The War for Talent: Following Up in 2021
Last year, I wrote an article that predicted that one of the impacts of COVID-19 would be a war for talent. I believed there was going to be a reshuffling of labor caused by pandemic related layoffs, downsizing, and an increased desire to have a flexible work schedule.
Although I was proven right by the current war for talent, there are two significant additional factors to this struggle that need to be uncovered.
What is Causing the War for Talent?
Unemployment as a competitor to employment
As of the time of publication, those receiving unemployment benefits from the state of Wisconsin receive $300 per week in addition to the standard $370 per week benefit. The total of $670 per week equates to a $15-per-hour job with benefits (1). This ultimately creates a dilemma for an individual looking for work.
Many employers have been advertising starting wages at least at $22 per hour. Every major highway in Wisconsin has billboards advertising employment opportunities. Some are offering signing bonuses, referral bonuses, flexible work schedules, and other incentives to attract and retain talent. Employers are trying to increase the delta between not working and working.
But there is another, tremendously important factor at play …
Labor force reduction
It is very short sighted to believe that the increased unemployment benefit is driving all that is occurring with the labor shortage. The demographics of the workforce are changing. Baby boomers are leaving the workforce and are not being replaced. These changes are creating downward pressure on the supply of labor at the same time the economy has recovered from the pandemic and there is an upward trend in demand. Simple economics states that when supply is suppressed and demand is inflating, the price for labor will increase.
The question is becoming, where will the next generation of labor come from?
Review of Other Factors
I would be remiss if I didn’t spend a few minutes discussing my original thoughts on this topic.
In the vast majority of sectors, the economy is back. Companies are growing. Labor is needed. Almost every single company that we work with is looking for employees, and concerned that the increased cost of labor will have inflationary impacts on the price of goods in the marketplace. I have even been informed by clients that they have turned down work due to the lack of labor. It has gotten so bad in the hospitality space that my favorite local establishment was closed on a Sunday in June due to lack of employees. That’s right, a bar in Wisconsin was closed on a Sunday in the summer!
Flexible work schedules have become increasingly important, especially with the need to provide care for children in remote learning environments. Most schools are planning on being back in-person on a full-time basis this upcoming year, but we have learned that they are willing to go virtual. It is estimated that 2 million parents left the workforce in 2020 to help with their children (3). This fact, along with the ability to collect unemployment, will keep many workers from re-entering the workforce, therefore continuing these labor pressures.
What Can We Do
Do your employees have to come to work or want to come to work? Now more than ever, it will be a benefit to your organization to be an employer of choice in the area. Life is all about choices, and your current and future employees have options.
As a business owner or executive, you have options too. Some factors beyond pay that impact your talent attraction and retention efforts include your organization’s benefit package, how employees are treated in your work environment, and the “why” behind the work they are performing. Make sure your employees know the value they provide to the organization in addition to what the organization provides to them.
There’s WAY more to this, and I could go on for pages, but each organization requires a customized approach to win the war for talent. Reach out to your M3 account executive for more information about creating a benefits package that fits your employees’ needs, encourages new employees to choose your organization, and helps you stake your claim in the war for talent!
Sources:
- WI Department of Workforce Development – Lost Wages Assistance (LWA)
- Labor shortage has no simple fix – Herald Times Reporter
- More than 2 million women left the workforce in 2020. Why it matters and what happens next – Good Morning America
