From the Desk of Rick Dennen: Market Trends and Their Impact on the Labor Market
June 14, 2023 •Oak Street Funding
June 14, 2023 — This week, the Federal Reserve announced they are not raising interest rates, but will maintain the 5.00 - 5.25% range set during the last meeting. The stock and labor markets remain strong, showing heavy resilience in the economy. Additionally, the Consumer Price Index (CPI) rose by 4.0% in May 2023 compared to the previous year, which is higher than the Fed’s target rate of 2%, but it is now trending in the right direction.
The US labor market may soon show signs of catching up with the economic tightening. May 2023 saw the unemployment rate rise to 3.7%. More than 10 million job openings remain, but unemployment rates are expected to rise to 4.5% in 2024. Additionally, there are still concerns about the number of people who have dropped out of the labor force, and the labor force participation rate remains below pre-pandemic levels.
Though unemployment in general is expected to rise, employee demand in insurance businesses, CPAs, and RIAs is expected to remain strong. The Bureau of Labor Statistics projects employment in these industries will grow 6% - 15% from 2021 to 2031. This growth is due, in part, to the large number of baby boomers retiring and the shortage of younger professionals entering these industries.
The talent market for these industries is highly competitive, and it can be challenging for businesses to attract and retain specialized professionals. In response to these challenges, many businesses are offering competitive compensation packages, flexible work arrangements, and opportunities for career development and advancement. Some businesses are actively seeking out candidates from underrepresented groups and creating a more welcoming and inclusive workplace culture. Additionally, many businesses are investing in technology solutions (such as A.I. tools like CHATGPT®) to increase efficiency and streamline processes.
Another solution to filling the talent gap is acqui-hire: the practice of acquiring another company for the primary purpose of adding talent. Because acqui-hiring involves bringing on a group of employees who are familiar with the industry, there’s typically less onboarding required. However, managing the integration of businesses is typically challenging as differing employee work cultures take time to meld into one cohesive and productive team.
Overall, as the economy continues to adjust to a slowed, healthy growth rate, talent acquisition will remain a key focus across many industries. While attracting and retaining specialized talent will likely remain challenging, there are opportunities for businesses to leverage specific employee acquisition strategies, especially in service industries such as insurance, RIA, and CPA, where investing in their employees will be critical for sustained business growth.
About Oak Street Funding
Indianapolis-based Oak Street Funding, a First Financial Bank company, provides customized financial solutions for businesses in various industry sectors and third-party loan servicing for financial institutions. Oak Street Funding incorporates industry knowledge, easy-to-use technology and exceptional employees to deliver top-quality service and capital products to niche businesses nationwide. With in-house sales, underwriting, and servicing teams, and direct access to the CEO and executive team, Oak Street Funding is well-positioned to meet lending needs of borrowers in all stages of the business life cycle.
Hostetler Public Relations
Representing Oak Street Funding