As 2021 nears an end, we look ahead and give our insight into the Market Outlook.
This year was another wild ride as high hopes of a vaccinated workforce would resolve our most significant problems in over a decade. The year has turned out to be exceptionally active on the job front, with many new themes and trends emerging that will carry into next year: Wage increases, Great Resignation, and traditional work model disruptions. We take a closer look at the sure-to-be exciting year ahead.
Historic Demand for Talented, Degreed Technical Professionals Continues:
Demand for brilliant, degreed professionals in our areas of manufacturing, engineering, and architecture has been steady over the years. However, the second half of 2021 has seen a record number of job openings in our areas of expertise. Combine the increased pressure on manufacturers to keep up with our relentless demand for products with an extreme supply shortage of everything from microchips to paint, and you have unprecedented demand for skilled engineering, manufacturing, and architecture talent.
The American Staffing Association’s weekly industry sales survey recorded a record number of openings for the week ending November 7th . Indeed.com data shows a 50% increase in job openings in Minnesota since February 2020. The U.S. Department of Labor’s Quit Rate, the percentage of workers who quit voluntarily is at a record high in September, resulting in 4.4 million U.S. working giving notice to their employers. This demand for talent will likely be relentless throughout 2022 as American and global consumers’ appetite for goods and services continues.
Inflation, the 2022 Word of the Year?
An emerging concerning trend is inflation and will have a significant market impact on the market. Add an unlimited supply of stimulus dollars printed, unrelenting consumer demand for products, and ongoing supply chain issues, and you quickly have increased inflation in the U.S. Economy. One of the first noticeable areas of inflation is increased salary requirements from candidates. As the renewed war for talent increases, supply and demand principle plays out at the cost to company budgets and bottom lines. This is particularly felt in the engineering, manufacturing, and architecture sectors, where highly skilled and educated employees are sought to meet increasing customer demand. In most cases, a modest salary increase is expected from a candidate to consider a new offer.
While causing headaches for executives, candidates are finding this environment very advantageous. They benefit from this by increased salaries either by counter-offers or signing bonuses, new stock options, and bigger paychecks at their new employers.
As job boards and social networks increase their prices to meet demand, inflation is also realized in recruiting costs. Discouragingly for leaders, the increased cost of job advertising brings less value as fewer candidates are posting public information about their search.
Inflation, due to gas prices, electronic components, shipping costs, and ironically, wages, is passed on to consumers and wipes out much of the gains new hires are seeing. As the image below shows, a 4.9% average higher salary is only met by 6.2% higher inflation.
The Great Resignation is Legit and Not Going Anywhere:
The U.S. Bureau of Labor Statistics states that job openings for replacement positions will account for twice as many as growth. Two out of every three job openings will be replacing works who’ve left the position. The number of U.S. workers who voluntarily quit their jobs is at a historical level. The reasons for this are as many as there are employees, but in general, the great reset of 2020 caused many people to reevaluate what’s important in their careers and what makes them happy. The term “work/life balance” is replaced with “balance”. Employees aren’t concerned about career happiness as they are about being happy. Increasingly, time spent with family, destressing their daily routine, and focusing on a higher purpose in their work has caused many people to find new ways to spend their time in exchange for a paycheck. The options to realize this are endless.
As resignations continue and after end-of-year bonuses are distributed, this trend will continue as employees hear about their former employees’ significant raises.
The aging workforce, record-high stock markets, and Boomer portfolios create a perfect opportunity for anyone over sixty years old to downshift their lives and find whatever might be missing to find more balance and purpose. The image below highlights the impact of employees nearing retirement will have on the manufacturing workforce.
Hottest Skills in 2022:
Human Skills:
Human skills are increasingly important as companies understand that employee engagement fosters employee fulfillment and happiness, making more productive and loyal teammates. This is more critical than ever. Possessing leadership abilities that keep great employees are needed to attract the brightest talent. The ability to be a strong team player, be a solid technical project lead, and grow a cohesive team of problem solvers is rare. Having strong qualities around inspiring others to deliver high-quality results while keeping them excited about the company and role over time is an increasingly sought-after skill.
Creative Problem Solvers:
The past couple of years has taught us much. One lesson learned is the need to be extremely nimble and adaptive as a business, as leaders, and as technical employees. Moving at warp speed and changing directions on a dime requires creative, quick thinking to solve complex problems daily. Leaders are looking for adaptable abilities to think without hesitation and minimal oversight. As uncertainty continues into 2022, the ability to move quickly without compromising quality will be critical for companies to navigate the year ahead.
Supply Chain Expertise: What used to be a lesser-known function now gets much more attention. The increased backlog of international shipments into U.S. ports and the struggle to get goods from the docs to manufacturers and store shelves are amplified because of the shortage of qualified workers. Supply chain experience around Asian suppliers and negotiation skills are required as pricing pressures continue and companies pass through costs.
Looking ahead with optimism to 2022, we see a strengthening employment market with increased salaries and internal and external opportunities for technical professionals. There is sure to be turbulence in the overall economy as supply chain, inflation, and employee resignations remain sticky issues through the new year. The greatest job market in history is expected to continue throughout 2022, giving professionals access to substantial flexibility and options at their disposal. Strong companies are attracting great talent, an elevated vision, strong leadership and engagement (See Related Insights below) and an increasingly employee-centric cultures.
Tom Goettl, President of Konik, a Technical Talent Network, writes at the intersection of careers, leadership and technology.