Where are all the workers? clues can be found in the data
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It’s no secret that unemployment is low, and workers are much more likely to jump from one job to another during what has been called “The Great Resignation” – a labor market phenomenon that bloomed during the COVID-19 pandemic and still lingers. During this period, many workers have changed jobs while others have completely left the workforce. In fact, the U.S. labor force is some 2 million people smaller than pre-pandemic levels. Some of this can be attributed to COVID-related deaths and those suffering from the lingering symptoms of “long COVID.” But what about the rest? The data hold clues.
Big-picture Data
Understanding the tight labor market situation begins with a look at some key metrics. For example, U.S. unemployment was reported at 3.5% for July 2022 (the lowest since the pandemic started). At the beginning of the year, unemployment stood at between 4.3% and 5.0% in many of our neighboring states. Our U.S. workforce participation rate (the percentage of the civilian noninstitutional population 16 years or older either working or actively looking for work) was 62.1% in July. In April, 11.4 million jobs were advertised in the U.S. and yet there are two openings for every unemployed. Before the pandemic, there were more unemployed people than available jobs.
Other factors include inflation and overall population data. Inflation was reported at 9.1% in June compared to the previous 12 months and is moving at the fastest pace in four decades. Despite this fact, 3% of the workforce (on average) quits monthly. As for the population, U.S. births have fallen every year since 2007 and have never gotten back above 4 million annually.
That’s a lot of data, but what has been the impact on hard-hit segments of our workforce?
Workforce Segments
Women
Approximately 1.1 million women left the workforce between February 2020 and January 2022, accounting for 63% of all jobs lost. Why? Many women found juggling business responsibilities with home schooling, childcare, and eldercare simply not worth the effort or the income to justify staying in the job. Certainly, with daycare approximately $400/week for just one child, it takes a higher income level to justify and cover that expense. A growing number of people believe our country needs to make long-term investments in childcare, paid leave, and paid sick days to help ensure caregiving responsibilities don’t contribute to a terrible economic impact like we have seen recently.
College Students
We have 1 million fewer students enrolled in college now than before the pandemic. Undergraduate enrollment was down 6.6% in fall 2021 alone. This was the largest decrease in more than 50 years, with community colleges seeing the worst of it. Overall, there has been a 13% drop over the course of the pandemic. Bachelor’s degree seeking students account for approximately half of the shrinkage. This could signal the beginning of a whole generation rethinking the value of college. Consider that in March of this year, 916,000 jobs were added to the US economy yet fewer than 7,000 were for workers with only a high school diploma. This may be good news for employers seeking entry level talent that do not require degrees, but not good news for employers who need people to fill jobs that require degrees.
Retirees
Millions of Americans retired early (before age 65) during the pandemic. But now, they’ve boomeranged back into the workforce faster than any other age group. An estimated 1.5 million of those would-be retirees are back to work according to US Bureau of Labor Statistics data. The workforce participation rate for ages 55-64 has returned to its pre-pandemic level. However, age 65+ are not returning at that rate. People who previously held management or executive roles are being offered sign-on bonuses to come out of retirement.
Entry-level Workers
While Amazon and Walmart lured many to work for them, they are now both reportingly over-staffed, and may soon begin layoffs. If this happens, employers in affected areas may soon find available talent in displaced individuals who went for attractive $15 to $18/hour starting wages.
A Look to the Future
Wages have risen by more than 4% year-over-year for the last five consecutive months. Those who switched jobs saw a 5.1% median wage increase vs. those who stayed in their jobs and saw a 3.7% median wage increase. We have lost many women and early retirees from the workforce that employers may now have the opportunity to get back. Employers may also be able to target non-college entry-level workers.
Regardless of volatile shifts in workforce demographics, it is still The Great Resignation. But employers who can provide as much flexibility as possible may soon see their employment pool open up more than in recent months. If those employers compensate workers who stay as fairly as they compensate workers who change jobs, job loyalty and stability might return. Another opportunity for employers is luring back workers who left as many of these employees discovered their new workplace culture wasn’t a good fit.
Where are the workers? Look to the data and plan your recruiting and compensation strategy accordingly.
Cassandra Faurote is the CEO of Total Reward Solutions, a compensation consulting firm and author of Compensation Sense 101: Common Sense Answers to Your Questions About Employee Compensation and Total Rewards. Reach her at cassandra@totalrsolutions.com.