A Pandemic-Altered Labor Market Is Making Hiring Difficult—and Causing Unexpected Problems for Promo Companies
In June, the U.S. economy added 850,000 jobs, continuing a stretch of strong job creation that began full force in March. The steady job gains are perhaps the surest sign that the U.S. economy is on a sustained path to recovery from the pandemic, but the raw numbers alone disguise a more complicated reality: American employers are having a hard time filling open positions.
The print and promotional products industry is seeing this firsthand. Suppliers and distributors alike are reporting difficulties hiring, both for positions vacated due to layoffs at the start of the pandemic and for new positions necessary to meet surging demand. These issues are contributing to slower production times for suppliers already navigating supply chain challenges and causing problems for distributors looking to regain their footing as the economy rebounds.
Here’s what the current labor market means for print and promo, and what industry companies can do to find workers and fill open positions.
When mass layoffs in 2020 left millions unemployed, the expectation was that there’d be an abundance of job-seekers as soon as the economy turned around. That happened, to an extent.
During the pandemic, the U.S. unemployment rate peaked at 14.8%. The current unemployment rate is 5.9%, reflecting the consistent job gains we’ve seen since March. That’s still higher than the pre-pandemic unemployment rate of 3.5%, which would make sense if there were simply not yet enough new jobs to offset pandemic losses. But U.S. employers are routinely reporting that there are more open jobs than people willing to fill them.
Why is this happening? Economists aren’t really sure. A popular theory is that the additional government unemployment benefits designed to support out-of-work Americans during the pandemic have, as Missouri Gov. Mike Parson put it, “incentivized people to stay out of the workforce.” That’s a plausible explanation—the standard unemployment benefits plus an extra $300 weekly could indeed be more attractive to some workers than getting back to the 40-hour grind, especially for lower-wage earners.
But some states have already cut off additional unemployment assistance and have not yet seen a noticeable impact on hiring. Missouri, for example, ended the $300 weekly supplement on June 12, and by June 28 had not reported an increase in job applicants, according to The New York Times. The job site Indeed, meanwhile, found that clicks on postings for jobs in states that had cut federal benefits were actually below the national average.
A total of 26 states planned to end the additional federal benefits by July, so we’ll soon have a larger sample size from which to draw conclusions. But many economists are pointing to other factors—child care issues, extreme caution in returning to work during an ongoing public health crisis, etc.—to explain the lack of job searchers.
There has also been a recent spike in resignations, with Americans in April quitting their jobs at the highest rate since 2000, when the Labor Department began tracking those numbers. Whether these workers are burnt out or simply seizing on a newly favorable job market, this so-called “Great Resignation” only complicates things for employers.
Whatever the causes, the problem is real, and it’s been impacting print and promo in not-insignificant ways. Patrick McHargue, director of talent and founding partner for PromoPlacement, a promo industry recruiting firm based in St. Louis, said the situation has only been worsening since industry companies began rehiring at the beginning of 2021.
“It’s been a slow ramp up,” he said. “The first companies to start hiring were able to snap up the unemployed who decided they wanted to stick with the promo industry. The companies that have waited until now to start hiring are finding that the talent pool is more of a kiddie pool.”
McHargue believes there are two main factors behind the hiring challenges in promo. One, he said, is that industry companies lack the infrastructure and experience to hire new workers quickly and in the numbers necessary to replace pandemic staff losses. After a year of reduced sales, business has begun ramping up almost overnight. That’s caught some industry employers off guard. The other factor, as McHargue sees it, is that the pandemic fundamentally changed the nature of the employer-employee relationship and what workers want from their jobs.
“Both employers and employees are still trying to find their footing in a post-pandemic world,” he said. “Many employees have left the industry and found the first job they could. Others have an entirely different view of employment than they did before the pandemic. In short, many of the employees who were let go aren’t available to be hired back by promotional product companies. The talent pool they are counting on has changed significantly both in terms of size and of what they want out of a job.”
Brandon Mackay, president and CEO of SnugZ USA, West Jordan, Utah, said that his company has been hiring almost “nonstop” since early 2021. But Utah’s 2.7% unemployment rate (essentially full employment), wage inflation and various other factors have made it difficult to fill roles at all levels. In the past, SnugZ would get a “dozen or so” applicants per open position, Mackay said. Now, the company is getting one or two.
This is happening at distributor and supplier companies alike, but it’s particularly problematic on the supplier side. Pandemic-related supply chain issues are already causing shipping delays, price increases, longer lead times and reduced availability for some products. Supplier staffing shortages are only exacerbating those issues. And while many suppliers have done an admirable job adjusting to the circumstances with limited disruption for distributors, that can only go on for so long if something doesn’t give soon.
“Current state, we’re getting by with the staff we have [because of] creative managers who have found every ounce of excess production time, but I do see in the third [quarter] and especially fourth quarter of this year many suppliers will have sold their inventory available or production capacity,” Mackay said. “Prices will trend up along with production times, so if I was a distributor I’d order early, lock in inventory and pricing, and take a deep breath. We’re all fighting like crazy to push hard to make everyone look like a winner and ship top-shelf products on time that exceed expectations.”
What to Do
Given the complexity of the situation, there’s no easy solution for industry companies looking to hire. But there are some things they can do to improve their chances. SnugZ, like many companies, has tried wage increases, hiring bonuses, referral bonuses, temp agencies and more. The supplier has also leaned on its HR team, which Mackay says is “kicking butt every day.” It’s been a grind, but Mackay remains optimistic.
“I’m not sure what normal means anymore, but we’re shooting to be fully employed (as far as our needs) sooner than later,” he said. “I think the best way we’ve mitigated this, for us, is we know if we keep them here for 30 days, we’ve won them over and they’re a SnugZ lifer.”
McHargue said there are qualified candidates “for every position you can imagine,” just not as many as before. Industry companies need to be flexible and patient, but they also need to move quickly when they find those candidates. And they need to accept that what worked before the pandemic likely won’t work in the current labor market—not without adjustments. Employees now expect things like flex schedules and remote work. And they have more leverage to ask for things like full benefits and market rate pay.
“During the pandemic, job seekers were desperate for jobs and came at discount rates,” McHargue said. “Today, if you want an experienced and talented person to join your company—you must be aggressive. Move quickly and make a strong offer. Do not wait for a parade of great talent to knock on your door, because it is not going to happen. We have seen many companies decide they want to ‘hire slow’ only to regret it when they miss out on great people.”
“Our advice to hiring firms is when you meet with someone who fits your job qualifications, hire them,” he added. “Move before they take another job. Hiring firms need to know that the talent pool isn’t as deep as it used to be. In the promotional products talent market, all the bargains are gone, so stop shopping for them.”