With a looming recession and millions unemployed, a path out of this new normal seems hazy – in order to progress, a period of recovery needs to take place. LaborIQ® by ThinkWhy® analysts are forecasting a Swoosh-shaped recovery as the most likely scenario, projecting the beginning of summer as a time of transition for the labor market and a recovery most likely beginning in Q3 into Q4 2020.
With that in mind, business leaders need to be informed and have a solid understanding of labor market conditions in order to reengage in critical workforce decision making. These vital factors encompass the information needed to adjust business strategies to withstand the current downturn and ramp up the workplace for the new normal.
The current pandemic has strained the economy and squeezed the financial resources of many organizations. Though businesses nationwide – and across industries – have been affected, certain regions and industries have borne the brunt of the downturn. These are places and sectors where population density is high and industries that depend heavily on in-person interaction.
The quicker states and metros reopen safely, the quicker businesses will be able to reverse some of the significant revenue loss caused from their closures. Supersectors that have been most negatively impacted are leisure and hospitality; trade, transportation and utilities; and education and health care services. These supersectors include restaurants, hotels, recreational venues, hotels, travel, colleges, child care, dentistry, among others.
Using Data to Prepare for the Rebound
The unprecedented near shutdown of parts of the economy will require creativity and resourcefulness from business leaders to make it through the trough of the downturn. Part of this is being informed. Today, many companies are focused on internal metrics, but business leaders that understand current and emerging trends in the labor market and their industry will be better prepared for the initial phases of the economic recovery. What does being informed look like?
Regardless of company or industry size, businesses depend on customers to buy their products and services and for their supply chain partners to be operational. The recent disruption has hindered consumer spending and clamped down on the cash flow of many businesses. However, this pending recession will not last forever, and there are already some signs that indicate the tide is turning.
Business owners and leaders who can use data analysis to accurately plan for when markets rebound will be able to make better business decisions. Tools like LaborIQ by ThinkWhy present valuable information – job growth, job gain, unemployment, industry growth, market analysis and salary answers – with actionable insights that businesses can apply to their overall growth strategy. For instance, understanding the depth of the downturn and knowing how the start of the rebound in Q3 or Q4 2020 will look in a specific metro or across industries helps business owners see where the best areas to invest more capital, target new customers or expand hiring efforts.
Having this data is useful for practical business reasons. Businesses can identify which markets best fit their business needs. For instance, B2C sales teams can center their efforts on metros with demographics that align with ideal customers and where consumer confidence is improving, while B2B sales teams can identify industry trends and metros that most impact their targeted sectors.
Economic Recovery Required from Businesses
The steady decline of both initial and continued unemployment claims as more businesses begin to reopen is an early signal of the start of the recovery phase. Based on known factors, this recovery will resemble a Nike swoosh. After a sharp decline in employment, there will be a strong initial rebound into early 2021, but the pace of growth will taper prior to reaching the previous level of employment. Some industries will recover significantly faster, but the national level of employment is not projected to recover all jobs lost until 2026.
The faster consumers feel comfortable and restrictions are lifted, the faster the recovery will be for public-facing establishments, such as restaurants and bars, retail stores, movie theaters and universities. Businesses that require more capital from either owners or customers may see a slower road to recovery, as both businesses and consumers rebuild balance sheets that have been disrupted by loss of revenue or unemployment.
The U.S. reaction to the coronavirus pandemic has forced everyone to adapt. Doing business after the pandemic will likely be different. Food services establishments may find that catering jobs consist of individual offerings instead of buffets or family style. Retail stores may include video and ecommerce sales techniques that strongly resemble the in-person customer experience. Extensive cleaning of shared equipment and spaces that customers frequent will probably become standard.
Regardless of what changes become permanent, businesses that can apply data analytics to plan their present and future operational and hiring strategies will have the best chance of succeeding during the recovery phase.
Jay Denton is Senior Vice President of Business Intelligence and Chief Innovation Officer at SaaS company ThinkWhy. ThinkWhy is helping companies navigate a new era of work by creating modern, human-centered software that supports better career lives. ThinkWhy’s flagship product, LaborIQ, is the first platform to bridge the gap between market analysis and salary answers, delivering a strategy advantage to business leaders. Learn more at www.ThinkWhy.com or follow us on Twitter and Instagram at @ThinkWhy_, on Facebook at @ThinkWhyLLC and LinkedIn at @ThinkWhy-LLC.