- Nationwide, most industries have more job openings than people with prior experience in that sector, according to the US Department of Labor.
- According to The Wall Street Journal there are almost 4M more open positions than people seeking work.
- According to ZipRecruiter’s chief economist Julia Pollak, this “is the lowest ratio of unemployed people to job openings we’ve ever seen”
- The job quit rate hit an all-time high of 3% in September of 2021 compared to the 20-year average of 1.94%.
This has left employers, economists and government leaders seeking to understand the trends and find solutions.
You Only Live Once (YOLO) – How a Meme Became Ingrained in the American Psyche
With the advent of Covid, American workers were forced to change their approach to work and school almost overnight, and these seismic shifts resulted in some deep introspection about life and what it should look like.
While every state approached the pandemic differently, across the board, the majority of non-essential workers stayed at home for some length of time, and many previously in-office workers are still remote. Millions of workers were laid off and some chose to stay out of the workforce when government benefits were more than their average weekly paycheck.
The giant pause button was pushed on people’s lives, and it gave them time to think. Many were able to ask: Is this what I want to be doing with my life? And they were asking this question in the context of some serious philosophical concepts that the pandemic brought to the forefront:
The Frailty of Life
In an August 2021 survey, 72% said they personally know someone who has been hospitalized or died from COVID-19. Adding to that, news coverage fills the 24-hour news cycle with tragic stories, images of overrun hospitals and Covid data. It’s hard to avoid the subject of death and dying. All of this is leading people to ask the big question: Life is short. Is this what I really want to be doing with my life?
The Importance of Family
The initial shutdowns brought families together in a way that they’d never experienced before. Plus, over the course of the pandemic, many Americans have been separated from extended family for significant periods of time. This has left the average worker re-evaluating how to better balance family and work. Remote work has given people more time with their family and reduced stress, with one study finding that remote work gives people an average of 51 more minutes in their day.
The Right to Bodily Autonomy
The debates about vaccine mandates, either government or employee mandated, have caused some people to question the role of government and employers. Their opposition to these mandates have prompted some workers to leave their jobs. While the numbers are small, in this tight job market it still makes an impact. Mary Kay O’Neill, senior health and benefits consultant at Mercer, explained, “The percentages are playing out to be very small. … In this environment of worker shortages, even 3% turnover can be concerning,”
An October 2021 Kaiser Family Foundation survey found:
- Half of workers do not want their employer to put in place a vaccine requirement.
- Seven in ten unvaccinated workers say they will leave their job if they are required to get vaccinated and weekly testing is not an option.
- Five percent of unvaccinated workers say they have left a job due to a vaccine requirement.
These three issues are leaving people to think about their lives and their freedoms as well as seeking more purpose and fulfillment in how they spend their time — and it’s impacting the job market. And now with a market that favors the job seeker, they have better choices and opportunities. Technology has given people who want to start their own businesses a variety of choices with a low entry cost. For instance, Etsy – an online marketplace for vintage and craft goods – has experienced a 53 percent increase in sellers with four in 10 of the new sellers having started their businesses for reasons related to the pandemic.
In the Wall Street Journal, Danny Nelms, president of the Work Institute summed it up well:
“This [pandemic] has been going on for so long, it’s affecting people mentally, physically. All those things are continuing to make people be reflective of their life and career and their jobs. Add to that over 10 million openings, and if I want to go do something different it’s not terribly hard to do.”
As workers are evaluating their lives in light of the YOLO (You Only Live Once) mentality, they are seeking more fulfilling and flexible work if they choose to work at all.
The Demographics of the Great Resignation
Baby Boomers
Even before the pandemic, the aging workforce was an ongoing topic of concern for economists. When the Baby Boomer generation evaluated concerns about health risks and the added stress of the workplace, they made the decision to retire early in large numbers. During the pandemic, there have been 2 million more retirements than expected. With the YOLO principle at work, they’ve reassessed finances and their quality of life and found that retiring early was the best option. Most other groups have returned to the workforce, but those 55 and up have not, as the number in this age group participating in the workforce is actually down from last fall.
Women
With most schools transitioning to remote learning, the burden of education fell to parents, and disproportionately affected mothers. Many of those mothers reached a breaking point, and left the workforce, still not returning two years into the pandemic. Women with young children disproportionately left the job market and haven’t come back. For those who do continue to work, they are choosing freelance work that gives them greater work/family balance. According to a Pew Research analysis of the US Department of Labor data, self-employed female workers have grown 4.3 percent.
Millenials/Gen Z
With older generations, greater barriers to entrepreneurship existed: gatekeepers controlled access, high entry cost, inability to connect with consumers, etc. Now due to technology and social media, many of those barriers are disappearing — and the pandemic has accelerated that.
Upwork Inc. Chief Executive Hayden Brown, citing a September 2020 survey, said: “A new type of career path has emerged, with half of the Gen Z [age 18 to 22] talent pool actually choosing to start their careers in freelance rather than full-time employment.”
Bargaining Power has Shifted to the Worker
As a result of these various groups leaving the traditional workforce, there’s no doubt that the power has shifted to the worker. Scarcity increases cost, and in this case, it increases salaries. It’s a simple, well-known formula:
Increased Demand + Decreased Supply = Higher Cost
For example, according to the Washington Post, pay is up 8.8 percent for nonmanagerial workers in the restaurant-and-hospitality sector and 6.1 percent for warehouse workers in the past five months.
Increased demand is driven by market forces in some sectors:
Increased demand is driven by market forces in some sectors:
- Healthcare (due to Covid)
- IT (due to increased automation/support for remote workers).
Decreased supply is driven by:
- Early retirements
- Millenials/Gen Z choosing freelance work over traditional jobs
- Increased family demands on women with small children
All of these forces are making it more difficult for companies to find qualified workers and they are paying more for workers they hire.
The worker is now in the driver’s seat with more bargaining power. Their bargaining power gives them:
- More job choices.
- More control over how and where they work
- The ability to choose a job with family-friendly policies
- Higher compensation