Franchise Hiring in 2023: Gig work will become more common

As your franchise gears up for staffing in 2023, recognize the winds of change. While 2022 was a challenging year for hiring, 2023 looks to be much improved—if you embrace today’s conditions and understand how to take advantage of changes in the air.

2022: A year of highs and lows

Let’s begin by understanding what happened last year, and how it will likely affect future hiring.

1) In Q1 of 2022, franchises faced the tightest job market in generations. By March there were 4 million more job openings than in 2021, and two open jobs for every one applicant (versus 1.3 in pre-pandemic 2019).

2) The bleak job market peaked in Q2, though it remains imbalanced. Four million workers disappeared from the labor force during the pandemic—many of them women and early retirees.

3) As the year progressed, economic uncertainty and rising interest rates affected employers’ outlook on hiring. While job openings declined 10% from their March peak, a tight job market persisted as job searches fell 8% from pre-pandemic levels.

4) Franchisees and workers learned how transferable job skills are. We found that 59% of frontline workers who changed jobs also changed industries. Sectors such as retail and hospitality benefited from hiring 66% of new workers from other industries, while restaurants relied primarily on industry hires (only 33% were from outside their industry).

5) In Q4, as the economic outlook became less certain, workers sought stability. Employee quit rates began to fall. While pre-Covid quit rates hovered around 1.6%, they rose to more than 3% during the height of the pandemic. The national quit rate has now fallen to 2.7% and is trending downward.

6) Industries that proved resilient in the pandemic (such as grocery) saw increased interest from frontline workers, while the restaurant and retail sectors suffered.

2023: A year of opportunity

With 2022’s lessons in hand, here’s what I anticipate happening with franchise hiring in 2023.

1) A possible recession will affect white-collar hiring more than frontline staffing at franchises. Since the pandemic, the majority of new jobs created in the U.S. have been white-collar jobs (many in technology). Frontline jobs have only recently recovered to pre-Covid levels. However, we have seen a shift across industries. For example, the warehousing and logistics sector added 1 million jobs, while jobs in hospitality fell more than 1 million below pre-pandemic levels.

2) The U.S. still has a demographic challenge that will continue to put pressure on frontline hiring. Labor force participation has been in decline for two decades as Boomers retire; this will restrict the number of available workers.

3) True gig work (picking up one-off shifts as opposed to having a set job and schedule) will become an even more popular way for frontline workers to supplement their income—and will affect how franchises manage staffing. Frontline workers’ interest in gig work has doubled from pre-pandemic levels, partially driven by rising inflation. Franchises are increasingly using gig shift platforms to fill staffing gaps. In fact, the number of shifts posted on Shifts by Snagajob has grown 600% since the start of 2021. Given today’s uncertain economic outlook, tapping into contingent gig labor will be critical for frontline employers.

4) To fill open roles, franchisees will have to look to new talent pools. In addition to gig workers, we’ll see an increase in frontline employers hiring from historically underserved talent pools such as first-time job seekers, second-chance workers, and those with disabilities.

5) Wage increases will gradually slow. While frontline hiring will not be as affected by a recession as white-collar jobs, I anticipate a reduction across the board. This slowdown in wage growth will be driven by the pullback in e-commerce. This will mean fewer e-commerce fulfillment jobs in restaurants (and particularly in QSR) and in counter-cyclical sectors such as discount retail.

Recommendations for 2023

So what can you do to ensure your franchise can successfully staff up in 2023?

1) Look for first-time job seekers and candidates from other industries. Evaluate which roles really require previous industry experience versus what skills are transferable or can be learned quickly. For roles where the skills can be learned, reinforce in your job post that workers without previous industry experience are encouraged to apply.

2) Offer flexible staffing. Given today’s uncertainty, leverage contingent labor to supplement your core team and mitigate overstaffing. Several platforms provide frontline employers with on-demand gig workers.

3) Lean into referrals. Referrals have five times the hire rate. Raise referral bonuses, run monthly campaigns to promote hiring activities, and ensure you have recruiting signage in the break room.

4) Optimize your job posts. Finely tuned job postings generate double the number of applicants. This includes listing the wage (+50% applicants), adding your logo (+30% applicants), using everyday terms, and highlighting differentiators such as training and a career path.

Mathieu Stevenson is CEO of Snagajob.