The COVID Paradox: Why are There More Jobs Than Job Seekers?
For most of 2021, a record-breaking talent shortage has been plaguing organizations across industries. This has become what’s known as the “COVID paradox”: essentially, that employers are struggling to hire despite higher rates of unemployment. Last week, the Labor Department revealed a surprising statistic: unfilled job openings now outnumber unemployed Americans.
In June, the number of unfilled job openings rose to a seasonally adjusted 10.1 million — the highest level ever recorded since the Labor Department began tracking in 2000. At the same time, the number of unemployed (and looking) Americans sits at 8.7 million, representing significant tightness in the labor market. But for reference, in February 2020, only 5.7 million Americans were unemployed, which means that there’s still three million more Americans unemployed today than before the pandemic began.
Lower-wage jobs are in particular demand, and employers are desperate to hire. Small businesses have responded by offering incentives like wage increases and free food, while larger organizations have also tried implementing sign-on and retention bonuses, improved benefits, and even paying for college.
So why aren’t Americans going back to work? We talked about some possibilities a little while ago when we started seeing these trends in our Workforce Activity Report, but it's time to dig into this issue more deeply.
Expectations vs. availability
Economists suggest a likely culprit is a mismatch between the types of jobs seekers want and the types that are available. One year ago, people wanted to work remotely primarily out of fear of contracting the virus; today, Gallup data found that 44 percent of Americans want to work remotely indefinitely because they prefer it.
Meanwhile, according to the Bureau of Labor Statistics, just 27 percent of management and professional Americans worked remotely in June — down from a high of 57 percent in May 2020 (this figure is 14 percent for all workers, down from a high of 35 percent last May). This disparity could be contributing to the record turnover and hiring challenges we’ve witnessed over the past several months — people are hoping to find remote work opportunities, but there are simply not enough for everyone.
Continued impacts from variants
Of course, the number of job seekers returning to work has also been notably lower than anticipated. With increasing concerns regarding the Delta variant or breakthrough cases, there remain a significant number of pandemic-related barriers to returning to work.
This is particularly true for working parents or those with compromised immune systems or taking care of elderly family. We continue to see the long-term repercussions on maternal labor supply that were spurred last year due to the chronic lapses in childcare and high rates of layoffs in occupations that traditionally employ women.
The "Great Resignation"
Turnover and unexpected attrition have also been a problem for organizations. Despite being in the midst of a massive global health and economic crisis, one in five employees voluntarily changed employers in 2020, and this trend intensified in 2021. In April, 3.9 million people quit their jobs, the highest rate in the history of the BLS series. In June, another 3.9 million quit.
The pandemic was a catalyst for many workers reevaluating, reprioritizing, and reimaging both their work and their lives, ultimately leading to this “Great Resignation” once vaccine availability and COVID numbers improved. Organizations who proactively prepared for this shift by prioritizing talent retention strategies were better positioned to both attract and retain their people when the proverbial doors opened back up.
So how do we change the trend?
Every business, large and small, can invest in their people by listening to what they want. These desires will look dramatically different depending on industry, job type, geographic location and average demographic, which is why life-work technology tools like pulse surveys and AI-powered HR systems that actively help you help your people can be instrumental in enabling business leaders to truly understand – and then take action – on the factors that matter most to their people.
In general, however, our research has shown that there are four primary things employees are looking for from their employers today: Flexibility, wellness, growth and development, and meaningful purpose.
Make sure your organization is ready to meet and exceed these expectations as we continue to manage through the uncertainty of COVID-19 and the changes it has brought on the future of work. Addressing each of these areas will go a long way in your long-term hiring, retention, and engagement efforts, and we will be discussing these in-depth in future installments.