By Anthony Kaylin, courtesy of SBAM Approved Partner ASE
With all who are unemployed and those who are actively looking for a new job while working, jobs are not being filled. There are a reported 9 million jobs available. Economists are calling the new paradigm “The Great Job Mismatch.” What is driving this trend?
The demand for jobs is rising because the economy has opened up fast. Employers who laid off workers or terminated them during the pandemic were caught off guard by the fast-moving demand. Think airlines. Routes were eliminated and schedules reduced. With the economy opening up, there is record air travel and not enough support at check in, gates, maintenance, and even staff in the airplanes (from flight attendants to pilots). Airlines are scrambling.
Here in Detroit the change for the autos in terms of inventory really hit the tiers hard. When the shutdown in March 2020 occurred, no production was going on and now the tiers are scrambling to catch up. Most cannot find workers and are basically keeping up with headcount.
Yet there is still a wait and see attitude by many employers to see whether the current employment situation is simply short-term trend or will be the future of hiring.
As the pandemic caused many to review their life choices, many workers moved during the pandemic and aren’t living where jobs are available. Remote work is a common preference, as many have enjoyed life without a commute and the cost savings associated with it – some estimate up to $5,000 per year. With blue collar jobs, many are finding they can get better pay and possibly benefits working in service industries without breaking their back. Moreover, Amazon, for all the good and bad written about it, has remade the salary structure faster than Michigan has given employers time to meet.
The tax-free pandemic unemployment assistance may have played a role as well as getting healthcare through the Obamacare exchange. For those with families, getting the child tax credit will also be advantageous for them. Also, thinking about life has given the incentive for many to try to pursue work that is more satisfying than their former job. Finally, given the above, workers can be pickier as to what they want to do for their next job.
A recent ZipRecruiter survey found 70% of job seekers who last worked in the leisure and hospitality industry say they are now looking for work in a different industry. In addition, 55% of job applicants want remote jobs. An April survey of U.S. workers who lost jobs in the pandemic, conducted by the Federal Reserve Bank of Dallas, found that 30.9% didn’t want to return to their old jobs, up from 19.8% last July.
Economists believe the ghost of the Great Recession is again haunting the labor markets. Economists say the lack of workers given the total jobs available is a “mismatch,” a disconnect between the jobs open and the people looking for work. The Federal Reserve had intense debates internally after the 2008-2009 recession about this phenomenon. Some Fed officials believed the economy was suffering from a skills mismatch in the form of unemployed construction, real estate, and manufacturing workers who were not suited for jobs growing in other sectors such as education and health.
So, what are employers doing? “The labor market is a matching market where you need to choose something and be chosen by it,” said Julia Pollak, a labor economist at ZipRecruiter Inc., an online employment marketplace. “This is not a market for shoes and pizzas. It is a very complicated market.” Many have raised wages and are now offering sign-on bonuses as well. This is an inflationary impact and for those in the auto industry, can be a big cut in margin as pricing pressure by the OEMs is fierce. Payroll generally is either the largest or one of largest expenses for more employers.
The more visionary employers are relooking at job descriptions and determining, for example, if degrees and education are appropriate for jobs or even necessary. Returning citizens (ex-convicts) are being added in many areas to the potential pipeline where before they weren’t considered. Further, many employers are reviewing talent pipelines and working to create a pool of employment eligible employees (e.g., United Airlines and its goals for replacing aging pilots). Finally, HR has to be more effective these days. Technology is creeping into many HR roles, and if it could be found more effective, many organizations will go to less HR and more technology.