Labor Market Tightens, Gen Z Avoids Managing, Open AI Launches Astra

Hey everybody, it's Gene Marks, and welcome back to this week's episode of the Paychex Thrive Week in Review. This is where we take a few items from the news and we talk about it a little bit because it impacts our businesses.

So, the first item, well, it has to do with jobs. The U.S. labor market last week remained relatively stable in August, but employers, particularly small businesses, continued to face difficulties finding qualified workers.

Paychex reported that job growth among businesses with fewer than 50 employees held steady with its small business jobs index at 99.13. Weekly hours worked increased for the sixth consecutive month, suggesting employers are relying more heavily on existing staff rather than adding workers. Hourly wage growth remained moderate at 2.89%.

Government data told a similar story. U.S. job openings increased modestly to 7.27 million in July from 7.18 million in June, while layoffs declined. However, hiring fell to 5.1 million, reinforcing the picture of a low-fire, low-hire labor market where companies remain cautious about expanding payrolls.

Small businesses are continuing to struggle with labor availability. According to a recent National Federation of Independent Businesses survey, 35% reported difficulty filling open positions in August, while 82% of those trying to hire said they found few or no qualified applicants. Hiring intentions also softened, although nearly one-third of owners said they had raised compensation to attract employees.

So, what is the takeaway from all of this? You're probably seeing it yourself. I'm seeing it myself. It still remains a tight labor market. Obviously, restrictions on immigration impact some businesses. I get that, but that mostly has to deal with undocumented workers, and businesses shouldn't really be hiring undocumented workers. So, what we're talking about is the existing labor pool of qualified, documented, and legitimate employees. Obviously, it still remains very, very competitive. Job openings themselves are still relatively low. And, of course, the Department of Labor reported just last week an increase – a substantial spike in increase – in jobs added to the economy.

So, businesses are still looking for good workers, they're still trying to find good workers. AI does not seem to be having that impact where we thought it was going to eliminate millions and millions of jobs, at least not yet.

So, the labor market remains very, very competitive, which means if you're an employer like me, we have to continue to provide not only competitive compensation, but also competitive benefits. And the three top ones – always remember – healthcare, retirement, and flexibility.

Flexibility is the one benefit I have to say where we have a leg up on a lot of our larger competitors because we can be more flexible and we can give our employees the ability to have more of a work-life balance versus working for larger corporations or the government where the benefits themselves and the rules are a lot more defined. We can be that much more flexible with the rules.

So, I do recommend that you do that. I do the same thing with my employees. I'm looking to hire somebody else. We are offering very flexible work arrangements, work from home, unlimited paid time off that kind of stuff because, you know, while I as a small business can't really compete for paying for like really, you know, really beneficial health benefits or retirement benefits, the flexibility point though for those that really want a good balance of life that is something I feel I can be even get more competitive than some of my bigger counterparts.

But the bottom line is that the job market is very, very tight.

Okay, the next bit of news comes from HR Executive and it's about younger workers. Younger workers are increasingly reluctant to move into management, creating a potential leadership pipeline problem for employers. Research cited by HR Executive found that nearly 60% of Gen Z workers would prefer to remain individual contributors, while 40% would accept promotions only if they did not have to manage people. Smart generation.

Technology is one reason. Younger employees are accustomed to using digital tools and AI to increase their individual productivity without needing teams. Management also appears less attractive because employees see current managers dealing with heavier workloads, constant organizational change, burnout, and job insecurity as companies eliminate layers of middle management.

AI is adding further pressure because managers increasingly must help employees redesign workflows and integrate automation, often without adequate training. Employers may also face a shrinking pool of experience in future managers as AI reduces entry-level positions. The article argues that companies need better practical management development and AI-enabled coaching to prepare emerging leaders.

It's an issue for all of us that are trying to grow our companies. We do need management. Younger people are less inclined to want to take over management roles because they see it: Managers get burned out. It is tough. That is why CEOs of the largest companies in the world get paid what they get paid because it really takes a certain kind of talent to not only manage hundreds but tens of thousands of people towards a goal or a direction that your company is trying to take.

So, how do we solve that problem? Well, as the article does suggest, we do need better practical management development. We need better training. We need to prepare people to become managers. We do need to merge technology – AI – with management, and don't, you know, surpass those people with strong people skills as opposed to people that might have strong technology skills. You're really looking at people that have both of those skills, ones that can recognize how technology can improve the productivity of their teams, but who are also very good at managing teams.

It is a really type of special expertise that we as employers need to make sure we're grooming our younger people to take over those roles because as evidenced by this piece, a lot of younger people don't want the headache of being managers.

Alright, before we go any further, I think it's a great point to talk about something that's on every business owner's mind, which is compliance. If you want your business to continue running smoothly throughout the fast-approaching holiday season, and you'll definitely want to ensure you can focus your attention there.

So, to do so, today's focus should be on mid-year and year end requirements so your business avoids being at risk. Paychex provides a checklist that includes state minimum wage changes, tip credit rules, workplace posting updates, state retirement management. Date reminders and a mid-year HR review to close any compliance gaps. You want to make sure that you're in compliance; that is the key to having a good workplace.

So, you can check out go.paychex.com/midyear to download the checklist. That's go.paychex.com/midyear, and there you can download the checklist. Okay, let's get back to the show.

And in this week's AI news, OpenAI has launched Astra, its powerful and controversial new model. Astra, which it describes as its most capable and aligned AI model yet, with major advances in computer use, browser automation, coding, and cybersecurity. Astra is initially available through OpenAI's Daybreak Cybersecurity program and is scheduled to expand to paid ChatGPT plans and the API.

OpenAI says the model can identify software vulnerabilities, perform terminal tasks, and assist with complex software engineering at levels exceeding its previous models. Its cybersecurity capabilities are particularly significant because Astra can help discover previously unknown vulnerabilities, including potential zero-day exploits.

However, the model has generated controversy because it uses a reasoning technique known as opaque recurrence. The approach can make portions of the model's internal reasoning more difficult for researchers to monitor, raising concerns about safety and oversight as AI systems become more autonomous.

OpenAI says monitoring remains critical, but acknowledges that understanding advanced models reasoning is becoming more challenging as their capabilities increase.

Wow, there are definite issues with not only OpenAI’s and new developments, but all of its competitors, as well. As these AI models become more and more powerful and they can provide reasoning capabilities without the monitoring or even surveillance from humans, there is a bigger and bigger risk that those AI models can take off on their own and do things without our approval.

So, that is something that we all have to be concerned about. But honestly, I think we're gonna have to let big tech, the Open AI’s and the Anthropic’s of the world, try and make sure they keep it under control.

As for us in business, we need to make sure that we are taking advantage of the latest tools in AI. So, remember, OpenAI's model is called Astra. If you are developing AI applications for your business using ChatGPT, you want to make sure that you're developing it on the Astra platform. It is only released limited right now, but it's going to be more widely available soon.

So, make sure that your developers are aware of Astra. They are migrating to using Astra so that you can have full capabilities, take full advantage, leverage all of the features and tools that come available with the latest model of OpenAI and it's called Astra.

My name is G Marks, and you have been watching or listening to this week's episode of the Paychex Thrive Week and Review. If you need any help or advice or tips on running your business, sign up for our Paychex Thrive news loader … letter. Go to paychex.com/thrive.

Of course, please follow us on YouTube, as well as your favorite podcast platform. And as we head into the fall, it is so important to make sure that your compliance is up to snuff on all of your HR needs. So, go to go.paychex.com/midyear. That way you can make sure that you are keeping track of all the compliance things you need to be aware of.

Again, my name is Gene Marks. Thanks for watching or listening. We'll be back next week with another episode of the Paychex Thrive week in review, where we will go over all the news that impacts your business and mine. We'll see you then.

My name is Gene Marks, and you've been watching or listening to the Paychex Thrive Week in Review podcast. A few things to take away. First of all, if you are in need of HR or payroll help in your business, consider Paychex. Go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X.com forward slash M-E-E-T-P-A-Y-C-H-E-X. Please follow this podcast on your podcast platform or on YouTube if you are enjoying the content so you stay up to date on our latest episodes.

And if you need help or advice or tips in running your business, get our Paychex Thrive newsletter. Go to paychex.com/thrive and sign up for it there.

Hope you found this information helpful. I'll be back with you next week with more news that impacts your small business and mine. My name is Gene Marks. Thanks so much for watching or listening. Take care.

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