The 2023 Outlook for Labor Supply and Demand

As the new year approaches, prognosticators everywhere want to know what trends we can expect to see in the job and labor market going forward. Will 2023 bring more supply and less demand? Or will it be home to more challenges and shortages of skilled workers?

Experts are once again predicting that businesses will face greater demand for workers than available talent. This may lead to more out-of-town or overseas hires, remote work and outsourcing, and even reduction in products and services offered.

Likewise, more companies will focus on developing the talent they already have—teaching new skills to current workers—to bridge the tight labor market. Training and talent development can help cover current gaps and increase worker productivity and satisfaction.

In addition, companies everywhere must focus on outreach and branding to continue to attract the best and brightest talent. Innovation is and will be the name of the game in the 2023 job market.

While it is never easy to precisely pinpoint what a new year and a new season will bring, most labor market experts today anticipate another lean year where businesses are short on workers and long on need. Companies that can creatively weather the storm will rise to the top.

Most Gig Workers Would Prefer a Full-Time Option

While many recent headlines have touted the growth in gig work across the United States, most part-time workers say they would prefer a full-time permanent option, according to McKInsey’s America Opportunity Survey. On the contrary, most companies plan to increase hiring of employees who work on contract or part-time, rather than full-time employees.

Even though part-time and gig workers enjoy flexibility in jobs and the ability to set their own schedules in some cases, these workers were most impacted by loss of income during the pandemic, and nearly one-quarter of them reported that they could not afford health insurance while many others were also struggling with basic living expenses. Nearly two-thirds of contract, freelance and gig workers said they would like to have permanent employment; these numbers increase for Black, Latino and both first- and second-generation immigrant respondents.

However, gig and part-time workers did note feeling more optimistic about the economy in general than their full-time peers, and this group is enrolling in additional training and continuing education at a rate that is more than double that of other workers.

As part of its recent survey, McKinsey interviewed 25,000 U.S. workers in spring 2021, and nearly 30 percent of those surveyed were freelance, contract or temporary gig workers.