Why It Is So Hard to Hire Top Talent Today
Spoiler: it isn't just COVID
There is no doubt that COVID has rocked our world over the past two years. As we know all too well, the pandemic has been responsible for the second, third, and fourth part-time jobs we didn’t ask for (i.e. chef, teacher, daycare, chauffeur), a total shift in how we connect with people, and the uprising of the three most common words we never thought we’d have to use: “You’re on mute.” And with everything has seemingly turned upside down, the world of work has not been spared. New technologies have been implemented, leadership has been tested, and The Great Resignation has been in full force.
Is all of this change due to the pandemic, though? Not exactly.
There is a growing temptation to point fingers at COVID for this massive career movement. And while one can admit that COVID has undoubtedly played a part in the current climate of work today, it is not the sole underlying cause of the Great Resignation.
So what is it?
Having studied workplace culture, leadership, and the future of work for the better part of the last decade, there are a series of trends that COVID has stolen the spotlight from that we simply can’t ignore any longer. And when we find out about what is really happening, it becomes more apparent that while a pandemic undoubtedly rocks the working world, there are other factors at play that are a much stronger force.
We’re having fewer kids. There is a consistent and steady decline in birth rates in the United States which are now below 2.1 and have been since 1970. This statistic is a significant contrast compared to Boomers, who had an average of three siblings; we now have an average of 0.8. Recently the U.S. Census Bureau reported that 1 in 6 adults age 55 and older (approximately 15.2 million) are childless.
We can’t afford them. According to the Expenditures on Children by Families report. In the United States, it is estimated that the average cost of rearing a child from birth to 17 years of age is roughly around $233,610. No matter how cute our kids may be, that's a significant financial investment- and quite frankly, a cost that many couples can't afford.
Temperatures are rising. While cost is an obvious and practical factor, the climate is also one of the other reasons childless adults choose not to have kids. There is growing concern among as many as 1 in 4 adults regarding the ethical and moral implications of bringing kids into a climate crisis. Several celebrities and politicians have vowed to remain childless to protect the environment.
Do we really need them? Think back to your great-grandparents. What did they do for work and how much help did they need to raise a family? Chances are, they didn’t fire up the laundry while cooking spaghetti over the gas stove, right? How about keeping the house warm? And birth control? Not yet. Our ancestors needed a larger family to help with the chores and frankly, to live a higher quality life.
2. Bye-bye Boomers
According to data collected from the PEW Research Center, approximately 28.6 million Baby Boomers, (anyone born between the years of 1946 and 1964) reported they had retired from their jobs by the third quarter of last year. This number is a 3.2 million increase than the previous year, which was around 25.4 million. As of September, approximately 40% retired, which was up from 39% in February.
Having this many individuals retire from their jobs significantly alters the entire landscape of the workforce. Boomers leaving their jobs has created a massive gap in the workforce- a cavernous vacuum of highly skilled, highly practiced, and highly experienced workers. So while yes, there may be jobs available, finding workers with the experience needed is a more challenging task.
Legal immigration has a tremendous impact on the U.S. economy; according to the Pew Research Center, in 2020, immigrants accounted for 17% of the total United States labor force. Immigrants are highly entrepreneurial and drive economic growth. For example, in 2016, immigrants added $2 trillion to the U.S. GDP. And two years later, in 2018, they added $458.7 billion to state, local, and federal taxes.
However, we have seen a notable decrease in immigration rates from March 2020 and October 2021, as 109,591 new restrictions were implemented during the COVID-19 pandemic. These restrictions, in conjunction with COVID complications, have been estimated to have decreased immigration by 2 million people.
The Pew Research Center also found that foreign-born workers were among the largest demographics to be hit by unemployment during COVID. Congress reported that from February to April 2020, one-in-five foreign-born workers lost their jobs, raising the unemployment rate to 16.5 percent.
Despite the setback, the data suggest that they were also the fastest recovering group.
In a recent Joint Economic Committee report chaired by Congressmen Don Beyer stated that "While initially immigrants were more negatively impacted by the coronavirus recession, immigrants are once again poised to play a vital role in the economic recovery and future economic growth."
4. The Part-Time Appeal
Let's face it, if we had the option, many of us would choose to work part-time if we could afford to. Working part-time is appealing; it opens up the door for increased flexibility and more free time. The U.S. Bureau of Labor Statistics confirms this desire by reporting that around six million people want to work part-time- not because there is a lack of full-time jobs, but rather because they don't want them.
This data suggests that more people (primarily teenagers, women and older workers) are interested in and choosing to take part-time jobs. As a result, we can see this directly pressuring more companies to meet this demand, but also struggling to get people to fill the hours of work needed for the company to have everything done.
5. A Stronger Economy
One thing is for sure, despite some of the doom and gloom we've all experienced over the past two years- our ability to innovate and adjust is stronger than ever. According to Reuters Business, nearly 709,000 jobs were created in November and December of last year. Moreover, we have seen trends of more jobs being actively created, and the economy is becoming robust as a result.
6. Women are leaving the workforce again
Gender equity in the workforce has been a popular conversation over the past decade; and while we have made significant leaps and bounds in the area compared to previous years- suddenly, it seems as though there has been a jolt in our progress. According to the data, more women are leaving the workforce to be full-time mothers at a rate we haven't seen in 30 years.
Politico reports that nearly 1.8 million women have quit their jobs through the duration of the pandemic. While numerous factors contribute to this trend, one must recognize the impact that COVID had on families- particularly mothers. The United States Census Bureau reported that as many as 93% of households that had school-aged kids were participating in some type of online or distance learning schooling. This pressured many parents to stay home with their children. The United States Census Bureau also reported that women between the ages of 25-44 were nearly three times more likely than their male counterparts to quit their jobs as a direct result of childcare needs.
Regardless of the reasons, the impact of this many women dropping out of the labor force is quite noteworthy: less diversity and representation in the workforce.
7. The Boomer Effect
Boomers' economic impact and legacy continue to morph; to date, they are the wealthiest generation ever, and as a result, are handing off an enormous amount of wealth down to younger generations. The impact of this is that their direct descendants will be less likely to have to work as much or as hard as the generation that preceded them.
According to CNBC, the average Boomer household's net worth is nearly seven times higher than the average younger household in the late 1990s. On top of that, according to a MagnifyMoney analysis of Federal Reserve data, Boomers today possess nearly 12 times net worth creating a significant generational wealth gap. Of course, like most statistics, hundreds of factors play into these numbers- the housing market, inflation, age, minimum wage, and so on. But what we do know is that this wealth is predicted to have a boomerang effect and be directly handed down to the younger generation.
There doesn't seem to be just one cause of the millions of people quitting their jobs. But instead, dozens of factors play a role. All this to say, this is a perfect storm for the Great Resignation, and the truth is, America will still be 6 million people short in the coming years.
So, where does this leave us?
Better jobs = our best resource to win against the Great Resignation.
The impacts of quality and fulfillment of someone's work-life directly impacts their overall happiness. In fact, Harvard Business Review reports that "elements of people's working lives drive their wellbeing." It's unavoidable; our jobs dictate who we are. While ideally, everyone has a job that makes them happy- we know that life doesn't always work like that. In fact, in 2015, there was a talent shortage, and people took whatever job they could get.
ManpowerGroup conducted a global survey across 42 countries with more than 41,700 hiring managers across various fields to create workable and practical strategies to fill this gap. Fast forward to today, we have seen that workers don't seem to be settling for bad jobs. Because of the shortage, companies are offering to pay more (Amazon doubled their cap to $350k BASE this week), are offering more flexibility, and trying to win talent. As CAP puts it: "For employers complaining of a "labor shortage," there is a simple solution: make workers a better offer." Fair enough. The negotiation power of the employee doesn't seem to be a trend stopping anytime soon.
The best way to fight against the Great Resignation is a pragmatic evaluation of the current climate of our own workplaces and begin to build a better system.
More on that later.