Millions of Americans are quitting and starting new jobs at a record pace, while job vacancies remain at an all-time high and employers are at a loss as to how to solve the talent crisis.
About 6.7 million people were hired into new jobs in February, according to the Labor Department’s latest vacancies and turnover survey, with the biggest gains in construction.
New hires this month surpassed 6.1 million layoffs, including an increase of 4.4 million people, or 2.9% of the workforce, who voluntarily quit their jobs. Layoffs rose during the month in retail, durable goods manufacturing and public education.
With vacancies plentiful and not enough people to fill them, economists say more money and flexibility won’t stop record sales and may exacerbate America’s burnout problem.
99 million people are not looking for work
Even though firing and hiring is happening very quickly, the labor market is not pulling back people who were pushed out of the labor market during Covid, says Ron Hetrick, senior economist at Emsi Burning Glass, a labor market analysis firm. He tells CNBC Make It that the scale of churn is like “recycling the same workers back and forth without hiring new people.”
The US job market had 11.3 million job openings in February, with the largest increases in the arts, entertainment and leisure sectors; educational services; and federal government. Many vacancies are for personal jobs, so “we’re going to have an imperfect job market. You won’t always have people where they need to be” to fill vacancies, Hetrick says.
Meanwhile, for every 100 vacancies, there were only 56 unemployed.
Though the average unemployment rate is falling, the number of people not actively looking for work remains high — nearly 99 million people, according to the March 2-14 Census Household Pulse Survey. Of that proportion, nearly half, or 42.4 million, were retired. For comparison, in the first week of the April 23-May 5, 2020 survey, the Census Bureau reported that 117.8 million Americans were not working and about a third, or 37 million, were retired.
After retirees, the second largest group of people not actively looking for work in March 2022 are 18.8 million who gave “other” as the reason and another 7 million gave no reason at all. Elsewhere, people reported being unable to work because they were ill or disabled and unrelated to Covid; responsible for care; are ill with Covid or caring for someone who has been; or concerned about Covid risks.
It’s not about the pay – not yet
Employers are looking for a way to reach these millions of Americans, says Hetrick: How do you show someone who isn’t actively looking for you that you’re willing to be flexible in a job?
As companies raise wages and offer flexible benefits, Hetrick doesn’t think money is the main issue keeping people out of the workforce.
“I don’t think it’s about the pay,” says Hetrick. “It’s about, ‘does this job fit my circumstances?'”
For example, workers with caring responsibilities may not think an employer will accommodate their schedule, Hetrick says. “If there are people out there who think, ‘I don’t see how work fits into what’s going on in my life right now,’ and if employers are willing to work with them to make it fit – that is mend the breakup we have.”
He says companies need to make “serious, intentional discoveries” to figure out how to make workplaces more accommodating for people not in the workforce. Until then, “employers want this problem gone.”
More people could also return to the labor market due to financial hardship. According to the Census Household Pulse Survey, many people who aren’t actively looking for work pay their bills with credit cards or their savings accounts. Rising inflation could weaken these resources and force people to take on new jobs.
A tight labor market could exacerbate burnout
Rucha Vankudre, senior economist at Emsi Burning Glass, says she expects the tight labor market, with record attrition and job vacancies, to continue unless employers make a drastic decision to downsize their workforce.
But Hetrick says the scale of churn during the ongoing Great Resignation could lead to burnout among people staying in place. “If you’re an employer who’s asking workers, ‘Hey, you just have to give a little more until we have staff,’ then you’re five to six months into that now.”
Productivity has remained high even in industries facing supply chain issues and labor shortages like manufacturing, he adds. Executives in these sectors should be concerned about the resilience of their strained workforces, says Hetrick: “Can we continue this one [business] Win or risk burning people out?”
Cash register:
Project management is a sought-after skill – that’s how much 3 people make from it
How to get your old job back if you hate your new one
How people have changed the way they think about work, according to their therapists
Join Now: Keep in touch with your money and your career with our weekly newsletter