Employers across the country are facing a huge issue right now: too many open positions and not enough workers.
On its face, it seems like there are simply not enough workers available for jobs, but that’s not actually the case. The unemployment rate is hovering just below 5%, translating to roughly 7.5 million unemployed Americans (source: Bureau of Labor Statistics), which tells us there are people available for work.
At the end of Summer 2021, it looked like unemployed Americans were going to return to the workforce in droves. This was when several key COVID-19 initiatives ended—expanded unemployment benefits ceased and children returned to in-person classes. Puzzlingly, while some individuals did return to work, many others quit in record numbers, leaving employers in the lurch.
Below we share what we believe is happening in the current labor market. We lay out potential reasons why individuals have been slow to return to work despite available positions. We also included some suggestions on how you can better attract some of these workers.
Factors Impacting Labor Shortage
1. Fear of Contracting COVID-19
One obvious reason for the labor situation may involve COVID-19-related fears. Some workers are simply afraid of contracting a serious case of COVID-19 at work. To some, remaining unemployed longer outweighs the risks of taking an in-person job. However, as more Americans get vaccinated, this may become less of a concern.
2. Comfortable Savings
During the pandemic, much of the country was in some sort of lockdown, with restrictions put on travel, gatherings and business operations. In effect, many activities people enjoyed were suspended for nearly a year. That meant all the money that someone might spend on eating out, going to the movies or attending concerts all went into personal savings. Plus, individuals received generous stimulus checks and had access to enhanced unemployment benefits during this time, which also contributed to savings.
Now, some workers are relying on those accrued savings to remain out of the workforce. Essentially, they are using their assets to hold out for a desirable job. Under normal circumstances, these people may have taken the first available position. But, with a savings safety net, they are able to wait longer.
3. Reprioritized Worker Desires
The COVID-19 pandemic caused workers to reevaluate their priorities, contributing to the labor shortage. Suddenly, workers began to rethink their priorities and the value of their labor. As the pandemic endured, a common thought was, “Is this job worth my mental and physical health?” Now, even as employees who were laid off are offered back their previous positions, the answer among many has been a resounding, “No.”
Paired with accrued savings, workers are now able to be more discerning with the jobs they accept. As such, a significant number have chosen to quit their current jobs while they search for more fulfilling options.
According to several surveys, employees are looking for the following advantages when job hunting:
- Scheduling flexibility and/or telework options
- Access to better employee benefits
- Greater compensation
- Job fulfillment
4. Continued Caregiving Duties
Finally, the COVID-19 pandemic has also affected the labor market through child care issues. While many schools have returned to in-person learning, some have not. On top of that, some day care facility rates have shot up due to staffing shortages and an influx of parents seeking child care.
For some parents, the costs of day care or the risks of in-person learning are too great. It may be more cost-effective to remain an at-home caregiver a bit longer instead of returning to the workforce right now.
The current labor shortage is due to several overlapping factors, many stemming from the COVID-19 pandemic. However, it’s not a traditional labor shortage in that there are still many unemployed individuals. The real crux seems to be that workers are leveraging the moment to obtain better jobs.
It’s unclear how long workers will remain selective with their labor. Realistically, savings only last so long and, with ample vaccine availability, the pandemic may be under control soon. Workers may be compelled back into the workforce sooner rather than later. It’s in an employers’ best interest to listen to the desires of unemployed workers, namely with flexibility and benefits. Understanding these drivers will be critical to attraction and retention efforts.
At the end of they day, if an employer turns a deaf ear on what employees are looking for, they may be limiting the applicants they receive—both in terms of quality and quantity. This can severely impact an organization’s ability to grow and succeed.
Need help attracting and retaining your workforce? Reach out to CorpStrat for more attraction and retention guidance. Email us at email@example.com