The U.S. labor market has undergone a seismic shift over the past few years, facing unprecedented changes fueled by the COVID-19 pandemic. One significant disruption is the struggle to find experienced talent in industries that were once a staple of the workforce, such as logistics, manufacturing, and on-site services.
The workforce size has increased since 2020, from 160.7 million in 2020 to about 167.1 million by 2023, reflecting gradual recovery and growth after the pandemic. As of early 2023, the largest employment sectors included Education and Health Services with around 36.4 million employees, followed by Professional and Business Services with 20.7 million, and Wholesale and Retail Trade at 19.8 million. Manufacturing also remained strong, with about 15.6 million workers, and Transportation and Utilities employed roughly 9.9 million people. However, many industries still face labor shortages, especially in roles that traditionally involved in-person work, such as logistics and manufacturing, as remote work continues to attract workers across different sectors.
* Information based on U.S. Bureau of Labor Statistics (BLS)
The Great Migration to Higher-Paying Industries
The pandemic didn’t just alter work habits; it redefined what work means to millions of people. Facing uncertainties, many workers transitioned to higher-paying industries, leaving behind sectors that have historically relied on stable labor forces. Logistics, for instance, saw significant turnover as workers sought more lucrative roles in tech or healthcare. This mass migration has left industries like logistics, manufacturing, and retail struggling to attract qualified workers, pushing them to explore alternative labor solutions. This labor shift has led to a talent shortage, impacting industries that play critical roles in the supply chain. Many companies have upped their wage offerings and benefits, but even these incentives often fail to attract and retain experienced staff.
The Rise of Remote Work, Workforce Composition, and Changing Workforce Expectations
Remote work, once a perk limited to select industries, has now become an expectation for many employees. The flexibility to work from home or any preferred location has shifted from a temporary adjustment to a new norm, especially among younger and mid-career employees under 55. For many in this demographic, it's now an almost non-negotiable condition of employment. Many employees who once commuted to offices now view even partial in-person roles, such as working one or two days a week on-site, as a step backward.
Based on U.S. Bureau of Labor Statistics (BLS), workforce demographics and Industry growth play a significant role in shaping these expectations. Currently, two-thirds of the workforce consists of individuals under 55, with the largest participation rates in the labor market found within this group. Notably, the 25-54 age range is evenly distributed across three segments: 25-34 (45 million), 35-44 (43 million), and 45-54 (44 million) years. Each of these groups brings unique expectations to the table, particularly regarding flexibility, autonomy, and work-life balance. As these demographic trends unfold, employers are compelled to rethink their hiring and retention strategies. To keep teams engaged and willing to stay, they must adapt to the evolving demand for remote work options. For many organizations, the solution lies in leveraging technology and tapping into a vast pool of remote talent that extends well beyond national borders.
Embracing Remote-Ready Talent and Nearshoring in Mexico
The pandemic revealed the power of technology to connect teams, and for companies facing U.S. labor shortages, it offers an opportunity to expand their search for talent beyond traditional limits. Nearshoring—working with professionals in neighboring countries like Mexico—has become an increasingly viable option for businesses struggling to find local talent.
Why Mexico? With a population of over 130 million, Mexico stands out as the Latin American country with the scale to fully support large-scale business operations. Mexico's vast talent pool is well-equipped to sustain the growing needs of nearshoring initiatives. Its proximity to the U.S. enables real-time collaboration due to shared time zones, while a well-established commercial relationship makes cross-border business seamless. The Mexican work culture aligns closely with American standards, and with easy travel connections, face-to-face meetings can be arranged quickly when needed. The nearshoring model allows businesses to access talented professionals who can work seamlessly with U.S. teams and clients. For roles in IT, logistics, and administrative support, this approach can be a cost-effective solution to labor shortages and a way to tap into a qualified workforce without compromising on collaboration or productivity.
The Future of Work: Local Talent, Global Connections
The U.S. labor market’s transformation, combined with advancements in remote technology and cloud security, offers companies an array of options to meet their workforce needs. As many sectors continue to grapple with worker shortages, nearshoring in Mexico and other neighboring regions presents a strategic and timely solution. By embracing remote work and nearshoring, businesses can tap into a global talent pool, reduce operational costs, and continue to grow despite challenges. In doing so, they not only adapt to the modern labor market but also position themselves to thrive in a world that’s more connected, secure, and resilient than ever before.
Projected Changes: Employment in certain occupations, like healthcare, technology, and business services, is projected to grow significantly, driven by high demand and the adaptability to remote or hybrid work models. Conversely, jobs requiring physical presence in less flexible industries may see slower growth, as remote work opportunities pull talent towards more adaptable roles.
Call to Action:
How has your industry adapted to these labor and technology shifts? Are remote work and nearshoring part of your hiring strategy? Share your experiences or questions in the comments.