Yong Kim is the CEO and co-founder of Wonoloan on-demand job marketplace that connects employees to jobs posted by companies in the US.
It has been more than ten years since the last financial crisis in the country. Since then, we have been going through a long period of growth. We also managed to avoid a cyclical downturn as the economy continued to warm.
For the past ten years, the government has kept interest rates low to stimulate the economy. The government also collapsed $2.3 trillion in economic stimulus during the pandemic, resulting in negative real interest rates. When interest rates are low, consumers tend to buy more, which in turn stimulates the economy. However, in this case, as consumer demand continued to grow steadily, many companies were unable to maintain a steady supply of goods due to a number of factors, including supply chain issues, labor shortages and global conflict. This imbalance between supply and demand caused consumer prices to rise. Annual inflation has skyrocketed from 1.23% in 2020 to a 40-year high of 9.1% in June 2022.
The economy has proved volatile over the past two and a half years and could be heading for a predicted recession. This article discusses why this predicted recession may be different from the one we’ve experienced in the past, the importance of temporary workers during this period of uncertainty, and the steps leaders can take to address workforce challenges in this environment.
What’s different about this recession?
The upcoming recession forecast will likely be different from the two previous ones we experienced in 2008 and 2001 – the impact of those recessions was strong and obvious from the start. However, this one could be quieter, slower and longer. Despite less attention, it will likely still affect many businesses and employees.
During past recessions, temporary or gig workers have been among the first to leave. This time, it will be critical to ensure that this vital labor sector has a place in our current economic discussions to determine how the labor market is performing and, ultimately, how these economic changes will affect consumers. Many of the sectors that are typically hardest hit, such as hospitality and travel, may not be hit in the same way they were during past recessions. Consumers have been unable to prioritize eating out or traveling for the past two years due to the pandemic, and many are now attaching more importance to these activities. As demand shifts over the next 12 months—probably in an unexpected way—companies need to be prepared to change with it, which means implementing strategies that respond to rapidly changing labor needs.
Why temporary workers should be part of the discussion
Today there are 55 million gig workers across the U.S. in a variety of industries — from food delivery guys and ride-hailing drivers to store clerks and event staff — but these workers are often excluded from larger conversations about the U.S. workforce and often go unnoticed in job reports. 86.5 million people are predicted to have gig jobs in the US by 2027, which make up half of the total U.S. workforce. This underlines the importance of both this work and the growing population taking part in it.
I believe that agency workers will be an essential part of the labor market during this predicted recession and a crucial part of companies’ efforts to develop more flexible labor strategies. Employing temporary workers allows companies to adapt their labor needs quickly and on a day-to-day basis. It also creates a more streamlined approach for HR and operations teams to find employees and quickly adapt to unexpected changes. From the point of view of the workers, it offers more flexibility and opportunity for those who want to take on a job during the recession as an additional form of income.
How leaders can integrate agile work strategies into their business
How can companies implement flexible employment strategies to stay ahead as we face arguably the most precarious recession in recent history and the need for workers continues to change rapidly?
1. Plan ahead. Whatever happens, the economy will fluctuate — be it a recession, seasonality, or other macroeconomic changes. The key is to start planning early and be prepared.
2. Decide how many people you need. There are resources like workforce calculators to help you figure out what works best for your business. It can help to attract at least 20% more employees than you expect to account for potential no-shows.
3. Find your employees. Once you know what tasks are required, you can start looking for the best candidates. There are multiple options available today for finding talent, from traditional staffing agencies to efficient job market apps.
4. Maximize employee experience levels. By accurately explaining the tasks you need to perform, you can ensure that employees with the right level of experience will do your job. To maximize productivity, enable new hires to collaborate with others more familiar with your company’s business. It is important that employees can share knowledge and experiences so that they can do their job successfully.
5. Build rapport with employees. Show appreciation for the employees you hire. Be open and honest. Ask employees to let you know if they have any questions or if something isn’t working.
6. Consider plans for long-term or permanent opportunities. You may decide that you want to re-contract with one or more temporary workers for future projects. Or maybe there is a vacancy at your company and a temp that you think would be interested in the position and a good fit for your company. Keep communication open about potential opportunities for their growth.
Gigworkers are only becoming more important to the US job market. These workers were on the front lines during the height of the pandemic and will be crucial again during this recession and well beyond. Seeing these workers as an essential part of the job market is critical to understanding where the workplace and the economy are heading and what companies need to do to keep up.