Navigating Manufacturing’s Busiest Hiring Season in a Tough Talent Market

‘Tis the busiest season for manufacturing, and this year is even more demanding than usual.

While supply chain disruptions caused raw material and critical component shortages last year, a different challenge is plaguing manufacturers this holiday season: Many are experiencing a talent shortage during the most hectic time of year for making and moving goods.

At a time when job openings continue to outnumber job seekers nearly two-to-one, workers—especially those in manufacturing and logistics—have strong command of their market power. Workers know they are in high demand and that they can find a new position quickly. With the demand for talent staying strong despite current economic pressures, many factors are impacting the manufacturing industry’s ability to hire including wage inflation and shifting worker expectations.

Despite Signs of Cooling, the Labor Market Is Still Strong

While there’s plenty of talk about a slowing economy, inflation, and recession fears, the labor market is still experiencing strong job growth. In October, payrolls grew by 261,000 and average hourly earnings rose 0.4% for the month and were up 4.7% from a year ago. In certain sectors the demand for talent has softened and there are some signs of cooling, but overall this is still very much a job seeker’s market. Monthly payroll growth is still well ahead of its pre-pandemic level in 2019 when it averaged 164,000.

Manufacturing added another 32,000 workers in October and the industry has added back about 1.5 million jobs since COVID-19 put the labor market into a tailspin. Leading economists are declaring that “factory jobs are booming like it’s the 1970s.” At the same time, U.S. factories are scrambling to find workers in this competitive talent market.

We’re seeing the same at Kelly. This time of year, the demand for our temporary talent solutions typically increases, as employers require additional flexibility to meet seasonal demands. Manufacturing, logistics and retail—clothing, electronics, accessories, food and beverages, toys, and small appliances—typically leads Q4 hiring surges. While retail posted only a modest gain of 7,200 jobs in October, overall seasonal demand is still strong while talent is increasingly looking for additional work to supplement their incomes as the holidays approach.

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Winning Employers Reduce Hiring Barriers and Increase Pay

In this competitive talent market, employers in manufacturing, logistics and retail are taking more aggressive actions to ensure they’ll have enough workers to meet production and delivery schedules. These actions include raising base wages, offering retention bonuses, and removing hiring limitations such as drug and criminal background screenings. These measures only intensify in the weeks leading up to Thanksgiving and the shopping holidays that surround it.

With significant wage inflation over the last two and a half years, many are wondering what it costs to attract seasonal talent. Most companies have increased their pay rates multiple times during the pandemic to align with demand and demographic wage trends. While we have reached a point where wage growth is slowing down, increases during peak season are still very much in play. During the fourth quarter, many employers are raising wages by a few dollars on the hour to attract and retain workers.

Employee Experience Matters More Than Ever

There’s no question job seekers are driven by good pay and benefits, first and foremost. But over the last two and half years, we’ve seen workers’ priorities shift. More than ever, they are concerned about what their day-to-day experience will be like. Today, even seasonal workers are motivated by the employee experience. How flexible is the job? Are there other benefits and perks beyond compensation? What is the company’s corporate reputation, and how is the organization approaching diversity, equity, and inclusion? Job seekers take all of this into consideration.

This shift is not temporary. This is a permanent change in how employees view work and how employers should manage talent. While talent management is complex and there are many factors to consider, there are three areas employers should focus on.

1. Stand out as a flexible employer.

The surge in remote and hybrid work during the pandemic has dramatically altered where, when, and how work is performed. For many “traditional workers,” autonomy and empowerment are now key benefits that were previously limited, to a large degree, to freelancers and gig workers. Companies must adapt by standing out as “flexible employers.” How? By offering four-day work weeks, remote/hybrid work arrangements, and shift sharing, where possible.

2. Stand up for the silent workforce.

A diverse and inclusive talent pipeline is the only answer to meeting the labor challenges of our time. Diversity, equity, and inclusion is the right thing to do and good business in today’s labor environment. Companies must make it easier for job seekers from diverse talent groups to access work. To start, organizations must evaluate their hiring practices and update them if barriers exist. They can adjust their criminal background processes, for example, to expand second chance opportunities to job seekers with non-relevant criminal records. They can also temporarily waive high school diploma requirements to allow workers to earn a living while pursuing their GED.

3. Don’t stand in the way of career development.

At Kelly, we found that 80% of our workers on assignment are considering job training and career advancement opportunities when evaluating a new position. Our research also suggests that contingent workers are often excluded from these opportunities. Only 30% of organizations say they offer such opportunities to temporary talent and contract workers. Employers have the opportunity to address the current skills gap by tapping into their existing talent pools and expanding their upskilling offers to all workers who contribute to their business.

There’s No One-Size-Fits-All Approach

The talent shortage is a multifaceted challenge—even more so in today’s economic environment—and there is not a one-size fits all approach. But it’s fair to say that an organization’s people are its most important asset and that the ability to attract and retain talent—even for seasonal hiring stints—is one of its biggest drivers for success. Leading employers realize that good pay is critical, of course, but only a first step to truly keeping full-time and temporary talent in place to achieve business results. They also review their culture and talent experiences to see where improvements can be made. If organizations can do all these things, they can win the race for talent this holiday season and beyond.