Tag: future of work

Where Have All the Workers Gone?

The October employment report was released last Friday, and it told a familiar story: the US economy is still suffering from labor supply issues, even with the pandemic (mostly) in the rear-view mirror and the Fed trying to apply the brakes via rapid rate hikes. As I noted in a fraction blog post last week, the professional workforce of the future is actually shrinking, hit by declines in college enrollment and legal immigration. Let’s dive a little deeper into the present situation – how many workers should we expect the US workforce to have right now, where are the missing workers, and what’s to be done about it?

The BLS October 2022 data showed a labor force participation rate still 1.2% below February 2020 levels. Population growth since that time implies a labor force that should be at least 3.2M workers larger than it is today – so what happened?

Early Retirements – Departure of the Boomers: -2.4M workers

The St. Louis Federal Reserve estimated that 2.4M additional workers retired early from the start of the pandemic through Q2 2021. Subsequent analysis by the Washington Post indicates that retirees are returning to work – but only at levels found in 2019, so this doesn’t make up for the pandemic era losses.

COVID Deaths and Long COVID: -2M Workers

Per Statista, just over a quarter million working age Americans have died of COVID since the start of the pandemic, further reducing the workforce.

COVID’s larger impact is through the impacts of long COVID – the Minneapolis Fed and Brookings estimate that 1.8M FTEs worth of work have been lost due to long COVID job loss and work hours reductions.

Lack of Immigration – Trump + COVID: -1M workers

This Census chart tells the story – changes in federal immigration policy and the closing of borders during the pandemic led to a huge loss in immigration. 1.5M less immigrants, with a 65% labor force participation rate, equates to a loss of roughly 1M workers due to changes in immigration flows.

The US added 1.5M less immigrants over the five year period from 2017-2021 than it over the previous five years (2012-2016)

Summing It All Up: 5.4M Workers Missing

The latest JOLTs report shows 10.7M job openings – 5.4M more available workers, when added to current unemployed (6.1M) would make for more available workers than jobs. That’s the opposite of the current 2:1 ratio of jobs to workers!

Alas, we can’t wave a wand and undo the damage of the pandemic, and many early retirees are happy with their new lives. Immigration is beginning to rebound, and will make a long term difference.

Short-term, we’ve got to make do with the workers we have – and that’s why I believe that fractional work is the future. Fully utilizing the surplus capacity of the existing professional workforce in America would add 4M FTEs to the labor market, almost fully replacing the 5.4M lost. In the coming weeks I’ll delve deeper into the fractional workforce and how it can help.

Posted on by praveenghanta 0

The Future of Work is Here!

I’m excited to announce the launch of fraction.work on ProductHunt – upvote fraction.work there to help us gain exposure and change the future of work!

Readers of this blog know that I like to focus on big macro trends. The macro trend here is incontrovertible – working age populations are flat or dropping in every developed country on Earth. We keep hearing that the robots are coming, and that automation will take all the jobs – meanwhile US unemployment is back near all-time lows, despite a Federal Reserve moving rapidly to force a recession.

There’s only one solution: expand the labor supply. And the fastest way to do that is to tap into the millions of American workers willing to work more, or to keep working part-time.

At fraction.work it’s early days, as we are focused for the moment on fractional software developers. But in the software field alone, I estimate that there are 500,000 additional workers available on a fractional basis. McKinsey’s research shows that over half of all jobs can be done in a remote or hybrid fashion – fractional work opens the door to millions more employees filling open positions we can’t otherwise seem to fill.

Posted on by praveenghanta 0

My experience as a fractional software developer

I started fraction.work earlier this summer, based on my experiences as a fractional software developer earlier in my career, and my experience hiring fractional developers while running HiddenLevers.

Those experiences guide me to believe that there’s a huge market for long-term, part-time software development work (that’s how I define “fractional” software development). We’ve seen fractional CFOs, CMOs, and GCs, but the adoption of this approach has been much slower at the individual contributor level and in particular in technology roles.

This is ironic because software development is more amenable to remote work than any other role – witness the explosive wave of offshore and nearshore development since the pandemic normalized remote work! Employers oddly feel more comfortable working with someone who half a world away and who may not grasp nuances of cultural difference, than working with someone in the US who is available 30 hours a week?

I know this isn’t really true – but many companies have a mental block when it comes to part-time work. As part of normalizing how effective it can be, I detailed the experience on the fraction.work blog – I hope you’ll follow the story there!

Posted on by praveenghanta 0