In the face of uncertain economic outlooks, many large corporations begin quickly looking for ways to slash budgets and save money internally. One of the most common ways they try to accomplish this? By trimming their workforce. Layoffs save companies money quickly and in large sums, but cutting back on employees is often a shortsighted solution that ends up costing more time and money in the long run.
Most economists were prepared to see major layoffs as the U.S. braces for a looming recession and even higher inflation. However, many businesses are doing the opposite right now; instead of labor cuts, they are labor hoarding.
I’d be remiss not to acknowledge that one reason—perhaps the main reason—that labor hoarding is trending right now is because of the pandemic. Ever since the start of 2020, when COVID-19 quite literally rocked the world and led to mass layoffs and then eventual labor shortages, the ways in which the world approaches nearly everything have shifted greatly. Many businesses witnessed firsthand how difficult it was to find and retain talent after mass layoffs. To prevent history from repeating itself, company HR leaders are adjusting their vision and thinking of long-term success rather than short-term fixes.
With threats of a recession flooding news outlets, many businesses are looking for ways to tighten their budgets and protect themselves financially. Although there are several things that can be done to safeguard your company and your employees, the most impactful step is to bypass layoffs and hoard your employees—especially those who are considered frontline workers.
What Exactly Is Labor Hoarding?
Labor hoarding is the exact opposite of layoffs. At its roots, hoarding is a survival instinct that kicks in during times of hardship or lack. Rather than laying off employees for the immediate preservation of capital, labor hoarding preserves your current workforce and ultimately saves your company more time and money once the economy picks back up because you won’t need to recruit, hire, and train new employees.
Where Do Frontline Workers Come In?
The phrase “frontline workers” wasn’t a household term until a few years ago, but many are still somewhat unclear about which jobs and industries qualify as frontline. Frontline workers are employees who work within an industry that’s considered essential to the general public and for the infrastructure of society as a whole, and their jobs typically can’t be performed from home. Frontline workers tend to have higher rates of face-to-face interactions with people. Some of the most common industries that employ frontline workers include:
- Healthcare
- Education and childcare
- Government
- Food service
- Public safety
- Transportation
- Utilities
- Construction
3 Reasons Your Company Should Labor Hoard Frontline Employees
Labor hoarding is not only beneficial for your employees and company, but also on a broader scale—especially when it comes to frontline workers. Here’s why:
1. It bolsters the economy, thus lessening the severity of a recession.
There’s no denying that when more people are employed, there is more money circulating in the economy. If a recession does hit, having a larger workforce can help lessen its impact. It can also impede the recession entirely. Instead of letting go of employees in preparation for a potential and short-term setback, hoarding employees and keeping them on the payroll allows for long-term stability. This also comforts employees, giving them a feeling that regardless of what happens, they will be okay.
2. It stabilizes the job market.
When employers hoard employees, they stabilize the job market and create lower unemployment rates. When a mass layoff or employee exodus event occurs, the demand and supply scale gets tipped disproportionately. Keeping your workers employed creates a positive ripple effect that extends to their local communities and beyond. When people remain employed, they continue to pay their bills and shop, which creates more tax income and fewer people relying on governmental assistance programs.
3. It keeps things moving.
When employees are laid off, especially in frontline industries such as construction, those industries as a whole suffer, which negatively impacts the world on a larger scale. As we’ve seen with the supply chain issues of the last few years, when layoffs occur, the effects are far-reaching. It’s important to retain employees in essential industries because finding and keeping new talent can be nearly impossible. The construction industry, specifically, is expected to grow 4% by 2031, which means employers need to not only hoard current talent to keep up with demand, but also start planning for ways to recruit new talent to add to and strengthen their teams.
It can be daunting to turn on the news every day and hear about inflation, high-interest rates, and the looming recession. Though there are many ways you and your company can be proactive and plan ahead, laying off your employees is not one of them—especially for frontline workers. By labor hoarding your frontline workers, you’re supporting the economy, lessening the impact of the potential recession, and keeping critical industries functioning.
Jenny Battershell is the director of marketing at Goodwin Recruiting, a full-service recruiting firm focused on construction recruiters. Battershell spent nine years as Goodwin’s director of sales and four more as the marketing and client relations manager before moving into her current role. She currently resides in Cleveland, Ohio.