The Great Resignation – A Worker Shortage Update

The Great Resignation – A Worker Shortage Update

Back in June, I wrote about the U.S. worker shortage and the forces behind it. At that time, the debate focused on enhanced unemployment benefits and low wages. I pointed out the number one culprit was a demographic shift, resulting in a shrinking workforce.

It’s now November 2021. The enhanced unemployment benefits have ended. Employers have increases wages and plan for even more in 2022. Other programs, such as the eviction ban, have also come to a close. Where does this leave us?

Still in the middle of a labor shortage.

A Male worker at a factory

Tackling the Real Problem

The good news is we have a more nuanced view of the demographic shift. As noted, there were a record number of retirements in 2020. In 2021, the older-worker participation rate continued its decline, as many have left the workforce earlier than intended.

Reasons cited include Covid concerns, improved finances, and other related life changes. In other words, a large part of the next decades’ expected workforce has bowed out.

A good number of younger Americans are also delaying their return due to:

  • Reduced life expenses
  • Higher savings
  • The residual effect of government programs
  • An increase in the cost of services such as child care

We can expect an easing of the shortage as they come back to the job market, but it’s not a solution. There aren’t enough workers on the sidelines to fill the current gap. On top of that, our declining birth rate will undercut these gains over time.

Too many employers still long for a return of the old status quo. They risk losing significant business by not adapting to the new reality. The best employees have more options now, and they’re using them.

The Great Resignation

A record 4.3 million Americans quit their job in August 2021. They didn’t leave the job market; they found something better. Surveys also show 46% of Americans are still considering something new.

Anthony Klotz, a management professor at Texas A&M University, coined it “The Great Resignation”. It’s a result of a pandemic-inspired reevaluation of priorities. Those who felt stuck in unfulfilling work decided to find something better. The shortage has opened doors that were nailed shut a couple years ago, allowing them to do so. They’re looking for:

  • Better working conditions
  • Higher pay
  • Improved work/life balance
  • A greater sense of accomplishment
  • The feeling that their work improves peoples’ lives
  • To start their own businesses

To the last point, one-third of the Americans who quit their job during this period started their own business. That alone could have a big impact on the future employment landscape.

The end result is volatile job market different from any we’ve experienced. That makes it difficult to predict, outside of not expecting a “return to normalcy” anytime soon.

One thing we do know is business leaders cannot afford to hold on to old assumptions in the face of new challenges. In a recent survey by Crain’s Detroit Business, they quoted managers who blamed unemployment for their recent resignations. They suspect these workers quit after two weeks to go back on unemployment.

They should know that’s not how unemployment works (and perhaps the magazine’s editors as well). Instead of blaming “lazy workers”, they need to ask themselves hard questions about how desirable they are as employers. It could be the difference between success and failure.

For 30+ years, PRA USA has helped our clients and candidates navigate the ever-changing job market in the fields of Electronics, Embedded, and Controls Systems. Contact us to discuss your recruiting headaches, so we can help you find a solution.

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