2021 was the year of “Great Resignation,” where millions of workers in the U.S. left their jobs during the pandemic. According to a study by Pew Research Center, employees who quit their jobs cited low pay, few advancement opportunities, and feeling disrespected at their workplaces among their reasons for quitting. A considerable number of people also cited a lack of flexibility, poor work-life balance, and the absence of health benefits. Most employees did not quit the workforce entirely. Instead, they transferred to different jobs that offered more flexibility and greater benefits. However, if most workers are just transferring jobs, this does not explain the myriad of ubiquitous “we are hiring” signs. Experts and economists point out three factors why these signs have cropped up in recent years.
- Restraints on legal immigration have led to more openings in specific fields, such as the hospitality, service, and technology industries.
- Many people, especially women, left their jobs to care for their children and the elderly and have not been able to return to the workforce.
- Some people took early retirement and chose not to return to work. Many older workers chose to retire early to protect themselves from the risk of COVID-19.
Although most people want to continue working, they are becoming more cautious about where they work. They want jobs that provide them with health and housing insurance and a work-life balance.
Work is Not a Luxury
For most people in America, work is not a luxury, meaning they need to work to survive. According to the 2021 American Family Survey, one in four men and one in three women can only live on their savings for less than a month. One in four adults said their savings could help them survive for one to three months, one in seven said they could survive between three to six months, and just one in three said that their savings could last them six months.
As expected, low-income households and those with a high school diploma or less were less apt to cover their long-term needs. Other surveys have also suggested that over 70% of Americans live paycheck to paycheck. However, these financially burdened Americans do not want just any job. They want something to help them afford the basics, such as health care and housing, but most Americans without a college degree are unable to find suitable employment. Median wages have been stagnant for quite a long time. Despite high profits, most companies have not increased wages and, instead, opted to hire more workers, resulting in high turnover rates.
Why Is There a Labor Shortage?
As briefly mentioned above, there are many reasons why companies are struggling to fill positions. Due to changes in immigration policy and an overworked workforce, there is an acute worker shortage in industries like hospitality, elderly care, technology, and other services. Immigrants are commonly sought after for high-skill tech jobs and low-skill service jobs.
According to the U.S. and World Report, half of the workers with children below age 18 had to quit their jobs due to caregiving responsibilities. Around 31% said that the pandemic forced them to leave. Additionally, most employers now require a college degree for entry-level jobs, many of which did not have that requirement before.
Another reason for the labor shortage is that more older workers (55 years and older) are retiring early. This factor has not been taken into account much, but has contributed significantly to the workforce shortage. Some experts suggest that remote working opportunities and a high rate of open jobs can take some workers out of their early retirement.
A Silver Lining for Workers?
While most employers worry that they will not be able to find suitable and experienced workers, there is some good news on the horizon as employers become more accommodating to their workers’ needs. There has not been a better time for workers to negotiate and demand what they want from their employer.
At KangarooStar, we believe labor shortages deepened by the pandemic can be addressed through a collaborative approach between employees and employers. We are your one-hop stop for data-driven job matching, career development, career development, hiring trends, and professional assessment. Learn more about how you can leverage advanced recruiting solutions to attract and retain the best candidates for your company.