While the hiring market is showing signs of improving, employers will continue to face talent challenges from pandemic-fueled transformations, according to the 2023 Labor Day Report by Littler’s Workplace Policy Institute. In particular, researchers found, there is an ongoing need for HR to address skills gaps.
“This year’s report finds signs that the labor market is loosening, but employers are still navigating a range of challenges that impact hiring and labor force participation,” says Michael Lotito, a shareholder and co-chair of WPI, the government relations and public policy arm of Littler, an employment and labor law firm.
Lotito notes that while the record-high unemployment rates and displacement that struck the global workforce during the pandemic have subsided, the labor market remains tight. Over the past year, he notes, there have been approximately two job openings per unemployed person, and recent studies have found employees more actively disengaged with their work.
“Although job levels in the aggregate continue to exceed pre-pandemic levels, certain industries have yet to fully recover,” Lotito explains. “The American workforce is undergoing a major transformation, due in large part to a widening skills gap. It’s impacting employers today and will create persistent challenges unless they take steps now to address it.”
What’s fueling skills mismatches?
The annual Littler report, which launched six years ago, found that prolonged remote learning during the pandemic left many young adults without basic skills, particularly the “soft skills” necessary for even entry-level jobs. In turn, this has contributed to the hiring difficulty employers have had, particularly in filling service-related positions. Many employers, in fact, researchers say, have had to provide more on-the-job training to bolster employees’ communication, time management and interpersonal skills.
Soft skills aren’t the only problem. It has also become increasingly difficult for employers to find qualified applicants for high-skilled positions. In a survey of 600 HR professionals by Wiley University Services, an online provider of higher education, nearly 70% said they are experiencing a skills gap. This could be due, in part, to what the National Association of State Chambers calls “skill mismatches.”
Before the pandemic, the organization says, about two-thirds of high school grads were enrolled in college; however, in the last few years, workforce transformations have had many employers rethinking degree requirements. Today, according to NASC, just one-quarter of jobs is likely to require a traditional college degree, while about half are considered “middle-skill” jobs that instead require some post-high school education or training—shifts that are leaving some employers without candidates that meet the job requirements.
And as technological advances will continue to affect most workplaces, Lotito notes, these skills mismatches may deepen—which is why he urges HR to take action today.
“Human resource executives must bring the skills gap to the attention of C-suite and boardroom leaders,” Lotito says, adding that leadership needs to understand how their workforce needs are changing: Primarily, what skills are going away? And what skills will be needed in the future?
“Armed with that knowledge, they can then strategically map out the evolution of the jobs at their organizations,” he says.
From there, to ensure a pipeline of suitably skilled talent, employers should engage with institutions in their communities—including state and local chambers, colleges and high schools—to establish effective relationships and influence educational training opportunities.
“This is a problem that cannot be solved by one single group,” Lotito says. “Employers, educators and policymakers need to work together to have a positive impact on the future of the nation’s workforce.”