Understanding America’s labor shortage is important for all leaders, whether you currently have openings, are debating whether or not to let someone go or needing to expand. The first challenge is that the latest data shows that the country has over 11 million job openings but only around 6 million unemployed workers. We can again use that now dreaded word – unprecedented – when it comes to this situation.
So overall, we’re short about 5 million humans to fill all available jobs right out of the gate. Add to that the fact that over 3 million people have decided not to participate in the labor force today compared to February of 2020. Two questions have been baffling me for months. Why aren’t people returning to the workforce and how are they supporting themselves without work?
To answer the first question, why aren’t people going back to work, the U.S. Chamber of Commerce surveyed unemployed workers who lost their jobs during the pandemic on what is keeping them from returning to work. Nearly one in 3 women indicated that the need to be home and care for children or other family members has made returning to work difficult or impossible. More than a quarter of men indicated that their industry was still suffering and not enough good jobs were available to return to work. The survey also revealed that some are still concerned about COVID-19 at work, that pay is too low, or that they are more focused on acquiring new skills and education before re-entering the job market.
To add to the problem, as of October 2021, the pandemic drove more than 3 million adults into early retirement, so we lost a lot of talent much earlier than we would have if not for the impact of the virus. And in 2020 alone, 4 million new businesses were started, moving people out of the workforce and into entrepreneurship.
Then we have the worldwide anti-work movements led by Millenials and Gen-Z’ers who are disillusioned with the injustice of the systems in play. They are loaded with student debt, can’t get high enough paying jobs to purchase homes and feel like they are being taken advantage of. In the US, this bloomed as part of the Great Resignation. In China, it is the lying flat movement (doing the bare minimum to get by and striving for nothing more than what is absolutely essential for survival) or 996.ICU movement (996 is the work culture that expects Chinese workers to happily work from 9am to 9pm, 6 days a week). Followers of these movements either don’t go to work at all or if they do, they slack off by refusing to work overtime, delivering mediocre quality, spending lots of time in the bathroom or reading novels at their desks. The younger generations are pushing back by protesting through slower-paced work or none at all. Countries around the globe are facing similar challenges.
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While younger workers are re-evaluating their life goals, the older generation is retiring in record numbers. In the U.S. alone, 10,000 people a day reach the 65-year-old threshold for retirement and that rate is expected to continue until at least 2029. Considering all of these factors, forecasts indicate a continuing labor shortage for years to come.
To answer the second question, how are so many people surviving without work and its associated income, a lot of it comes down to savings. Enhanced unemployment benefits, stimulus checks and not having to spend money on gas, auto repairs, entertainment and childcare during the shutdowns all contributed to Americans collectively adding $4 trillion dollars to their savings accounts since early 2020. People stayed on unemployment as long as possible because with the enhanced unemployment benefits, 68% of claimants earned more on unemployment than they did while working. Additionally, many families reprioritized their lifestyles and found that they could live on one income instead of two.
Faced with a labor shortage, it is more important than ever to successfully attract talent to fill open positions, but that’s a challenge now, too. The US workforce situation is being referred to these days as a work-quake. We’ve basically functioned within a work structure with the same general rules for about 100 years and suddenly, everything changed in a blink. Trying to return to pre-pandemic working conditions seems to be unacceptable to many employees now, so adaptability is vital in order to sustain organizations’ futures.
During the shutdowns, people stepped back and looked at their lives from a different perspective. While I think this was a positive thing for humanity in general, it’s created something of a nightmare for many employers. The overwhelming majority of workers want more flexibility, but that is going to look different in every industry and since this is a new scenario, there are no clear guidelines or best practices established. We do know that overall, around 40% of workers are currently considering quitting their jobs, but the numbers are higher in certain areas like healthcare, retail, and supply chain sectors. It is estimated that 58% of workers today have the option to work remotely but that many more job seekers want that option.
Researching what companies are doing around the U.S. to address this situation, it’s quite clear that we’re in a major experimental phase. There is no consistency and no guarantees for what will or won’t work. About 1/3 of organizations have shifted to total remote work, giving up their physical offices completely. Some report the best productivity they’ve ever experienced, while others say it’s the worst and they’re still trying to figure it out. About another 3rd have decided to go back to on-site workspaces, requiring employees to return to offices and noting how many are quitting instead. On the upside, they report that the socialization, brainstorming/creativity, and structure of working in the office are more beneficial over the long-term and they’re willing to stick with it to see it through.
Then there’s the third model, the hybrid. In most cases, employees split their time between being onsite from 1 to 3 days per week and then working their remaining days remotely. This model has been slowly rolling out and significant studies have not yet been conducted. But it is an option for industries that can support it and who are concerned about employee attraction and retention.
We’ve moved from the Great Resignation to the Great Reshuffle. Employed workers are considering career changes motivated by higher salaries and a better quality of life. Only 14% of Americans believe that they have a great job and would not change it. People want better work/life balance and more meaningful work than they had in the past. They want more flexibility in their schedules to address family issues or to accommodate educational pursuits. They want to be recognized for their contributions. They want better pay, with less stress and pressure. They want more paid leave and better health benefits.
A tall order indeed. But it appears to be time for leaders to accept that the world has shifted and business-as-usual probably won’t cut it anymore. The challenges ahead will require vision, resiliency, adaptability, creativity and patience. But aren’t those the very qualities of a great leader?
Massive change is definitely in the air. Are you ready to let go of preconceived ideas regarding how and where employees should do their jobs? Is your organization discussing options to make you attractive to the new and emerging workforce? Are you comfortable with managing remote staff or accepting that the 9-5 structure might be a thing of the past in many cases? This may be a good time for self-reflection for leaders. Determine what you need in order to adjust so that you can successfully lead your employees through what seems to be a grand transition over the upcoming months and even years.