2021 has not given the US economy, nor the world’s, the magical turnaround that many had expected. Instead, we see hyperinflation, supply chain shortages, and the Great Resignation. So is there a saving grace amidst this seemingly abysmal state of affairs? Some say there is, in the form of an impetus towards greater productivity and labor-saving technology. There is also an argument that the smaller workforce will attract higher salaries.
How Many and Why
4.3 million people quit their jobs in August 2021. Those are the latest figures publicly available and the highest ever recorded. It seems this Great Resignation was driven by a fear of being infected with Covid at work as it coincided with the rise of the Delta variant.
In the period from January to August 2021, there was an explosion in job openings; it grew almost 50%, from 7.1 million to 10.4 million. The analysis is rather simple – people are comfortable with the sacrifices they are making and their decision not to work. In addition, able-bodied folk are unwilling to work unless offered significantly larger salaries and additional benefits (such as permanently working from home).
Most of us have witnessed the fallout from these trends already. “Help Wanted” signs are everywhere, and employers are complaining that there simply are no applicants.
Productivity and Salary
The instinctive reaction to this by employers is to raise salaries as a means of attracting workers. Clearly, this is a move that will benefit more prominent companies that can withstand the shock to their bottom lines. But, unfortunately, smaller businesses will not be so lucky and may have to fold, as many already have. Consequently, we will see higher-paid jobs but a smaller workforce.
We should be cautious about celebrating these higher wages. Keep in mind that a sizeable portion of those currently unemployed by choice will be eager to return to work for economic reasons when their fear of Covid subsides. Fewer openings, and even those just restricted to higher-paying jobs, may impact the most marginalized and vulnerable in our community.
Large corporations will again be the winners here. They will be able to design workplaces, processes, and systems that increase productivity to counter the glut in team numbers. New training and labor-saving technology will entrench this new model of lean workforces so deeply that it will be impossible to reverse.
Good, Better, Best
So, how do we view this new work paradigm forced upon us? Is it good that the number of job openings will shrink in response to current trends? Is it better that educated and capable people of all ages are sitting home subsidized by taxpayers?
The best pathway seems to be the old, familiar one where things worked as they should. There is no returning to that. Keep your ear to the ground as the midterms approach and keep your business ready to adapt to the changes they are expected to bring. Please contact me today if you would like to discuss this topic further.
