Analyst Insight: The North American talent pool has shown few signs of improvement in the post-pandemic new normal. U.S. labor participation rate declined 110 basis points since February 2020 while Canada declined 50 basis points. The European Union, in contrast, improved 160 basis points over the same period. With 37% of all U.S. jobs in supply chain, North American supply chains and supply ecosystems are particularly vulnerable to weak labor participation.

Labor Participation Rate (LPR) is the percentage of eligible labor working or actively seeking work. LPR declines when job seekers stop looking for work.

Why are workers not buying the jobs that potential employers are trying to sell? Research suggests multiple factors are driving declining U.S. LPR, including aging population, delayed workforce entry due to education, eldercare commitments, limited childcare options, and declining workforce health. Supply chain firms need to adapt to labor participation trends to gain competitive advantage in hiring. Relevant labor participation and workforce trends include:

Not Everyone Wants to Retire. According to the U.S. Bureau of Labor Statistics, the number of unemployed individuals in the U.S. seeking full-time or part-time work grew more than 11% over the last five years. During the same period, the pool of job-seekers age 55 and over grew more than 24%. Supply chain employers faced with hiring shortages could do well to look to the pool of available (and likely experienced) older talent.

Full-Time or No-Time. While total job seekers grew by 11%, individuals seeking part-time work declined 2%. Labor data suggests increasing preference for full-time work. Hiring strategies that feature “contract to permanent” or “part-time to full-time” need to be re-thought or discarded. With more opportunities than qualified candidates, fewer candidates are likely to buy in to the promise of “full-time later.”

The Side Hustle. Sources suggest the 30% to 40% of North Americans have a “side hustle” or side business. The U.S. Census Bureau reported a record 5.4 million new business applications in 2021. While firms need to ensure that company time and resources are not used for personal ventures, employer policies can be modified to attract candidates who also maintain side businesses. More predictable work schedules, compressed work weeks, contract roles, and job sharing can help to attract entrepreneurial candidates with active side businesses.

How can an employer improve labor participation? Few supply chain firms are large enough to materially impact the national labor participation rate. With the goals of gaining and growing superior talent, employers should, however, understand labor participation factors for current and former employees. Structured exit interviews, supported by data analysis, will reveal factors that cause valued employees to leave. Of particular concern should be resignations made despite having no plan for the next job. Would a compressed work week (40 hours in four days) motivate staff to stay? Could lunch periods be shortened to give staff more time at home? Do some employees need to leave 15 minutes early to pick up children from school? Keeping in touch with former employee “alumni” helps firms to understand how to proactively encourage labor participation. It also forms a recruiting base when former employees choose to return to the labor pool.

Outlook: In November 2021, LinkedIn reported 224,000 supply chain job openings; by November 2022 there were 269,000. The U.S. Bureau of Labor Statistics reports employment of supply chain logisticians is projected to grow 28% per year, “much faster than the average for all occupations.” Supply chain employers need to understand and strategically respond to workforce participation challenges to attract and retain critical talent effectively and competitively.