It seems everywhere you go today, you see Help Wanted signs. You see them at restaurants, fast food companies, and department stores. And in my discussions with association members, I constantly hear, “I can’t find anyone who wants to work.” These discussions have evolved from members looking for quality employees to hire to looking for anyone to hire. These conversations caused me to focus on two things. First, what happened to all the people that were working before the pandemic? Two, what can be done to fix the problem?
Demographic Shifts Due to the Pandemic
We have heard for years that the American population is aging and that retiring baby boomers would cause an employee shortage. The global financial crisis of 2007 to 2009 slowed the retirement process for many baby boomers. Many older workers delayed retirement due to the strong labor market and lingering concerns about their financial stability. These dynamics kept the labor participation rate largely stable from 2012–2020. Then the pandemic hit.
When the pandemic hit the US, many older workers understood that, due to their age, they were more vulnerable to the disease and thus were uncomfortable working in a riskier environment. These baby boomers were also in a better financial situation than in 2009. It took a while for the financial markets to rebound from the Great Recession. Today is different. The downturn in the markets due to the pandemic was short-lived. Individuals interested in retirement before the pandemic are financially better off today. Thus retirement is a viable option.
Younger people working from home during the pandemic were able to assess their work-life balance. In a recent article in the Financial Times, Betsey Stevenson of the University of Michigan explained that the pandemic has resulted in significant shifts in society. She believes that more Americans are staying home, cooking their own food, and taking care of children and elders. Stevenson said, “I do wonder whether there has been a shift in preferences to wanting a little bit less work and a little bit more, ‘do things for ourselves.’”
The shift in work-life balance can be seen in the participation rate for females aged 25–54. The number of working females in this demographic plummeted during the pandemic and has yet to return to the pre-pandemic level.
In addition to work-life balance, the steep rise in inflation has some individuals asking if it’s even worth going to work. Nela Richardson, the chief economist at payroll processor ADP, was quoted in the Financial Times as saying, “We have this situation where it’s not really worthwhile to participate in the labor market. It’s expensive to go to work, especially if you don’t make a lot and you have to find childcare. You have to put gas in the tank … clothes are more expensive, food is more expensive. So are you really winning by working?”
With inflation making everything more expensive and the residual economic effects of the pandemic, the state and federal governments have stepped in to “help.” The question is, has the litany of government programs helped or hurt people? The Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, Pandemic Additional Compensation, and the Mixed Earner Unemployment Compensation programs paid individuals who were unemployed due to the pandemic. Those programs ended on September 4, 2021. Yet, other programs, including rent and utility relief, remain in effect. And in California, Governor Newsom will soon provide ‘inflation relief’ payments to 23 million Californians. Have these “relief” programs made it easier for some people to stay home rather than work?
The Hard Numbers
In addition to retiring baby boomers and government relief efforts, California’s population is shrinking. Every year since the 1990s, more people have exited California than have moved in from other parts of the country. Between 2007 and 2016, California lost a net of one-million residents to other states. In 2020, nearly 650,000 people left California, and another 275,000 left in 2021. Add to this the 69,000 excess deaths in 2021, due primarily to COVID, and you have a big reduction in population. The reduced population in California is so bad that it has resulted in the state losing a congressional seat for the first time in its 170-year history. It’s believed that this trend will continue.
People will continue to leave California as they follow companies like Apple, Oracle, Tesla, and others who have moved to other states. According to Stanford University’s Hoover Institution, nearly 300 corporations have moved their headquarters out of California since the beginning of 2018. This may not seem like a lot of companies leaving California. Still, it’s essential to understand that this is undoubtedly an undercount since many relocations are not made public, especially by smaller, less newsworthy companies.
The exodus will likely continue. The Hoover Institution stated, “The data presented here show that headquarter relocations are accelerating substantially, with no sign of reversing course, reflecting a California business environment that ranks near the bottom of all U.S. states in many dimensions, including taxes, regulations, litigation costs, labor costs, energy and utility costs, and employee cost of living.”
California’s chief demographer, Walter Schwarm, agrees with the Hoover Institution’s findings. In a recent NY Times article, Schwarm said, “I don’t know that we’re ever going to have growth rates over one percent anymore.”
What the Numbers Tell Us
As people continue to move from California, some states that belong to our association will benefit. According to the New York Times, the top five states to which Californians are moving to are:
Even as this population shift hurts California and benefits others, the country will still have to contend with increased demand for goods and services as the economy returns to pre-pandemic levels. Add the 1.5 million baby boomers retiring yearly, and the employment situation will continue to be stressed. Perhaps a further examination of the unemployment rate can provide an answer to elevate the employment situation.
In April of 2022, there were over 11.4 million job openings in the country. During that same time, there were 5.9 million unemployed individuals. That means if every single unemployed person in April had a job, there would still be 5.5 million jobs left unfilled. And, because those 5.9 million individuals would have a choice of 11.4 million jobs, the 5.5 million unfilled jobs would be the least desirable jobs in the country. And therein lies the answer to our industry’s employment situation.
People today are not looking for a job. They are looking for a purpose. The pandemic has caused a shift in what people want in life. Whether baby boomer, Gen X, millennial, or Gen Z, there’s been a fundamental change in how Americans view work-life balance.
This change does not mean Americans are looking to “save the world” to give their life a purpose. It means they are looking to belong and be a part of something bigger than themself. They want to be appreciated for their contribution.
Now that we have a better understanding of Why we can’t find employees, in my next blog, we will discuss Where to find and how to keep quality employees.