Post Covid, the attitudes, availability, and needs of employees have changed pretty dramatically. The choice for employers is pretty simple – you need to adapt or get left behind. In today’s world, here is our reality, there are roughly 5.6 million people who have chosen to sit on the sidelines of the employment arena. Those individuals will not come back until they can or until they want to. Until then, businesses have very few options but to hire what IS available and grow from there.
The Growing Importance of Wages
According to a PWC study released in June, 1 in 5 employees worldwide plan on quitting their jobs in 2022. Why? According to 71% of them pay is the primary driver of their change. Employees are looking for new challenges, a fresh start AND better pay, especially considering just how badly inflation is hitting them!
Here in the Tampa Bay area is has been widely publicized that our inflation rate is out pacing the national average by almost 3%. The impact of our inflationary rates is that our employees are consistently fighting a losing battle for their buying power. Consider this: From April 2021 to March 2022, a period in which quit rates reached post-pandemic highs, the majority of workers switching jobs (60%) saw an increase in their real earnings over the same month the previous year… Put another way, the median worker who changed employers saw real gains in earnings in both periods, while the median worker who stayed in place saw a loss during the April 2021 to March 2022 period. (Pew Research). In other words, if you have stayed with your employer for a longer period of time there is a very high likelihood you are losing significant wages by staying.
Employer Mindset
As discussions of a recession have begun in earnest and we see the results of various large corporations moving to lay off their workforce, we have seen a stiffening in the resolve of business owners who believe they are going to get the upper hand in the hiring process again. Unfortunately, they are wrong. Our labor participation rate is still below that of February 2020 and there is no reason to believe it is going to return to normal levels any time soon. The unfortunate reality for employers today is simple, if they want to be successful in hiring, now is the best time to become more flexible and adaptable.
Too often, especially as an employment agency, we have been told that a position was filled, only to have it come open again a month or two later because that candidate got a better offer. Most employers believe their “culture” will keep employee’s from jumping ship. While a great culture is helpful, the reality of our current situation is that your culture is not helping your employee pay rent. From our perspective, a good employment agency is going to really try to advise our clients on the reality of the hiring market today. Quite bluntly, it is the hardest conversation to get traction on, as employers don’t want to hear it, until they get burned. The missing ingredient in my mind is that employers are not realizing that people aren’t leaving roles, generally speaking, for lateral moves. Something is driving that person to leave. Usually, it is for significantly more money, sometimes it’s for the chance to work from home, and for others its simply the desire to feel more professionally fulfilled. Regardless of their reason, the reality is that employees are in the drivers’ seat right now and that is not going to be changing anytime soon based on the data we have.
Facts About Hiring Today:
- Real averaging earnings for employees fell 3% from July of 2021 to July of 2022 – BLS
- Far more mysterious is what is holding back the rest of the workforce. The participation rate among those ages 16 to 54 was 76.1% in July, compared with 77% in February 2020. – Wall Street Journal
- The November 2021 Gartner survey revealed 52% of employees report that flexible work policies will impact whether they stay at their organizations. – Gartner
- 62% of working professionals say they lose interest two weeks after an initial interview if they haven’t heard back. – Harvard Business Review
- Among those whose income falls in the $30,000-to-$100,000 range, 75% say their earnings are falling behind the cost of living – CNBC
If you watch LinkedIn much you will see a large number of candidates frustrated that they can’t find work. While I am sure that some of them have unrealistic expectations, many of them are good people who simply want to work. We can get more people out to work if employers begin to realize that they may need to look beyond perfection and realize there are a number of high quality people available. Hopefully as we move through the fall, more employers will see this. As always check us out at www.staffingtampabay.com for more insights like this!
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