With the U.S seeing a decline in COVID-19 cases, employment levels are starting to pick up. But many Americans are still sitting on the sidelines, raising the question: What will it take to lure them back to work?
Many employers, for example, have increased their recruiting efforts amid the so-called “Great Resignation” of millions workers quitting for better jobs. Businesses are also grappling with a continued worker shortage spurred by the pandemic and high consumer demand for goods that is intensifying a need for more staff.
Nearly half, 47%, of U.S. employers say labor shortages are a significant issue, according to Mercer’s recent Real Time Insights survey of over 300 U.S. employers.
About 1.4 million Americans working pre-pandemic still haven’t returned to the workforce as of February, according to an analysis by economists Jason Furman and Wilson Powell III published for the Peterson Institute for International Economics earlier this month. The labor force participation rate in February continued to be below pre-pandemic levels.
Many of those missing workers include working parents, immigrants, retirees, and even those struggling with long COVID and other health issues that make them vulnerable in the current pandemic environment.
But what will it take to get these workers off the sidelines? So far, higher pay hasn’t been enough. In February, the average hourly pay for non-farm employees hit $31.58, an increase of 5.1% over the past year.
Better work arrangements and benefits may help. More than four in 10 companies reported plans to increase their employee perks and benefits in 2022, according to a survey by recruiting site Monster.com.
That boost can’t come soon enough——particularly in the case of employers granting Americans more autonomy over how they work. About 42% of overall workers reported that a flexible schedule is the benefit most likely to get them to consider taking a job, The Harris Poll found in a late February survey on behalf of Fortune.
The desire for increased flexibility was followed by the ability to work remotely (34%), and expanded employer retirement contributions (32%).
“If you have the capability to offer people flexible employment, you need to be using that as a weapon in your arsenal in this war for talent currently,” says Mike Smith, CEO of Randstad Sourceright, which specializes in talent acquisition and human capital management strategies.
Women, perhaps unsurprisingly, are significantly more likely than men to want the option to work remotely (37% vs 31%). That likely stems from the fact that women are more involved with household work and child care. Women are far more likely than men to leave work because of childcare issues. Payscale recently reported that about 85% of women reported the primary reason they quit a job was because they were caring for a child, compared with 15% of men.
But benefits by themselves may not be enough. Ron Hetrick, a senior economist with labor market data company Emsi Burning Glass is carefully watching personal savings rates, predicting that a lack of savings will push more Americans to find a job.
The U.S. personal saving rate was 6.4% as of January, falling below pre-pandemic levels for the first time in two years, according to the Bureau of Economic Analysis. The rate has been slowly shrinking since March 2021 when the percentage of Americans’ disposable income was 26.6%.
Inflation is likely helping drive that decline. “Inflation is eating money so quickly. It's making everything more expensive,” Hetrick says. But most experts believe the U.S. still has a ways to go before the workforce sees maximum employment again, likely not until perhaps even 2024, according to the Federal Reserve Bank of San Francisco.
Until then, it seems like companies offering more flexibility will be better positioned to win the war for talent.
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