds the supply of workers, the market becomes one of employee-in-control. In this environment, employees have the choice to define and co-manage the employment relationship.
Companies that ignore employment trends relevant to their geography or industry will be compromised by not having the people to do the work that needs to be done. Attraction, recruiting, and retention costs will rise, which will significantly compromise growth and profitability. Employee turnover must and can be managed.