Talent is the lifeblood of your company, so recruiting is one of the top jobs for any executive or entrepreneur. There are three macroeconomic factors that are converging to make hiring more difficult for companies – the stronger economy, the large increase in demand for technically skilled workers and the booming freelance economy. Let me explain my points.
The U.S. Bureau of Labor Statistics has reported that the unemployment rate dropped to 5.1 percent in September, which is the lowest level since April of 2008. The low unemployment rate and healthier economy puts pressure on salaries. Median household incomes have consequently increased by 5.2 percent each year. However, low unemployment means that talented employees have more options than ever. If you’re like most companies, you have seen an executive respond with a counteroffer to avoid having a key employee “poached.” This has happened more and more frequently over the past few years.
Explosion of Tech
As our economy becomes more and more driven by technology, the skills needed to manage this new world are more valuable than ever. Software plays a very important role in fields that are not traditionally considered tech such as food, retail, real estate and transportation. That means that hiring tech-savvy workers is more of a challenge. Talent agencies for programmers now exist to hire out the best of the best on a model similar to the agency model for Hollywood stars.
A recent study by Edelman Berland and Upwork found some surprising statistics about freelance workers. The amount of U.S. workers who do some sort of freelancing has grown by 700,000 just in the past year and constitutes for 34 percent of the workforce. There are almost 54 million Americans that freelance and this trend has no signs of going away. For some people, this is just an evening job like driving a car on the weekends or putting together a mix of part-time traditional work. A shocking finding is that over 40 percent of U.S. freelancers don’t have a boss at all – they are entirely self-employed and freelancing is their primary form of income.
Freelancing appears to be more of a choice than a necessity. They enjoy the greater flexibility and many of them are actually making more money than they would working for an employer – 78 percent said that it took a year or less to exceed their previous income.
In a tight labor market, the smart professionals are realizing their options go beyond traditional employment. Smart companies will have to do the same and follow the talent as it embraces the freelance economy.