Workforce Trends to Watch in 2025

Episode Summary:

Developing a data-led workforce strategy requires an understanding of industry trends and how they affect every aspect of building and managing talent. On this episode of the Subject to Talent podcast, Brian Grogg, market analytics manager at AGS, discusses the largest influences and patterns that shaped the workforce in 2024 and what workforce leaders can expect in 2025, including technological advances such as AI, locations for nearshoring or offshoring and financial outlooks that affect global expansions.

Transcript:

Bruce Morton: Allegis Global Solutions (AGS) presents the Subject to Talent podcast, a hub for global workforce leaders to unleash the power of human enterprise. Listen in as we explore the most innovative and transformational topics impacting businesses today.

Hi, I'm Bruce Morton, the host of the Subject to Talent podcast, and today I'm joined by Brian Grogg, Market Analytics Manager here at Allegis Global Solutions. Brian has worked with nearly all of AGS global managed services provider (MSP) clients, providing insights on rate management and sourcing conditions to help drive strategic hiring decisions. A lifelong student of operational effectiveness, Brian has lent his expertise to continuously evolving processes across the market analytics function over the last couple of years. We're very excited to welcome you today, Brian. Welcome.

Brian Grogg: Thanks Bruce. Appreciate it.

Bruce Morton: Thanks for being here. So, at AGS’ Subject to Talent podcast, we always ask our guests the same first question, and that is, "How did you get into the workforce solutions industry and what was your journey to where you are today?"

Brian Grogg: Yeah, so it was about 10 years ago, I got hired into a local shop here in Detroit that was a staffing agency, and they had their own MSP. After working in financial counseling and bankruptcy counseling, housing counseling, during the 2000s and got kind of burned out from that, I had the opportunity to join the company there and learn more about staffing for one, but also the MSP program as well as staff aug, SOWs, how the pricing works, things like that, too. Worked there for about two years. Had a great experience. Worked with some really good people, but unfortunately our client went to RFP and decided on another company to go with. I kind of saw the writing on the wall because they were our biggest clients, so I left there and went to the financial industry and hooked up with a bank, worked in risk management for about eight years as a reporting analyst. I really enjoyed my time there, as well. Again, had some great leadership, good people, but they were bought out and I didn't quite see a future there. And this opportunity came to work at AGS and I've been here ever since. And I'm loving it. It's been great.

Bruce Morton: Great. So, you're a returner back to the industry. Great to have you.

Brian Grogg: Yeah, exactly. It's funny enough, my original degree is actually in education, so I'm kind of way off from where I started, I feel like.

Bruce Morton: Could argue that you're educating our clients on market analytics, so it coincides.

Brian Grogg: Exactly.

Bruce Morton: So, as we begin the new year, we often find trends that sometimes continue from the previous year. So, looking at 2024 to start with through a global lens, can you share a couple of things, what trends we should expect to continue through 2025, and what were some of the big surprises or predicted changes that did or didn't happen last year?

Brian Grogg: Yeah, so in terms of trends that we're seeing, it seems like more and more of the clients that we support are committed to look for offshoring opportunities for some of the workers, for some of the needs they have to see if they can maybe find talent out there along with talent at a good price, too. India continues to be a hot spot. It's growing. A lot of clients are looking to India as a way to get some support, but we're also seeing more and more interest in [other] countries as well, like Mexico, Poland, Philippines and Indonesia. Locally, here in the US, the hot button issue and trend continues to be returning to office mandates. We're seeing some bigger companies asking their employees to return to office full time. As we know, during the pandemic, remote work exploded because we couldn't go in the office, so we needed to figure out a way to adjust. And there were more and more people hired as full-time remote. And there are companies out there saying, that's just not working for us. Let's bring them back in the office full time.

And we're seeing a lot of articles written. Employee satisfaction, it's kind of tied to that a little bit, too. So, in our QBRs that we do on a regular basis is a topic that keeps coming up over and over again. Me, I fully understand the need to develop culture and teamwork, but we also have to understand the needs of so many people that you're hiring that we need to be a little more flexible with our schedules and have them being able to go in the office a little bit and work from home a little bit. That's one of the things that we find in terms of a lot of research we're seeing and surveys. That's where we find better employee satisfaction. So, return to office has a big impact. And we're also seeing that in terms of job searches too.

As for one of the big surprises of 2024, I think both revolved around interest rate cuts. Inflation was a big, big issue going into 2024. What are we going to do about it? How's it going to control? And it wasn't just a US only issue that we saw. It was global. And why that's important is because that puts added wage pressures onto a lot of the rates for our clients and a worker. So, that wage pressure was huge over the past few years, as well.

When we think about wage pressures, we've seen wage increase by like 27%, yet real earnings have only risen by 1% since 2019. So, in the beginning of 2024 respectively, the Fed would start cutting rates in June. That didn't happen. Canada and UK started their process a little early in the year. So, however, June came. Fed didn't cut, but they held. So, it wasn't only until September that we saw the drop in the rate. So, I don't think we'll see the impact, I think, until 2025. So, that's what we're looking at for 2025 is how will that impact the overall economy, but also wage pressures, too.

Bruce Morton: And do you see that, going back to those stats, which on the face percentage, shocking wage increases of 27%, but the real earnings only risen by 1%. Is that the inflationary impact?

Brian Grogg: Yeah, I mean it really is inflationary, and I also think it's when it comes to housing, that's a big issue here in the United States and Canada. I mean housing costs have gone through the roof, and so that's an added pressure, too. So, whereas we're seeing groceries go up, as well. So yeah, you're getting a raise, you might be switching jobs and getting a 9% raise from one job to another, which is great. You're getting that raise, but you needed that because your housing went up, your groceries went up, your gas bill went up, utilities went up. So, that's why I think we saw a lot more job hopping as well throughout the pandemic because people were trying to catch up with the cost of living, too.

Bruce Morton: Right. And then, the Fed. You're saying that you were sort of waiting and waiting for them to do something, and they finally did the 0.5 and the 0.25. It's interesting that if you look outside of our industry, the Fed are patting themselves on the back and saying, "We've got it under control. We have a nice soft landing," but we're not seeing the effects of that yet in the world of talent and the world of recruitment. But are you saying you were hoping for some positive impacts this year in 2025?

Brian Grogg: Yeah, I mean because we're not seeing it directly as a consumer right now. Obviously, mortgage rates aren't down because that's the biggest thing that people look at. They associate the fed right with mortgage rates, which rightly so, I guess, but tune it.

Bruce Morton: Yeah.

Brian Grogg: But it's really a way for businesses also maybe get cheaper money. So 2024, I liken it to a wait and see period because not only did we have the inflation, the fed lowering their rates, but we also had a pretty big election in 2024. So, I feel like a lot of companies did a wait and see approach, didn't hire a lot, didn't really cut loose a lot of people. We didn't see a lot of layoffs in 2024 like you might see, I guess. But in 2025, I think we might see, hopefully, a little more of a ramp up mid-year once rates go down a little more and that trickle down with loans and maybe business can now start investing more in projects, investing in talent as well too, and hopefully more contingent workers, especially in our space, too.

Bruce Morton: Right. And do you see two sides of that coin? You mentioned that organizations were not hiring a great deal of growth in 2024, but I guess people were also bunkering down as well, as individuals weren't necessarily looking for the next move because they were wait and see situation. They don't want to be the last in first out. Think that has an impact on the market, as well?

Brian Grogg: Yeah, it does. And I'm glad you brought that up too because I recently looked at the jolt report that came out a couple days ago through October, and October was the first time in 17 months that the quits rates actually increased. It didn't decrease. So, I think there is a sense out there amongst workers that the economy is doing okay or wait and seeing might not be an option anymore because this might be more of a steady state. So, that's one point. Another point too, going back to the return to office policies, too. How many of those individuals were for companies where they demanded them to come back and come back in the office and instead took a job somewhere else. They quit and found a different job somewhere else, and maybe they took that job taking less money because the option of working remote or hybrid was far more attractive than their current situation. Yeah.

Bruce Morton: And the cynics amongst us might also think that organizations that are looking to downsize might double down on the return to office to have some natural attrition. Right?

Brian Grogg: Oh, man. I mean is my phone bugged right now? I feel like I've had this conversation before where it's like I don't know if that's a good strategy. If I'm advising, I don't think that's good in the long-term. Short-term, it would probably help. It's obviously going to help with their overall balance sheet, but long-term... reputational risk is a real thing. And if you're in the market, and the labor market's so tight right now, if the average worker finds out a company decided to return people to office as a way to avoid, I don't know, for lack of a term, paying unemployment benefits to give to workers, I don't think that's going to be a good idea, and I wouldn't really recommend it. But if you're doing it because you do want to develop culture because you have a lot of people who've been with the company for two or three and don't know what it's like to work for said company, I get that. You want to develop culture. It's important.

Bruce Morton: Yeah, it's a fine balance. And as you mentioned earlier, I think we seem to be settling on this hybrid. Seems to be the norm going forward.

Brian Grogg: Yeah. All the studies say the same thing, Bruce. Hybrid is the best option. Full-time remote isn't great either. I mean from a societal standpoint and from people need to be around other people, and you can develop things. I know here in our Troy office with my team, we're hybrid. We come in the office three days a week. It's great, but we also work home two days a week, as well. And I feel like it's a good way to develop culture within our team.

Bruce Morton: Yeah. Great. Great. So, now here we are in 2024. What are some of the common themes that you are finding you and your team discussing with clients? What's keeping them awake at night? You mentioned return to office, but what else is top of mind?

Brian Grogg: Well, I mean obviously in our role we're dealing with rates all day long, bill rates for a lot of talent that we're looking to hire, and that's what keeps a lot of people up at night is, “our rate's going to go up a lot more.” Things like that. And there was an article published, I want to say about three or four months ago where it said, "Wage pressure is decreasing." And I want to caution a lot of hiring managers and sponsors and clients out there that it says wage pressure is decreasing. It doesn't mean that wages are going to decrease. So, the good news is I think, and if we're looking for optimism in 2025, we're seeing that wage pressure decrease because inflation is decreasing, so on and so forth. So, whereas maybe last year or two years ago, you were looking at a 12 to 13 or 14% increase in a certain role, maybe this year it'll be less than that, so it won't hit as hard for lack of better term. So, I think that's one thing that we're trying to keep an eye on is, “are we seeing the competition go down,” which hopefully will then help reduce the overall need to increase rates to be more competitive.

Bruce Morton: And what about the world of AI? You can't have a podcast these days without mentioning AI. Is that starting to impact the shape and design of the workforce yet?

Brian Grogg: Yeah, good question. We are getting a lot of requests on the cost of AI language modelers and the development of AI, like how is that going to impact not only recruitment but also overall headcount within organizations? How can it help maybe an organization scale without taking on more headcount, too? I think that's one thing that we're trying to figure out in article after article and survey after the survey I read, it's like they're trying to figure out, "How can we use AI to help basically work alongside our workers and scale a lot better?"

Bruce Morton: So, augmented talent rather than replacing?

Brian Grogg: Exactly. I mean, because only so much AI can do right now, as well. But I mean, there are some good things, but I think there's some kinks that need to be worked out, as well. I know there's been some lawsuits around staffing and AI and how it's being used too, but I'm optimistic about it. I want to see how it develops and how we can use it in our everyday lives. I know some people find it to be a bit scary, which I get as well too because if you read enough science fiction, that kind of creeps in a little bit in your thought process. But I like to liken it as a helper for lack of a better term. If you need to refine a statement or something like that, AI can help you do that too or sort through resumes.

Bruce Morton: Yeah. Another couple of subjects I wanted you to touch on. One is the continual talk of the baby boomers retiring, this massive cohorts that are the right age now for leaving the workforce. How are organizations thinking about that, and let's answer that one first, and I've got another question for you.

Brian Grogg: Sure. So, as far as the baby boomer leaving, it's good for the baby boomers in that hopefully right now a lot of their homes are probably at very high values, which is great. Probably their stock portfolio or their 401(k)s are really good right now compared to let's say 15 years ago. So, they're in a sweet spot. The downside is when those baby boomers retire, they're taking with them a lot of knowledge and a lot of skill and who's going to replace that? That's my concern, too. Because we do have a bit of a younger workforce. I think the Gen Xers are being supplanted by a lot of millennials in the workforce, too. So, I wouldn't be surprised if we see more baby boomers come back on to certain roles as consultants more so than working full-time, so they can enjoy their retirement a little bit, but also earn some money and also continue working. I mean, me personally, I'm looking at down the road, I'm probably never going to quit working, but I'll probably have a job doing something because I think it's important that we get out and get up every morning and have a purpose.

Bruce Morton: Right. Yeah, absolutely. And as people are living longer and longer, of course, that's probably even more important.

Brian Grogg: And healthcare costs continue to go up and up and up, and social security and retirement can only cover so much, too. So, it's unfortunate, but I think it's good.

Bruce Morton: Yeah. And there's a lot of talk about skills-based organizations, skills-based hiring. It's been in the market for a while now. Are you finding yourself in conversations with our clients, and what are the conversations they want to get into?

Brian Grogg: Yeah, no. I mean that's a great point because I'm going to give an anecdote. Growing up in my early 20s, I knew that I wasn't going to work for a company for 20, 30 years like my parents did. So, many people in the older generation, they worked at the company doing the same job for 20, 30 years, retired, got a golden watch. Fantastic. Awesome. But I feel like you have to be more adaptable now in developing skills, and having transferable skills is so important. And for companies to identify those skills versus your education or where you went to college, what your degree is in. I think the skills is a lot more important, honestly, if we're going to look to continue to fill roles that we need to fill in, and you also as a worker, as an employee, you need to develop skills as well while you're in your current role so that you can take those skills and maybe move on to a different role maybe within your organization or different organization, as well.

Bruce Morton: Yeah.

Brian Grogg: And so many more companies are looking at that, too. And I think kids today at the high school level aren't going to college as much. So, enrollment's down because I feel more and more are developing more skills in maybe the trades or computer development, coding, maybe like a two-year certificate versus a four-year degree because I think what's going on with student loan debt, and kids are seeing that, they don't want that, so they want to develop their skills to maybe transition to the workforce a little sooner and not have debt.

Bruce Morton: Yeah. Yeah, I think it's a good movement. I think that there's a lot of hype around it, but if organizations follow it in the essence that it was meant for to truly take out bias as well and think about the skills, and it isn't just about taking the degree off the job spec. It's far more than that. But I do think that we're starting to see there are organizations that are taking it seriously, benefiting by widening the talent pool by taking that skills approach, so long may that live.

Brian Grogg: Or even identifying certain workers that have a soft skill that they can maybe send to school for a year or two, develop that skill, and then now they're in the organization. They're part of the culture, and now you're moving them up within the ranks too, which is great, as opposed to bringing someone in who might not really fit the culture too much.

Bruce Morton: Yeah. Cool.

Brian Grogg: I'm a big believer in that myself.

Bruce Morton: Yeah. Good, good, good. Well, it has been good checking in with you as we kick off the year as always, but I have my final question, which is typically a crystal ball five to 10 years, but because of the job you're in, I'm going to limit that to 12 months. So, as we think about the year ahead and we're at the end of 2025, what do you think will be some of those influencing factors that have actually affected organization growth in 2025?

Brian Grogg: Yeah. I think we touched on a few of them a little bit. Obviously, the interest rates, trying to see what the Fed's going to do. Is inflation ever going to get into control, and is there going to be a recession? I feel like most economists feel like we're going to do a soft landing. We're not really going to see a recession per se. And now also in the US, we can kind of look at the uncertainty around the presidential election. We can put that in rear view mirror and look forward and see what's going to happen in 2025. I know there's still some uncertainties right now with the future administration and what they're going to do, especially when it revolves around tariffs. But I do have some optimism for down the road in 2025. I think it'll be a little better than 2024, but I don't think it's going to be as, let's say, robust as it was post pandemic where we see a big hiring boom and things like that, too.

Bruce Morton: Right. So, back to sort of 2019 type levels?

Brian Grogg: Yeah, exactly. Yeah. Steady state, which is nice.

Bruce Morton: Yeah. Cool. Great. Well, obviously we've just scratched the surface here today. I know your team produced some phenomenal material, so if you wouldn't mind sharing with the audience how they can get their hands on some of those workforce trends and expert advice.

Brian Grogg: So, actually we're going to be publishing our workforce trends report here fairly soon here in January. So, that's going to be a really good one coming out about wage equalization. So, that's really good. And of course, we have our QBRs we provide to our clients. And, of course, our previous workforce trends reports that we published over the year, as well.

Bruce Morton: And those are all accessible via AllegisGlobalSolutions.com. Right?

Brian Grogg: Yep.

Bruce Morton: Great. Well, it's been a pleasure speaking with you, Brian, and all the best for 2025.

Brian Grogg: Thanks, Bruce. Appreciate it. You, too.

Bruce Morton: If you enjoyed this episode, please subscribe, rate and review us on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with the #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com, where you can find additional workforce insights and past episodes. Until next time, cheers.