COVID-19 has impacted the workforce – and the workplace | Economy
Two years into the coronavirus pandemic, the workplace remains in a state of severe disruption. The economy has 4 million more jobs than there are workers to fill them. Employees quit in large numbers. Businesses are struggling to find workers. Salaries are increasing at an annual average of about 5%.
Rewind to March 2020, when millions of people suddenly found themselves forced out of their offices for a lifetime of working remotely. Or worse, consider the 20.5 million people who joined the unemployment rolls in April of that year.
The recovery in the labor market has been historic, with the unemployment rate now at 3.8%, not far from the record of 3.5% in the pre-pandemic month of February 2020. Last month, some 678,000 new jobs have were created in more than 467,000 in January.
But the past two years have revealed some fundamental workplace truths that may endure long after the anniversary of the pandemic.
For years, employees have taken a back seat within corporations as companies prioritized profits and wages struggled to keep pace with historically low inflation. Companies have favored automation, the relocation of work to low-cost countries and the maintenance of a lean payroll.
But, once the economy started to recover from the pandemic at a pace that surprised most businesses, gaps started to appear and some of them were the size of sinkholes. Suddenly, garbage was no longer being picked up, restaurants could no longer rely on staff, parents could not find child care, and low-income workers such as delivery drivers, warehouse packers, washers dishes and cleaners have become the new heroes of the labor market.
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Meanwhile, skilled workers and those companies relied on most could punch their ticket. This led to what was called the “Great Quit” in which 38 million workers quit their jobs. Some of the most experienced workers, baby boomers who had spent years working their way up and working long hours, decided it was time for retirements in this age group to double.
A recent research paper from the Federal Reserve Bank of St. Louis found that workers who disappeared from the workforce during the pandemic were dominated by accelerated retirements and the need to stay home to care for someone. a.
“To conclude, our analysis of non-labour market activities in (government data) reveals that shifts towards retirement and home care/family care have driven the deficit in labor market participation,” said the document, titled “Why Are Workers Staying Out of the American Workforce?”
Retirements have reversed a trend for a group of older workers whose labor force participation rates were on the rise before COVID-19. The percentage of retirees under 65 rose from 44.5% to 46.7% in 2021, bringing the participation rate closer to 2015-2016 levels, found economist Victoria Gregory and research associate Joel Steinberg.
“With 75 million baby boomers set to retire by 2030, the great retirement is looking to replace the great quit as the biggest hiring trend for 2022,” said a recent blog post from the company. Adecco USA recruitment.
Before the pandemic, the luxury of working from home was often enjoyed by the highest paid and most advantaged employees. But when the pandemic hit, millions of people became experts at navigating Zoom meetings and working with children and other family members at home. Yet remote work was even more likely to be the preserve of skilled workers, as waiters, nurses, delivery drivers and other frontline people couldn’t take advantage of this option.
“The two biggest things that have really changed in the last two years are increased worker power,” says Andrew Flowers, labor economist at ad tech firm AppCast. “The other is the shift to remote working. I don’t think that’s going to go away.
Indeed, David O’Reilly, CEO of mixed-use real estate developer Howard Hughes Corp., says the shift to remote working has even changed the way communities are built. Proximity to work, security and a better work-life balance now dominate the traits people look for when choosing where to live.
“It’s a reversal of roles,” says O’Reilly, whose company developed The Woodlands in Texas and Columbia in Maryland. “Employees move and set the pace, and companies follow.”
The tight labor market is the new reality
Although there have been some signs over the past two months of strong hiring that the labor market is easing somewhat, the overall picture of a tight labor market is here for some time. Retiring baby boomers, particularly those aged 65 to 74, have also reduced the labor supply.
“These were people with degrees, who probably made it,” says Ron Hetrick, labor economist at Emsi Burning Glass. “They’re not coming back.”
The restrictive immigration policies that have shaped national politics in recent years show no signs of easing and are another drag on the labor market, reducing the supply of around 1 million or more workers. And COVID-19, whether through death, illness or long-term disability, has further reduced the supply of available labour.
“Fifty years of low birth rates, an aging population and a recent steep drop in immigration have left us with fewer people of working age,” Hetrick says.
In recent labor market research, Hetrick argues that companies need to search for workers rather than just posting vacancies and waiting for applicants. The declining labor force participation rate is a sign of disengagement among working-age Americans — a trend that reflects a “demographic drought” that predated the pandemic but has only intensified since.
“Fewer people are looking for work or taking up available jobs,” Hetrick says. “It’s a double that has left the job market in shock.”
And people continue to express a desire to quit, although most of these workers end up taking other jobs. A survey conducted earlier this year by CareerArc found that 23% of the US workforce plan to quit in the next 12 months.
Companies will have to work harder to find – and keep – employees
To compete in the new job market, companies need to rethink their working and hiring processes, recruiting experts say. This can be something as simple as making sure job applications are accessible on smartphones or something more complex like breaking up a job into parts so it can be done by workers who don’t. not want a 9-to-5, five-day-a-week schedule.
“Organizations need to realize that talent shortages and skills gaps aren’t going away any time soon, and we’re not going back to the old way of working,” says Mike Smith, Global CEO of Randstad Sourceright. “Ultimately, companies that offer more comprehensive benefits and provide people with a better work-life balance will be in the best position to attract and retain top talent in this tight job market.”
Jae Sung, director of strategy and data at CareerArc, says companies need to be more aggressive in their use of social media and other platforms to reach workers today.
“We’re definitely seeing much more use of social media,” he says, as well as video interviews. “My personal experience is that interviews are done via Zoom.”
And, of course, salaries will have to reflect the new dynamic. There is evidence that companies are getting it. Target led the move to a minimum wage of $15 an hour in 2017.
Last month, the giant retailer said it would invest $300 million to raise starting wages to a range of $15 to $24 an hour. It also lowered the minimum number of hours an employee must work to access medical benefits, from 30 hours previously to 25 hours.
“We want everyone on the team to be better off working at Target, and years of investing in our caring culture, meaningful compensation, extensive benefits and growth opportunities have been key to helping members of our team to build rewarding careers,” Melissa Kremer, Target’s chief human resources officer, said in a statement.
A higher salary is just the start
Certainly, employees want to be paid properly and fairly. But, more and more, it is advantages and flexibility that are in demand.
A 2022 survey of employee and employer attitudes towards workplace benefits by human resources consultant Buck found that young employees in particular are seeking help for mental health issues. , while workers under 40 place a higher priority on financial and family benefits.
Tom Kelly, senior director and head of voluntary benefits at Buck, notes that “21% of American workers say their mental health has deteriorated” since the start of the pandemic. But among baby boomers, that number jumps to 30% and for Gen Z employees, it’s 62%.
“Employers are focused on the impact of these issues on workplace productivity,” says Kelly.
Yet Phoneix University’s Career Institute’s 2022 Career Optimism Index, released recently, revealed a perception gap between how employers view their compensation and benefits and how employees view them. perceive.
While 86% of employers believe their employees are happy with their pay, the survey found that almost half of employees were not. Similarly, while 91% of employers say they empower their workers, 52% consider themselves easily replaceable and 41% fear losing their job.