With 2022 halfway over, the franchising world is continuing to see major shifts in the workforce, as the effects of COVID-19 and the Great Resignation continue to reverberate. Because the franchise world covers many different sectors of the economy, the recovery process is definitely not one-size-fits all. While many franchise-related industries, such as hospitality and food, have a larger hill to climb, others have smaller obstacles to overcome but slower growth.
As we head into the latter half of 2022, the most recent workplace numbers are painting a picture of what the rest of the year might hold. Here are a few of the most significant statistics that franchising professionals should be aware of.
Let’s start with the job numbers. According to the US Department of Labor, American employers added 372,000 new jobs in June 2022, while the unemployment remained at 3.6%, the same level it has been for four months in a row. At this point, the US has only approximately 524,000 jobs fewer than it did in February 2020, the last month before COVID-19 led to massive upheavals in the economy. Those jobs are mostly government jobs; the private sector has largely recovered to pre-pandemic employment numbers.
Some sectors are hiring rapidly but are still battling back from major losses during COVID. The leisure and hospitality industries (including food service) added 67,000 jobs in June, but the sector is still 7.8% below its February 2020 numbers, with 1.3 million fewer jobs. Similarly, health care added 57,000 jobs over the course of the month, but is still 176,000 jobs, or 1.1%, below its February 2020 level.
The numbers look slightly different when broken down by demographics. The unemployment rate for White workers ticked up just a hair, from 3.2% in May to 3.3% in June. Asian workers saw the largest increase in unemployment, from 2.4% in May to 3.0% in June. The unemployment rate for Hispanic or Latino workers remained steady at 4.3%, and Black workers saw the only notable decrease in unemployment rates, from 6.2% to 5.8%. For workers over the age of 25, those without a high school diploma still have the highest unemployment rate, at 5.8%, and unemployment decreases with each level of education, with workers who have a bachelor’s degree or higher at an unemployment rate of 2.1%.
For individuals, the financial effects are still a little more complex. Average hourly pay rose 0.3% in June, and has risen 5.1% year-over-year. However, consumer prices have risen 8.6% in that same year. This means that the wage increases are not keeping up with inflation, which reduces buying power for households. On the other hand, the Associated Press reports that economic experts may welcome the slower rate of pay increases, as some fear that higher rates of raised pay could further fuel a cycle of ever-increasing prices on consumer products.
Meanwhile, the real gross domestic product (GDP) decreased in the first quarter of 2022, at an annual rate of 1.6%, according to the Bureau of Economic Analysis. This comes on the heels of a 6.9% increase in real GDP in the fourth quarter of 2021. The BEA attributes this GDP drop to “decreases in exports, federal government spending, private inventory investment, and state and local government spending… Imports, which are a subtraction in the calculation of GDP, increased. Nonresidential fixed investment, PCE, and residential fixed investment increased.”
Franchises are finding themselves on the front lines of many economic challenges currently facing us all. Adding jobs is a major priority, and achieving this goal requires being competitive (in aspects like wages, benefits, and company culture) in a tough labor market. At the same time, inflation may lead many customers to partake in franchises’ goods and services less than before. It’s all about managing that balancing act to help your franchise continue to grow and meet the needs of its partners and communities.
About the Author
Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.
Blue Rock Search is a 100% minority/female-owned executive search firm, an SRA Network member, a Hunt Scanlon Top 10 global recruiting firm, and a member of the Hunt Scanlon HR/Diversity Recruiting Power 65. We specialize in the targeted identification, assessment, and placement of executives across four distinct practice areas: Human Resources, Franchise, Higher Education, and Customer Experience.
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