Talent Talk: Is Labor Hoarding Over?

Here’s a brief recap of the past few years.

You will recall that during the COVID era, workers left the workforce in droves. We had the Great Resignation, the Great Retirement, people being paid more by the government not to work, and a remote workforce reluctant to come back to the office.

Help wanted signs were everywhere, wages were raised, and sign-on bonuses offered to entice people to come back to work. We didn’t have enough teachers, restaurant personnel, truck drivers, or workers in dozens of other professions.

Manufacturing was already facing a potential labor crisis, exacerbated by our country’s decision to start making things in the United States again. Millions of jobs have been — and will continue to be — created through ongoing reshoring efforts.

Leaders in the manufacturing sector such as plastics lived through about two years of the tightest labor market of our lifetimes, and so when conditions caused a bit of a slowdown, they were reluctant to implement layoffs. A new phrase was added to the lexicon — labor hoarding or, as highly paid consultants call it, strategic retention.

Now that manufacturing has been in a contraction mode for a full year, is the labor hoarding over? I believe the answer is yes . . . and no. You must look industry by industry. There have been high-profile layoffs at big tech companies, for example, and industries such as professional services, construction, and retail trade have been shedding jobs.

Within the manufacturing space, layoffs are happening but more selectively. Part of this is still the supply-chain imbalances stabilizing. The recreational vehicle market is an example of a huge spike in demand followed by a return to pre-pandemic norms.

For the plastics industry, the answer to the question of whether labor hoarding is over is generally no. Companies see a light at the end of the tunnel we’ve been going through for a while, and the memory of the tight labor market is still fresh. For now, at least, most plastics companies seem to be in strategic retention mode.