If you thought it was especially difficult to hire good talent in 2018, brace yourself: Next year you can expect more of the same.
The historically low unemployment rate--it stood at 3.7 percent in November--made it hard for companies to bring in both permanent and seasonal talent throughout 2018, and experts believe the trend will continue into the new year. To find out what lies ahead for hiring and retaining talent in 2019, Inc. spoke with economists and labor market analysts. Here are their five biggest predictions.
1. The pickings will get even slimmer.
Employers will grapple with a talent pool that continues to shrink next year, according to Jed Kolko, the chief economist at Indeed, a career search engine. One reason for this is the number of Americans who are of working age is growing more slowly than it did in the 1980s and 1990s, he says.
Recent immigration policies are another factor, Kolko notes, as the Trump administration has been cracking down on H-1B visas, which allow U.S. companies to hire skilled temporary workers from other countries. The U.S. sent back more than one in four applications between January and August 2017, whereas the previous year, the Obama administration sent back fewer than one in five, according to data from the U.S. Citizenship and Immigration Services. In 2018, the number of H-1B applications dropped for the second consecutive year, falling to 190,908 from 199,000.
"Immigration can be one way that we compensate for a slow-growing working-age population," Kolko added. "But, at the moment, our policies are discouraging rather than encouraging immigration."
2. Employers will consider opening foreign offices.
To combat the increasingly challenging hiring market, companies may open international offices and hire local workers who haven't been able to get the required authorization to work in the U.S., according to Kolko.
"Today, recent immigrants are more likely to have college degrees than native-born Americans, and many work in specialized fields, often in tech, health care, or other sciences," he says. "Those are some of the industries that might find it harder to get the workers they need as immigration becomes more difficult."
3. Companies will invest more in technology.
Rather than investing in human talent, companies might look to technology to help solve their hiring problems. "Some firms will look for ways to produce what they need to produce without having to hire as many workers," Kolko predicted. These methods will vary between industries, but companies that can replace manual labor with automation will consider investing in robots, rather than people.
4. Amazon could force other companies to raise wages.
Amazon's new headquarters in Crystal City, Virginia, and Long Island City, New York, will add a total of 50,000 new jobs. This will spark a demand in both areas for skilled workers such as engineers and recent graduates with technical backgrounds, says Jon Barney, a senior partner at the consulting firm Korn Ferry.
While New York City has a more established ecosystem for tech jobs, the market for these roles is already tight in the Washington, D.C., area. In the short term, tech, aerospace, and defense companies in the area may raise their salaries and offer more competitive benefits to retain talent, Barney says. In the long term, Amazon could help turn D.C. into a bigger hub for tech.
5. Companies will hire even faster than before.
When hiring candidates in the new year, companies will continue to use a major strategy from 2018--hire people quickly. "I do think speed increasingly matters when looking at candidates," Barney says. "The market is getting more competitive, so you have to move faster." Some companies are trying to streamline the hiring process by rolling out automated, one-sided exchanges: Candidates call in and record responses to questions with no one on the other end of the line, according to The Wall Street Journal.
Additionally, job seekers increasingly want to work for businesses that have a compelling company story and core values that align with their interests and beliefs. Small businesses have an advantage, because they tend to have more authentic messages and can move faster than larger companies, Barney added.
5. New perks are crucial--and the more personalized, the better.
To reduce attrition, companies will need new ways to persuade talent to stick around, predicts Juliana Barela, the vice president and general manager of recruitment process outsourcing at consulting firm Korn Ferry. One of these tactics is what she calls personalized pay, which refers to individualizing perks and benefits to specific workers instead of larger groups.
"We are seeing four generations in the workplace, and each one has different expectations when looking at how they are paid and what their reward package consists of," Barela says. Examples include offering more flextime and paid time off, international assignments, or the ability to relocate. This will be especially true of smaller companies or startups that are more agile than larger establishments and can easily tweak their compensation methods, Barela adds. Instead of establishing a rewards program for the whole company or team, firms will survey their employees to figure out what's important to each demographic.
"It turns the notion of how people are compensated into something more tailored to individual groups," she says.