Amid a tight labor market, employers face workforce challenges exacerbated by congressional gridlock and the rise of AI

WASHINGTON, D.C. (September 5, 2023) – Littler’s Workplace Policy Institute® (WPI®), the government relations and public policy arm of Littler, the world’s largest employment and labor law practice representing management, has released its 2023 Labor Day Report. The sixth annual report examines the current state of the U.S. labor market and provides insights into how policymakers and employers can approach challenges facing the workforce.

“This year’s report finds signs that the labor market is loosening, but employers are still navigating a range of challenges that impact hiring and labor force participation,” said Michael Lotito, Littler shareholder and co-chair of WPI. “At the same time, Congressional gridlock at the federal level has led to ramped-up federal regulatory activity and a growing patchwork of state-level employment laws. With the world of work at an inflection point, now is the time for workers, employers, educators and policymakers to reevaluate what is needed to make the modern workplace thrive.”

While the record-high unemployment rates and displacement that struck the global workforce during the pandemic have subsided, the labor market remains tight. For much of the past year, there were approximately two job openings per unemployed individual, though that ratio fell to 1.5 job openings in July according to data from the U.S. Bureau of Statistics. Although job levels in the aggregate continue to exceed pre-pandemic levels, certain industries have yet to fully recover. At the same time, recent studies have found employees more actively disengaged with their work.

Further complicating the landscape is the rise of artificial intelligence (AI) and automation, which brings fundamental changes for hiring, the nature of work and the labor market as a whole. From the use of algorithms in recruiting to concerns that AI could displace human workers, the advances are contributing to new workplace anxiety and helping fuel general labor unrest.

The report, divided into four sections, explores:

• The current state of the U.S. workforce and the increase in union organizing efforts.
    
• The federal agency actions that have been most significant for employers this year and what to expect from key government agencies in the months ahead.
    
• How the U.S. Supreme Court has revised employment law this year and the major questions that are ahead for the 2024-2025 term.
    
• The state legislatures that have been most active this year and the trending topics for new local laws.

The inability of Congress to advance workplace-related legislation has given rise to a myriad of new policies for employers and workers to maneuver. Over the past year, several significant labor and employment changes have emerged from state and local legislative bodies, federal agency regulations and policies, and Supreme Court opinions.

“With a divided government in D.C., we have seen more than 420 state and local-level bills that have been enacted in the labor and employment space since we published our last Labor Day Report in September 2022,” said Shannon Meade, WPI’s Executive Director. “The topics of interest at the state and local levels run the gamut and include workplace freedom of speech, reproductive health, the use of AI in personnel decisions, pay transparency and regulation of noncompetition agreements. The sheer volume of new legislation, combined with the fact that regulations addressing the same topic are not always consistent with one another, creates a massive compliance burden for employers.”

In addition to Lotito and Meade, the WPI Labor Day Report 2023 was authored by Shareholders John Adams, Maury Baskin, S. Libby Henninger, Bradford Kelley, Kelcy Palmer, Jim Paretti, Melissa Peters, Alka Ramchandani-Raj and Jamie Spataro; Special Counsel Bruce Buchanan; Of Counsel Eric Compere; Associate David Ostern; WPI Senior Manager Jake Baker; Knowledge Management Counsels Tessa Gelbman and Maureen Lavery; and Summer Associate Caroline Jaipaul.

Click here to download the full report.

This report follows the recent release of The American Workforce Transformation – Challenges and Opportunities, a WPI report that provides several recommended policy proposals to address the growing “skills gap” and facilitate future job growth. An overview is available here and the report can be downloaded here.

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About Littler WPI

WPI advocates for employers on a global scale. Working closely with businesses and trade associations, WPI serves as a strong voice for employers and their workplaces to navigate real-time changes in employment and labor law, while influencing the legislation of tomorrow. By harnessing Littler’s global depth of knowledge and expansive resources for tracking emerging issues that affect the workplace, WPI brings employers’ interests to the forefront of today’s rapidly evolving regulatory landscape.