Horizon Point Consulting

Category: Next Generation Workforce and Workplace

We help individuals, organizations, and communities think innovatively about the next generation workforce and workplace. Read these forward-thinking stories and best practices from our work and lives.

What’s Affecting the Labor Force Participation Rate?

What is the Labor Participation Rate and how does it impact employers and the economic outlook?

According to OECD.org, “The labor force participation rate is calculated as the labor force divided by the total working-age population. The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.”

There are many factors impacting the Labor Market in 2023 including the benefits’ cliff, boomers exiting the workforce, the rate of working-aged males declining, women leaving the workforce by the millions and the decline in fertility rates.

One reason some workers are deciding not to work or to stay in low paying jobs is the Benefits Cliff. The benefits’ cliff occurs when an increase in someone’s pay triggers a greater loss in public assistance such as food, healthcare, childcare and housing. This happens because public assistance does not gradually decrease as income rises. Instead, it “drops off a cliff” at a certain income. This leaves prime candidates stuck between a rock and a hard place. Some may be quick to fault those not participating because of this or not participating fully (working less than full time in order to keep their benefits), but these individuals are making an economic decision and a wise one at that.

Next, we have the mass exodus of the baby boomers. Boomers made an economic decision to remain in the labor force during the great recession, causing them to begin exiting the labor force much later than historically anticipated. Now, boomers are retiring at a staggering rate. While we are still living in a work world created by the boomers, they are no longer the primary contributors. According to PEW Research Center, the number of baby boomers exciting the labor force has grown by about two million since 2011. Then, from 2019 to 2020 the numbers jumped by 3.2 million.

Why does this matter? Well, this group is often vacating higher level positions in their companies and the transfer of knowledge can be a challenge. Not to mention boomers aren’t being replaced at the same rate of exit and some who are retiring are passing down tremendous amounts of wealth to their children. This creates children that more than likely won’t be filling their parents’ shoes.

According to The Demographic Drought by Emsi male millennials are the next group that are in sharp decline in the labor force. Males have been AWOL since 1980. With boomers having such wealth, it left men not taking on the responsibility of getting a job until after 20 or moving out of their parents’ home either. Another economic decision. Add in the opioid epidemic, and males of prime age are being taken away from the market. Also, among the Millennials, there has been a shift from full-time work to part-time work. The reason for this says Lightcast in The Demography Drought is video games, yes video games!

Men aren’t the only ones we are looking at here. According to the latest Women in the Workplace Study by Lean In and McKenzie & Company, women are demanding more from work and are leaving their companies in order to get it. Some are referring to it as the “Great Breakup”. In addition, childcare prices are soaring and quality care is a challenge to find. That leads to women taking on the majority of the child care responsibilities. Again, this is another group is making an economic decision. Paying for quality childcare is often more expensive than bringing home a paycheck to cover it, so women are opting out. One report found that from 2020 to 2021 mothers took on the majority of child care responsibilities, spending an average of 7.1 hours per day caring for their children.

Finally, BLS.gov shares that population is the single most important factor in determining the size and composition of the labor force. So, what does that mean for the downward trend in US Fertility Rates? There is a growing number of childless US adults who don’t expect to ever have children. Again, are they making an economic decision not to have children? What impact does this have on the future of the Labor Force Participation Rate? Evidence would point to the conclusion that it will continue to decline under these circumstances.

Many people are making decisions based on a variety of factors, including the economics of working, to opt out of the labor force or not opt for full time participation. What does this mean to our macroeconomic situation? And what does this mean for employers? In order for people to opt to enter and remain, we will all have to think about how to weigh costs and benefits of such decisions.

September 12, 2023
The Economics of Union Activity

Supply and Demand. The first lesson of Economics, or at least I remember it that way. The most important lesson of economics as I remember it.

Maybe I’m remembering it wrong, but I think the issues of the supply and demand of labor need to be reinforced when we think about anything and everything that is going on in our world. And one of those things is union activity.

The issues at Starbuck, Amazon, UPS… the list goes on and on about union organization and in the media seems on the surface to be about wages, benefits, and the overall treatment of workers. As Jillian pointed out in our last post, People want to be valued and listened to. They need to feel like they have some sense of control over their lives, and that includes at work. Many employers don’t offer that. When people don’t have this at work, they aren’t happy.

But none of that matters from a union sense if only one person feels that way. Many people have to feel that way. And when many people feel that way and there aren’t enough people to go around to fill the demand for labor, they have power. Or in union terms, they have “collective bargaining” power.

And right now, there aren’t enough people to go around to fill jobs in many industries both in terms of the actual number of human beings available and or in terms of a desire to work in certain jobs or industries. And it is only going to get worse.

Typically, this issue of supply and demand for labor is measured by the number of job openings compared to the number of available workers. According to the Bureau of Labor Statistics, there have been more job openings compared to unemployed people since May 2021. In January 2023, there were almost twice as many job openings as there were unemployed people in the United States according to this BLS data.

This challenge is not unique to the United States. Boston Consulting Group’s The Global Workforce Crisis- $10 Trillion at Risk highlights the differences in labor supply and demand by country (both Germany and Japan are experiencing particularly acute issues with labor supply). Whereas some countries are currently experiencing a higher level of supply than demand, the piece emphasizes that by 2030 most countries will experience labor shortages. BCG postulates that this issue could result in $10 Trillion in GDP not created.

So, when there is more of a demand for labor than there is supply, employers better pay attention. We would hope they don’t have to pay attention because they are treating people like people. But when they aren’t, the most important law of economics will bite you. Workers will all leave and go someplace else, because someone else needs them, because there are more jobs than people available to fill them.

We can be distracted by the media saying artificial intelligence (AI) is going to take over all our jobs, but the data doesn’t show this. We may need to retool ourselves for the jobs of the future, and that may be where employers need to be focused to not only help with labor supply issues but also to employee engagement issues. Both impact union activity.

What are you doing to impact labor supply and union activity?

August 29, 2023
Could You Pass a Labor Relations Class?

School is starting back, and that means I’m collecting the latest news on union activity – good, bad, and ugly – for a college-level labor relations course I’m teaching. Each of us at Horizon Point has a unique perspective on the union landscape through our work with various clients and projects, which we’ll be sharing in a series over the next few weeks.

I’m kicking us off with a look at union activity right here in our North Alabama region, featuring a snippet from the 2023 Wage & Benefit Survey. When asked if any employees are represented by a union, only 3% of participating companies said yes:

All of these companies are in the manufacturing industry. Is that surprising? Why or why not? (I won’t grade you on it!)

In the same wage survey, we ask questions about pay practices, compensation, and benefits – these factors contribute to employee satisfaction and whether or not they’ll seek unionization. You may have noticed that big names like Amazon, Starbucks, and UPS have been making news for employee union activity and the sometimes less-than-stellar response from corporate leadership. Workplaces are more advanced than ever before, but sometimes labor practices don’t keep up.

SHRM recently published “The Evolution of HR and Labor Relations” for the Summer 2023 edition of HR Magazine. The biggest takeaway for me? The last sentence:

“The worker of today isn’t so different from the worker of yesterday in terms of their core human needs,” [Steve] Bernstein says. “What people really want in the workplace is to be listened to, to have access to decision-making and to be in a position to at least influence their workplace.”

Stick with us over the next few weeks as we explore further the changing (and stagnant) trends around labor relations and why it matters for YOU.

August 22, 2023
Application Process 2023

Should you Change your Application Process to make it easier for Candidates?

A couple of years ago, we worked with a client who was having difficulty filling positions. They were using all the right avenues to get the word out to potential candidates, but the pipeline was not working. After surveying several candidates, we discovered the issue was with their extensive application process. It was lengthy and ultimately deterred candidates from completing their application. Fortunately, we helped them streamline by removing some of the steps to apply.

Recently, a close family member applied for a position online and had the opposite experience. During a conversation, he shared that it was the “easiest process” he’d had while applying for jobs. He was asked two questions and had the option to upload a resume. Within a week, he was called in for an interview.

In Alabama, the current unemployment rate is 2.2%. Which means, most everyone who wants to work is already working. This makes it tough for companies who are looking to expand their workforce. Making the application process easier for candidates is one way they can attract future employees. A few weeks ago, I was in a café that had “mini applications” placed throughout their dining area. I immediately took a picture, thinking of our clients & how we can help them increase their applicant pool.

How can you streamline your hiring process? Consider what steps you can remove from the process all together. Save the paperwork for new hire orientation! Let us know if we can help.

August 8, 2023
Second Chances
Who among us has not needed a second chance in life? Have you been extended that grace? In my life I have been given chance after chance and have needed that opportunity to fail and to learn from those failures. When prisoners are released they are told that they cannot carry a fire arm and will not be eligible to vote but most times are not warned of the invisible barriers that exist in finding a job, housing or transportation. For example, you are good enough to buy a car but you cannot sell cars for a career. You must obtain housing but most will not rent to you due to your criminal record.

On June 29th Lorrie, Mary Ila and I attended the first Reentry Leader Conference in Birmingham at the Hyatt Regency Wynfrey. As a subject that is near and dear to my heart, I was excited to hear about ways to help employers afford people a second chance. We have so much untapped talent and potential in Alabama and in the world. Studies show that 77% of our population is justice involved, that’s 32% more than the percentage of people who have college degrees. Depending on state, there are between 2-4 open jobs for every one person available to take that job in the industrial sector. Connecting those jobs to reentrants is critical. Of the 9.7 million reentry each year, only 8% can find employment.

This is where Reentrycenters.com comes in. They equip participants with must haves such as affordable housing, food, transportation to appointments and counseling and most importantly good jobs. They even offer a free mobile bank for reentrants. Local Auto plants like Mercedes near the Reentry centers employ these workers.

During the 2nd chance employer Leader Session, Donny Jones from West Alabama Works shared about Building Hope West Alabama. Their passion is to “provide hope, help, and opportunity to people that are justice involved.” This program “connects justice-inolved individuals with meaningful jobs, as well as the job skills and educational credentials they need for long-term success.” Schnellke is one of the employers hiring people who are justice involved. They believe that everyone deserves a second chance.

Chief Justice Sue Bell Cobb was the keynote speaker. She became judge at 25 and now runs RedemptionEarned.org. It is an effort to help worthy incarcerated adults to become productive citizens. Alabama has one of the highest percentages of the aging population incarcerated. Out of the 4002 total parole hearings in 2022 only 409 were granted parole.Their mission is “to identify, assist, and represent worthy individuals who have spent decades behind bars, demonstrated they are transformed, and earned parole or work release.”

At Horizon Point we have a people first mindset. We believe that people are a company and community’s greatest asset. As one of the ladies speaking put it, which one of us has not made a mistake that needed forgiveness? How can your organization help to give “people” an opportunity after they have been held accountable for their actions? Afterall, don’t we all need a second chance?

Need inspiration? Read more from The Point Blog here:
July 25, 2023