Are Recession Fears Over?

With all the talk and speculation of a recession, we posed the question to our partners to see how labor-intensive industries like landscaping, construction, and manufacturing might fare in 2023. And whether a recession is coming or not, what should businesses be doing right now to be in a good position to weather the storm if need be? Here’s what they had to say:

A recession is probably coming, but it might not be that bad.

I think the talk and speculation regarding the looming recession might be a bit more bloated due to the media sharing the mass layoffs in the technology sector and the numbers are not as bad as they seem. The tech industry makes up only 3% of the labor market and many of the small businesses are still adding jobs and growing. So while that sector has shed a percentage of their workforce, this doesn't necessarily apply to many of the service industries that are in large part, essential. The National unemployment rate is still holding strong at around 3.7% which doesn't necessarily apply to service sectors which are much lower.

— Tito Caceres, Bloom Partners Talent Solutions

Most experts are saying a recession is already here or arriving sometime this year. However, unlike the "experts" I believe that while the economy may slow further, economic activities will remain strong across many or most sectors. Employers in many sectors continue to struggle with finding enough workers with unemployment still at close to record low. This will further reduce the likelihood of a severe recession.

— Bahaa Moukadam, SeeMetrics Partners

The US is ending 2022 with about 10 Million open jobs and about 6 Million people unemployed. While the gap has been closing a bit in recent months, it is unlikely that whatever recession occurs will result in a drastic change in hiring. The 2008 financial crisis caused 7 Million people to go on unemployment over the course of two years while 5 Million open jobs disappeared. If that happens next year, the market for candidates will be about the level it was in 2013 when it was still difficult to hire quality people for trades. And if that happens, employers will have many, many other problems to worry about.

— Neal Glatt, GrowTheBench.com

Although the likelihood of recession is high for 2023, the persistent strength of the labor market, coupled with strong business and consumer balance sheets, suggest that it will be relatively mild in nature. Certainly nothing like 2020 or 2008/09. As such, employers should look for opportunities to add impact players to their organization while also retaining the employees they already have. This strategy will pay off handsomely during the next business cycle rising trend and period of economic expansion.

— Alex Chausovsky, Miller Resource Group

How to Prepare

Know your numbers.

Employers need to start "knowing their numbers." What type of work makes your company profitable? Who are your best employees? On your project estimates, are you making or losing money, and do you have the ability to see that in real time so that if a project isn't going well, you still have time to adjust?

— Derrik Shakespear, busybusy.com

Employers should consider ways to adapt and stay competitive. This may mean identifying new markets or adding other services they haven't provided before and investing in training and development for employees to help them acquire the skills needed to succeed in these areas.

— Scott & Kati Molchan, Million Dollar Landscaper

Employers should be thinking about putting even more focus on talent development and retention and on new strategies to gain market share. Yes, be frugal and cautious about unnecessary spending. And the mindset and strategic planning should focus around "if the pie gets smaller, what should we be doing to gain market share so that our piece of the pie gets bigger and we still grow?". Keep playing to win and avoid playing not to lose.

— Bahaa Moukadam, SeeMetrics Partners

Evaluate Org Charts & Company Needs

Employers should ask themselves: do I really need an employee for this position? Create partnerships with subcontractors and solution providers wherever possible to decrease your overhead, and then pay the employees you DO have on your team exceptionally well so they want to stay.

— Jack Jostes, Ramblin Jackson

Employers need to have a 1 to 2 tier plan based on specific triggers to revenue and profitability changes for how they would adjust staffing. We use a recession proof assessment and reverse accountability chart tool to guide clients for this exact purpose.

— Cullen Talley, Exit Momentum

In terms of workforce management, employers may need to make difficult decisions about layoffs or reduced hours. If these measures are necessary, it's important to handle them in a fair and compassionate way. This may include offering support for job searching, as well as considering alternative options such as temporary reductions in pay or hours rather than outright layoffs.

— Scott & Kati Molchan, Million Dollar Landscaper

Invest In Culture, Benefits, Compensation & Communication to Retain

In terms of employers thinking about their workforce as it's related to the recession, I feel it's critical for employers to think not only about who they're hiring (is the right person in the right seat?), but also if they’re giving their employees the right tools to be successful, and whether or not they’ve cultivated a company culture that values the individual and the team. If a recession does occur, those former employees are much more likely to return to the same company because they feel that sense of value, belonging, and know they'll be supported just as they support others on their team.

— Nicole Henry, CompanyCam

Employers should prioritize the well-being of their employees. This means offering support and resources to help employees cope with the financial and emotional stresses of the recession. Employers should also be transparent and communicate openly with their workforce about the state of their business and any potential changes that may be coming.

— Scott & Kati Molchan, Million Dollar Landscaper

Think about ways to limit risk, this will be especially important in a recessionary time period. We are advising our clients to look into ways to retain team members, like additional benefits, pay raises, etc. There also needs to be a diversified way of obtaining quality candidates.

— Carla Policastro, Cycle CPA

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