The Shrinking Workforce: What It Means for Hiring Today

I recently caught a report on NPR about shrinking population rates across generations—and how it’s going to impact the workforce. It got me thinking: what does this really mean for companies today?

Here’s the trend: each generation is smaller than the one before. Gen X is smaller than the Baby Boomers, Millennials are smaller than Gen X, and so on. This gradual decline is starting to create a real crunch in the labor market.

A Tight Labor Market

The economy is picking up, which means companies are scaling headcount to keep up with demand. But here’s the issue: as of November 2024, there were only 0.9 job seekers per open role, according to the Bureau of Labor Statistics.

With Baby Boomers retiring in large numbers and fewer workers from younger generations to replace them, that number will continue to shrink. We’re heading back to the labor imbalance we saw during the Great Resignation.

And in tech fields—like AI, Machine Learning, and Engineering—things are already competitive. Forbes reports that 60% of U.S. tech managers plan to hire AI Engineers in 2025, a 35% jump from last year.

The question is: How do companies stay ahead when talent is in such high demand?

Competing for Talent: Key Areas to Focus On

To stand out in today’s hiring market, businesses need to prioritize three main areas: compensation, transparency, and employee experience.

1. Compensation: Get It Right

Compensation is still the top priority for most job seekers. If you want to attract top talent, you need to stay competitive:

• Stay Current with Market Trends: Use reliable benchmarking surveys to ensure your pay scales are aligned with industry standards.
• Automate Your Processes: Simplify and streamline compensation workflows to ensure accuracy and fairness.
• Collaborate Across Teams: Make sure HR, Finance, and Managers are aligned on compensation strategy and can clearly communicate it across the organization.

2. Transparency: Build Trust with Your Team

Pay transparency is a big deal. Employees want to know they’re being compensated fairly—and candidates won’t waste their time if they don’t have basic info like salary ranges.

• List Salaries in Job Postings: Over 80% of job seekers say they won’t apply for a job without a listed salary. Transparency attracts great candidates!
• Communicate Clearly: Sharing pay bands and being open about compensation policies helps build trust and loyalty.

3. Employee Experience: Make It a Priority

Engagement and retention hinge on the experience employees have at work. Right now, engagement is in rough shape—Gallup says it hit a 10-year low in 2024. To turn that around, focus on benefits and the overall employee experience:

• Invest in Benefits: Robust benefits show employees you care about their well-being, growth, and stability.
• Foster Engagement: Forbes notes that employee engagement is a top-three priority for job seekers. Building trust through transparent and fair hiring, compensation, and benefits is the foundation for engagement.

The Bottom Line

The shrinking workforce presents challenges—but also opportunities. Companies that invest in competitive pay, transparency, and a great employee experience will come out ahead in the race for top talent.

In a tight labor market, the companies that adapt fastest will win. The question is: Will you be one of them?