A Labor Shortage with 8 Million Unemployed
Published June 17, 2021
Quits And Job Openings At Record Highs: What Is Happening In The Labor Market?
Recent labor data point to an increasingly tightening job market, with reports of workers quitting instead of returning to work in-person, while employers reassess benefits packages to attract workers. Despite these reports, the unemployment rate at 5.8% is still well above the 3.5% it was pre-COVID. A myriad of factors may be working together to create this contradictory moment of high unemployment and a labor shortage, according to one workplace authority.
“The country is undergoing an unprecedented era during which American workers have proven that many of their positions can be done almost entirely remotely. Meanwhile, employers whose jobs cannot be done remotely are having a difficult time attracting and retaining their talent. With job seeker confidence at an all-time high, workers are really calling the shots,” said Andrew Challenger, Senior Vice President of global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
The latest Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics (BLS) found 9.3 million job openings, a record high. Meanwhile, the quits rate at 2.7% is the highest for the series with 4 million workers willing to leave their jobs in April. While the JOLTS report does not measure whether the workers who quit did so for other positions, it is a measure of worker confidence in the job market.
So far this year, employers have announced plans to cut 192,185 jobs from their payrolls, dramatically lower than the 1,414,828 jobs eliminated through the same period last year. While companies are holding on to their workforces, a survey from Microsoft found 41% of global workers are thinking of quitting their jobs, with 54% coming from Generation Z. A study by Prudential found 42% of workers plan to quit their jobs if their employers do not offer remote work options long-term.
“Even if workers are not leaving directly for new jobs, right now, they will leave positions that do not meet their needs,” said Challenger.
Challenger offered the following factors that could be influencing worker readiness to leave their positions.
While the country appears to be on the tail end of the pandemic, it has taken a massive emotional and sometimes physical toll on American workers. Employees were required to reimagine their positions as remote or mostly remote or conversely, work in-person during unsafe conditions. “Some workers may find new jobs simply to take an extended period of time off between the end of their former jobs and the start of the new ones,” suggested Challenger.
Remote Work Options
According to a recent Challenger survey, 6% of the 96% of companies that moved all or part of their workforces to remote work situations plan to return to their pre-pandemic remote work policies. Another 4% will not keep workers remote, and 5% are still determining what they will do. That means 84.2% of companies plan to retain new remote work options for their teams. “After successfully working remotely for over a year, it does not make much logical sense to demand workers come back to an office eight hours a day, five days a week. Many workers will find new, more flexible arrangements,” said Challenger.
While millions of American workers have gotten the vaccine, and indeed 44% of the eligible population are considered fully vaccinated according to the Mayo Clinic, children under the age of 12 cannot receive the vaccine. This puts working parents in a difficult position, and many parents, particularly mothers, left their jobs or the labor force entirely to care for children. In fact, the participation rate for working mothers fell more than a full percentage point in 2020: from 72.3% in 2019 to 71.2%, according to the BLS. Meanwhile, the unemployment rate for single mothers in 2020 was 10.4% while single fathers experienced 10.6% unemployment. That number was much lower for married parents who may have had partners or means to care for children: 6.1% for married mothers and 4.8% for married fathers in 2020.
As millions of American workers moved their jobs to fully remote, they also bought houses, sometimes in completely different locations. Last year, existing home sales surged to the highest level since 2006, according to the National Association of Realtors, as interest rates plummeted and buyers looked for spaces that could accommodate working, living, and schooling. As employers begin to call their workers back to the office, those who relocated may find positions in their new locations or ones that will keep them at home.
Expanded Unemployment Benefits
Though likely a small contributing factor to the unemployment rate, the expanded employment benefits set to expire in many states could be keeping some workers from taking other positions. “In many cases, these benefits paid better than the positions from which recipients were discharged. This factor coupled with some others – childcare needs or burnout, for example – could keep some people from finding new employment more quickly, especially if they can cover base expenses,” said Challenger.
“Over the coming months, the labor market will likely level out, with the number of unemployed falling to meet demand. However, much of it will depend on whether employers successfully woo and retain their workers,” said Challenger.
“This is a real test for leadership to see if they can engage their teams and entice them to stay. It is likely we’ll see increased wages and more generous perks, like paid time off and mental health care benefits, in the wake of this period,” he added.
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