September 7, 2022 Littler’s Annual Labor Day Report

Report examining the top issues facing employers and what policymakers can do to address them.

WASHINGTON – Littler, the world’s largest employment and labor law practice representing management, has released its fourth annual Labor Day Report. Developed by Littler’s Workplace Policy Institute® (WPI™), the firm’s government affairs arm – with contributions from Curtis Dubay, the Chief Economist of the U.S. Chamber of Commerce – the WPI Labor Day Report 2022 examines the top issues facing U.S. employers and what policymakers can do to address them.

“Our country is in the midst of a once-in-a-generation workplace transformation that has given rise to a host of novel challenges that employers must now navigate – from continuing labor shortages to technology-related job displacement to a widening skills gap,” said Michael Lotito, Littler Shareholder and Co-Chair of WPI. “With this report, we aim to not only provide a window into the state of the U.S. labor market and the evolving issues confronting employers, but to offer solutions that will position their businesses and workers for a more prosperous future.”

Divided into three sections, the report starts with an examination of the current state of the U.S. workforce and the factors steering employee and employer behavior. The second section provides an overview of how federal, state and local government decision-making is affecting labor and employment law. Lastly, the report outlines steps policymakers can take to address the employment challenges stemming from the historic transformation of the workforce.

“The myriad challenges impacting the workplace over the past two years have culminated in more employees leaving the workforce and employers struggling to fill needed positions,” said Shannon Meade, WPI’s Executive Director. “Understanding the complex dynamics of the current labor market is a critical first step to identifying in-demand jobs and skills, guiding investments in education and training, and ultimately maintaining a competitive advantage in a rapidly changing landscape.”

The economy has become more turbulent than ever amid rising inflation, mounting national and global unrest, and the looming threat of a recession. While employers and employees continue to recover from the devastating effects of COVID-19, the rate and extent of this recovery varies significantly by industry, level of education and worker demographics. WPI’s report examines these and other key trends, including:

• The U.S. jobs level has recovered from the hit it took from the pandemic, although the hospitality and service industries are still lagging.
• Despite this recovery, the labor force participation rate is 1.3 percentage points below the pre-pandemic level. There are approximately 4.8 million more job openings than unemployed workers.
• Workers are putting in more hours and costs are rising, yet output is falling. The decrease in productivity combined with an increase in hourly compensation has resulted in a 10.8% jump in unit labor costs.
• The Democrats’ slim majority in Congress over the past two years has prevented either side of the aisle from advancing employment-related legislation. Federal agencies and state legislatures, therefore, have become the main drivers of employment policy.
• The pandemic exacerbated job displacement, which is creating employee demand for new ways of working, skillsets, and approaches to improving workplace policies.

“Alongside a global pandemic, tumultuous economy and changing work environments, employers must comply with a disparate assortment of new federal, state and local rules and laws,” said James A. Paretti, Jr., Littler Shareholder and member of WPI. “Yet while these regulations have created a litany of new requirements for employers, they have thus far fallen short of addressing the more systemic workplace issues in need of repair. There is an urgent need for federal policy reforms that address these challenges and recognize the evolving nature of work.”

In addition to Lotito, Meade and Paretti, the WPI Labor Day Report 2022 was authored by Shareholders Maury Baskin, S. Libby Henninger, Alka Ramchandani-Raj, Bruce Sarchet and Brooke Niedecken; Special Counsel Bruce Buchanan; Of Counsel Michael Paglialonga; Associate David Ostern; WPI Senior Manager Jake Baker; and Knowledge Management Counsel Tessa Gelbman.

Click here to download the full report.

This report closely follows the release of a study that WPI conducted with the National Association of State Chambers. The report, Workforce: A Throttle on American Growth, provides a state-by-state analysis of workforce development challenges and solutions. An overview is available here and the report can be downloaded here.

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