The End of the “People Just Don’t Want to Work Anymore” Myth
Throughout 2021, as the pandemic continued to disrupt everyday life but some semblances of normality were beginning to slowly return, a phrase entered the employment-world vernacular: “People just don’t want to work anymore.” At a time when enhanced unemployment benefits were providing a lifeline to the millions of workers who lost their jobs and livelihoods seemingly overnight in March 2020, and when reports abounded of restaurant patrons, hotel guests, and flight passengers losing their minds and sense of decency, inflicting all manner of debased behavior towards public-facing employees, it was plausible – if not a bit cynical and cold – to speculate that some folks may have been opting to stay on the sidelines for a bit longer until temperatures cooled off a bit. After all, employers were generally offering their pre-pandemic wages for workers to return to what was at the time an often hostile workplace environment. Based on actual economic data and our own observations, we’ve always contended that these speculations were overblown, but we operate in a small corner of the employment world and know that we don’t often have the full picture.
Fast forward to today, over six months after the expiration of the CARES act unemployment benefits, and everyone from your barber to your car mechanic to your family care physician might throw out the same comment if the topic of the labor market comes up: “People just don’t want to work anymore.” Is there any truth to that today?
Well, no – there isn’t. Unemployment is now below pre-pandemic levels (1.3 million currently unemployed vs. 1.7 million average before Covid), and the unemployment rate is at 3.8%, a near-record low. So it’s time to put that myth to bed, as maintaining that outlook is unlikely to help your organization going forward. Instead, let’s look at what is going on, and what you might do in response.
The first question you may have if you’re in the midst of trying to hire might be, “So where are the applicants?” As was the case in early 2020 before the pandemic – which feels like an eternity ago – there are fewer active job candidates than there are available jobs, and that dynamic continues to shift in one direction as job growth continues at a healthy clip (678,000 new jobs were created in February alone).
One responsible variable is that nearly 10 million Americans retired and left the workforce in 2021 (about 3 million more than expected). Those retirements happened across all industries and at all job levels, from entry-level to senior positions. That massive number of vacated positions has flooded the labor market with new career opportunities and paths for promotion (which opens up lower level positions for new employees).
The data indicates as much, as over 47 million Americans quit their jobs in 2021. As there are only 1.3 million unemployed Americans currently, a very large number of those quits can be attributed to individuals switching to new employment opportunities.
So now we’re back to the similarly tight labor market conditions of late 2019, with some additional complications: decades of sluggish inflation have finally started to play catch-up, the cost of living for many everyday needs (food, energy, and housing) has jumped, and wage growth has spiked to multi-decade highs (although both nominal wage growth and inflation since the Great Recession still trails Federal Reserve targets by a few percentage points).
With those conditions in mind, employers have to consult the low-unemployment playbook and deploy its tools to the maximum extent possible. Here are some ideas and strategies to focus on:
- Overhaul your wages, and focus on what you can offer beyond increased pay. We won’t dwell on that first item too much, because every employer knows by now that if they haven’t raised their wages since 2020, they’re going to really struggle to attract and retain staff. But what else can give you a leg up? Candidates are increasingly focused on meeting their cost of living, and finding opportunities that offer growth and advancement. Are you able to offer free or discounted housing? Travel stipends to cover the expense of traveling to your location for the season? End of season or employee referral bonuses? On-the-job training and advancement opportunities to offer employees paths for growth and longer-term careers within your company? If you’re able to offer any/all of the above, place that information front and center (along with your wages) in your advertising materials. At this moment, it may be time to shelf some of the traditional selling points for a seasonal job in a great place (“Spend the summer of a lifetime”, “Live in paradise”, “Adventures await”, “Get paid in sunsets”, etc.). Lots of employers can offer those things, and they’re all hiring. Focus your messaging on the benefits that matter most to job seekers right now
- Create opportunities for the Older & Bolder crowd. CoolWorks has been a popular resource for working-retirees: folks who have moved on from their primary career, but still want to work while having the opportunity to travel. These candidates bring a wealth of life experience and skills, and often contribute a nice variety to staff culture. Providing RV spaces, private / quiet housing options, and making a few tweaks to job requirements, scheduling, and your messaging can make some of your positions very appealing for this crowd, and for retired couples, you may often get two applicants together. As we mentioned earlier, there are now 3 million more retirees than expected. Many of them are still keen to participate in the workforce, and will jump at the right opportunity.
- Fight to retain every hire and existing employee. Whatever you have to do to encourage your staff and new hires to seek out a conversation before moving on to a different position, do it. In normal labor markets, the cost of turnover (expenses associated with recruiting, hiring, training, and retaining an employee) for entry-level positions is around 50% of that position’s annual salary. As experience and skill requirements increase, that figure rises quickly. In a tight labor market, those figures are certain to be even higher. Turnover expense doesn’t show up as a line item on your P&L, but it is substantial. Keep a lid on it by showing your employees that you value them and having conversations about how you can keep them on your team
- Reevaluate your education and experience requirements. Writing job descriptions and requirements is objectively tedious, so many organizations don’t regularly revisit them. But there is no time like a labor crunch to go back to the drawing board and find opportunities to expand the pool of potential candidates by loosening some minimum requirements. Does a candidate really need a bachelors degree in order to succeed as a Front Desk Agent? Does that Activities Guide need 5 years of experience, or would 2 suffice with some early season training? You may be inadvertently turning away potential applicants with overly-restrictive and out of date job requirements, so look through your job descriptions and see if you can identify opportunities to loosen your requirements and open up your positions to a broader group of candidates.
In a tight labor market, there’s no magic cure for the challenges of this hiring environment. One silver lining is that tough hiring conditions are a bi-product of an economic expansion, which should bode well for business levels. People very much want to work, and they very much are. But standing in the shoes of job seekers and staying up to speed on their changing needs and perspective will be paramount to being a competitive employer who captures the interest of applicants.