Adecco talks: COVID-19’s lasting impact on the labor market

Understanding a still evolving landscape

Before, during, and after the COVID-19 pandemic, the US economy was reshaped by significant events and disruptions – whether it was the shift from mass layoffs to surging wage rates, remote work to return-to-office mandates, or The Great Resignation to The Great Detachment.  

Meanwhile, in recent years, the labor market has undergone major shifts driven by demographic changes, evolving worker expectations, and rapid technological advancement. Each shift has brought new challenges and new solutions.

Understanding this timeline can help employers prepare for what’s next.

Pre-2020 labor trends (Before 2020)

• Average hourly wages start increasing, driving up labor costs
• Baby Boomers start retiring, shrinking the experienced workforce
• The Labor Force Participation Rate (LFPR) for men falls, reducing the available labor pool further

Pandemic-era disruptions (2020-2022)

• COVID-19 hits, triggering mass layoffs
• Remote work increased for nearly 20% of American workers between 2019 and 2021, shifting employee expectations
• In 2022, The Great Resignation begins, as millions leave jobs in search of better conditions

Post-pandemic shifts (2022-2024)

• Skills gaps emerge as tech outpaces traditional learning pipelines, leaving employers struggling to find qualified candidates
• Labor hoarding ramps up, resulting in underutilized workers and increased wage pressure
• Immigration surged 3.94 million people from January 2022 to October 2024, helping to ease labor shortages but also increasing the need for inclusion and upskilling
• The Great Detachment begins, increasing disconnection between workers and employers

Today, these shifts are creating new pressures, which are challenging traditional workforce strategies. As a result, organizations need new approaches to attract, engage, and retain talent:

• Look for skills, not just degrees
• Tap into hidden talent pools
• Create a reskilling and upskilling plan
• Ensure you create flexibility

Additional trends we saw

• Job growth slowed sharply, with 73,000 jobs added
• The latest jobs report revised previous months downward by a total of 258,000 jobs. May dropped from 144,000 to 19,000, and June from 147,000 to 14,000
• Together, healthcare and social assistance made up 94% of July’s job growth, adding 55,000 and 18,000 jobs, respectively
• Labor market strain is growing as long-term unemployment rises and companies grow more cautious about hiring

Future ready your workforce

The ramifications of the COVID-19 pandemic are still being felt throughout the labor market. Whether it’s the spread of remote work or more vocal workers or supply chain crises – there’s no shortage of new obstacles for employers to navigate.

You don’t have to understand or address these challenges on your own. Contact us today to learn how we can support your operations and ensure you stay ahead.