As the workforce shifts back to in-person working after an unprecedented year of economic challenges, many business leaders are grappling with the new need to accommodate a hybrid work model while also recuperating from financial strains and planning for the future. As more and more business is done online and the global economy continues to recover, forward-thinking business leaders should be aware of these three trends — and specifically how they might impact growth and business success in the future.
1. There is a scarcity of labor in the market.
The U.S. economy is recovering from pandemic lows with historic speed, and new businesses are entering the market faster than ever before. The side effects of this velocity are shortages in raw materials, goods and labor.
What’s more: the U.S. Bureau of Labor Statistics reported in April 2020 that year-over-year growth in average hourly earnings jumped nearly 8% — the sharpest increase since 2006 — during what was also the worst job loss on record. That dramatic increase was a result of millions of low-paid workers losing their jobs while relatively high-paid workers kept theirs; the average wage rose because of the shift in the compensation level of those who remained employed. As the economy continues to recover and lower-paying jobs bounce back, the effects will likely be most evident in industries like hospitality, leisure and entertainment as more jobs are added and lower-paid workers who were laid off get new jobs.
“There’s a mismatch that seems to exist in the job market,” says John Sarvadi, head of Middle Market Banking at Texas Capital Bank — an institution that has made a concerted effort to understand recent challenges and shifts its clients are experiencing to see how the bank might be able to help support. “There are many job openings available and lots of people still looking for work, but there’s currently not an alignment between the two groups.”
2. Issues around logistics continue to persist.
Numerous industries have been faced with delays in operational activity; for example, the global shortage of computer chips has been disruptive to the global semiconductor supply system – which the Los Angeles Times describes as “the foundation of everything from weapons systems to technologies used daily by businesses and consumers.” The impact of logistical complications on businesses has the potential to be extremely costly, and the White House reports that shortages have caused the prices of commodities to rise by 19% between May 2020 and May 2021 — the largest year-over-year increase since 1974.
“The cost has to get passed down somewhere,” Sarvadi says. “If you need products shipped to Houston from Asia and it costs the importer extra because of disruptions in container logistics, you may have to pay that extra cost.”
3. Texas remains an attractive hub for businesses.
Global and nationwide challenges considered, the state of Texas still continues to present an attractive environment for doing business. With its central location in the United States, renowned connectivity and infrastructure that enables it to lead the nation in export activity for 19 consecutive years and attractive tax incentives, there is a lot of excitement around working and living in Texas.
The city of Austin has ranked near the top of major cities for job growth during the pandemic. “It’s the third coast for technology companies, and it has been for some time” says Sarvadi. “Its connection to the University of Texas as well as to the government give Austin a unique edge compared to other cities.”
Regardless of industry, size or vision, your company likely needs a sound, experienced financial institution with a dedicated team of bankers who work to build a relationship based on understanding your financial goals and strategy for success.
Start a conversation with the team at Texas Capital Bank and learn more about how we put our expertise to work to deliver solutions that make sense for you.
Texas Capital Bank is a trusted financial institution focused on serving businesses and their leaders. In addition to offering guidance from experienced fraud personnel, Texas Capital Bank offers a wide variety of treasury solutions designed to minimize the risks of fraud and protect clients’ accounts. Member FDIC