Another major trend in the workforce since the pandemic has been the impact that long-term work from home and automation has had on the workforce. That change in workforce has resulted in nearly 25% more of the workforce than previously anticipated having to change their occupation, according to McKinsey.
Large swings to workforce demographics may have Plan Sponsors feeling overwhelmed. Those who are eager to keep track of demographic changes in the overall investing habits of America may want to take note of several new studies and statistics that show a few clear trends.
Prior to the pandemic, the largest change in the workforce was the aging of America. According to National Council on Compensation Insurance, “In the past 10 years, the US labor force has grown older… between 2009 and 2019, the labor force grew at every age group except under 25. Workers 65 and older increased from 6.5 million to 10.7 million, a 63% increase.”[1] The aging of the workforce drove employers and plan sponsors to consider questions about catch-up options as well as succession planning for widespread retirement. Post-pandemic, the news is quite different and so are the trends.
Most of the story around the pandemic’s impact on workforce demographics centered on massive unemployment. Some of that unemployment was felt stronger by some groups than others. As we’ve discussed in the past, women were more impacted than men by the employment decline. According to the Bureau of Labor Statistics, that disparity corrected somewhat once vaccines became widely available.
While there was an increased attention on diversity and inclusion in retention and recruitment, the pandemic impacted diverse workers in disparate ways. While white men were more likely to keep their jobs during the pandemic, those that became unemployed were less likely to get rehired. According to the BLS, “White men recovered only about half of their 2020 employment losses in 2021, while other groups recovered about three-fourths or more of their losses. In 2021, employment of White men was down by 4.8 percent, somewhat more than that of men in other groups.”[2] This is also true for men who were foreign-born. “Although the foreign born recovered larger shares of their employment declines than the native-born in 2021, the decline for foreign-born men was more than double that for native-born men one year into the pandemic.” Lastly, on this topic, employment remained down for men with lesser levels of education. The impact of these demographics may result in a backlash by some workers against DEI efforts.
Additionally, the pandemic employment trends may change how employers are hiring. They may be more prone to hiring contractors. “Some companies will shift from trying to build skills for an uncertain future and instead just hire, and pay a premium for those skills, when the need actually manifests. Other companies will instead expand their use of contingent and contract hiring or expand their partnerships with organizations to “rent” employees for a short period of time to meet the skill needs that they are facing.”[3]
Another major trend in the workforce since the pandemic has been the impact that long-term work from home and automation has had on the workforce. That change in workforce has resulted in nearly 25% more of the workforce than previously anticipated having to change their occupation, according to McKinsey.[4] In addition to the proliferation of virtual meetings, which may be here to stay, the increase in e-commerce is predicted not to change. That may be increasing the ability of small businesses and start-ups to take flight, and could cause an increase in employees leaving for side-hustle turned small business.
Similarly, WFH’s other major impact to the workforce may be the blurring of work and life spaces. According to Harvard Business Review, “employers that support employees with their life experience see a 23% increase in the number of employees reporting better mental health and a 17% increase in the number of employees reporting better physical health. There is also a real benefit to employers, who see a 21% increase in the number of high performers compared to organizations that don’t provide the same degree of support to their employees.”[5] That may also be moving the second trend of employers who allow for greater flexibility in employee schedules.
[1] https://www.ncci.com/Articles/Documents/Insights-LatestTrendsWorkerDemo.pdf
[2] https://www.bls.gov/spotlight/2022/demographic-changes-in-employment-during-the-pandemic/home.htm
[3] https://hbr.org/2021/01/9-trends-that-will-shape-work-in-2021-and-beyond
[4] https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19
[5] https://hbr.org/2021/01/9-trends-that-will-shape-work-in-2021-and-beyond
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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