This year Labor Day in the U.S. falls on September 5th. It is a federal holiday created in 1894 in response to unions’ urgings. This year marks the 20th annual World Day Against Child Labor. Labor Day is also the unofficial end to summer, with children returning to school, summer vacation spots closing up, and people preparing for the rest of the year.
My thoughts as we celebrate Labor Day this year:
Labor shortages continue
It seems that post-pandemic, the U.S. is at or near full (maximum) employment. This is deduced in part by measuring the maximum number of people who can be employed without pushing up inflation. Full employment also reflects the number of unemployed workers per job opening. I’ve also seen full employment tied to an unemployment rate of 3%, and in July we were at 3.5%. However you measure it, we’re in a tight labor market.
According to the July 2022 NFIB Small Business Optimism Index, nearly half (49%) of small businesses reported job openings they could not fill in the current period. Yet 20% plan to increase employment in the next 3 months. This is so even though we are likely in a recession. Small business owners must be confident enough in the economy to want to hire new workers.
Compensation and benefits
In light of the tight job market, many small businesses have already increased compensation and benefits packages for employees. And 2023 should see more increases. According to a Willis Towner Watson report, nearly two-thirds of employers (64%) are planning for pay raises in 2023 that will top those in 2022…a projected increase of 4.1% in 2023. This would be the largest percentage increase since 2008. As inflation continues, it’s likely that there’ll be more pressure for more increases.
A union boom?
It was the unions that spearheaded the creation of Labor Day. In 2022, there are reports that we’re in a union boom. CNN reported: “After years of declining influence, unions are having a resurgence. Employees from companies across the country are increasingly organizing as a means of asking for more benefits, pay and safety from their employers.” Chipotle workers in Lansing, MI, in August voted to unionize. Starbucks, Apple, and Google are other companies experiencing unionization now.
I’ve always maintained that employees are your best assets and shouldn’t be thought of as expenses. Sure, they can’t be entered on your balance sheet. But they make all the difference in your company’s success. So let’s celebrate Labor Day!