The problem of attracting labor to open positions becomes more acute than ever in the United States. Year after year, since 2000, the number of citizens participating in the labor market has been falling:
- In 2000, the labor force participation rate reached 67.1% and was last at its peak.
- After the 2008 crisis, this figure fell sharply, reaching a minimum of 62.7% by 2014.
- Subsequently, the trend reversed, but the pandemic again lowered this figure to 61.7%.
- And today, despite all the conditions for a safe return to work, few have done so. As of April 2024, the labor force participation rate is only 62.7%.
Businesses are concerned about this situation, since many jobs are not closed, which affects the revenue and success of companies. At the same time, there is an interesting trend in the increase in the number of people who want to engage in business on their own instead of looking for favorable opportunities in the labor market. These two trends indicate that business models are changing in the United States and, to attract labor, large and medium-sized businesses should make concessions previously unthinkable for them.
What Happened to the Labor Market?
The U.S. Chamber of Commerce closely monitors the state of the American labor market as it concerns many business people. The organization carefully collects and analyzes statistical data and conducts sociological research to understand the work behavior of the employed and the expectations and behavior of the unemployed. According to analysts, the key factor contributing to the decline of labor force participation in the United States is the rapid development of digital technologies.
How E-Commerce Changed the Labor Market
Digital commerce has revolutionized people’s understanding of doing business and offered business tools accessible to everyone. E-commerce made it possible to earn significant money without leaving home, promoting products and other platforms on social networks, blogging, streaming computer games, etc. Young people have become especially receptive to the opportunities of digital commerce and have most easily mastered new business practices. This affected the labor market since, instead of a natural renewal of the workforce, there was a significant outflow in favor of starting their own business, primarily in e-commerce. As a result of these processes:
- The older generation is retiring, freeing up jobs in the market.
- Young people, instead of competing for these positions, are seeking success in digital commerce by launching their projects.
Thus, in 2023 alone, more than 5.5 million new businesses were launched. This figure is the highest in recent years, but the growth is unlikely to stop there. The number of applications submitted to open new business in 2024 in the first few months has already reached almost 1 million.
The ease of launching your e-commerce project is facilitated by the low entry threshold for starting a business. Even those who previously unsuccessfully tried to grow their business projects, got into debt, and lowered their credit rating can try to do it again. Bad credit payday loans at FCLOANS gives them a chance to start over. By taking advantage of the simplicity of algorithms for making money on the Internet, they achieved significant success although they were plagued by failures in traditional ways of doing business.
Is Business Ready for New Employment Models?
Another consequence of the rapid development of technology is the popularity of remote work. The pandemic has made this form of labor organization a necessity. But even when it finished, many workers opted for remote work. And if the employer does not provide them with such an opportunity, they either leave in search of a more accommodating one or leave the labor market altogether, preferring the status of unemployed. Therefore, many companies experiencing labor shortages face a choice:
- Modernization at an accelerated pace to introduce automated systems that will perform some of the work that was previously performed by humans.
- Creating more jobs with opportunities for remote work and attracting specialists living abroad.
- Losing their competitiveness against the background of those companies that followed the first or second scenario.
The situation in the labor market in the United States has changed dramatically in recent years. Instead of competition for jobs, there was competition for employees. This means that the latter may demand more concessions from employers to remain active in the labor market.