Business Management Advice: The Impact of COVID-19 on the Labor Market

Two young businesswomen wearing cloth face masks look away from the camera.

COVID-19 has already had a significant impact on the labor market. In the early stages of the pandemic, many companies were forced to shut their doors, at least temporarily. As a result, millions of Americans suddenly found themselves unemployed, the victims of coronavirus layoffs.

However, the situation has since changed. While higher unemployment is still a factor and will likely remain so, COVID-19 is having other impacts on the labor market today. If you are wondering how the pandemic is altering the landscape and what you can do to stay ahead of the curve, here’s what you need to know.

COVID-19, the School Year, and the Labor Force

As the school year began, unemployment numbers began to improve. The trick is, the positive movement wasn’t solely due to an economic recovery; the return of the school year also played a role.

Not all districts reopened schools at the beginning of the 2020-2021 academic year. Instead, for safety reasons, they continued to rely on remote learning. That means students would be home instead of heading to a classroom each weekday.

As a result, not all adults decided to remain a part of the workforce. Instead of finding a new job after a layoff, some chose to stay home, ensuring their children had support and supervision during the day. This leads to a smaller talent pool, something that could plague companies that need to hire additional help for the holiday season or are trying to ramp back up to previous productivity levels.

The Permanent Layoff

Many workers who were initially laid off due to the pandemic may have held out hope that their jobs would return. That optimism prevented some from focusing on new positions. Instead, they delayed their job search, assuming that their old job would eventually come back.

Today, that sentiment is changing. For some, it’s fear that their unemployment benefits will come to an end, leaving them in a bigger financial bind. For others, it’s new knowledge (or a sudden realization) that the position isn’t going to come back or that, if it does, it won’t involve as many hours or as much pay.

A change in sentiment actually benefits employers. An increasing number of professionals may start seeking out opportunities, potentially broadening talent pools. This is especially true with the holidays on the horizon, as many may want a new income source to make the season more affordable.

What Employers Can Do to Navigate COVID-19

Adaptability has been the name of the game since the start of the coronavirus pandemic. However, planning is also vital, particularly since the labor market is in flux.

Ideally, companies need to find a way to secure workforce agility. For some, this involves strategic planning. With predictive analysis, some businesses can approximate their hiring needs for the coming months, if not longer. Once that information is in-hand, they are empowered to launch the hiring process at the right moment, allowing them to be proactive instead of reactive.

Agility can also be accomplished through other means. By partnering with a staffing company, businesses can access talent quickly. Additionally, they can have a highly-skilled, well-managed contingent workforce that can be scaled up or down whenever the need arises. This allows them to right-size their teams as the situation evolves, ensuring they have precisely what they require without risking overstaffing.

If you’d like to learn more about how an agile workforce can lead to greater success, the team at GSG Talent Solutions can help. Contact us to learn more about our services today and see how our workforce management and planning expertise can benefit you.


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