• Bernhardt Wealth Management

“The Great Resignation” or “The Great Renegotiation”? The Labor Market Is Changing

For months now, we’ve been hearing about “the Great Resignation”: the pandemic-spawned phenomenon that has seen a record number of people leave their current jobs and look for something that suits them better. Many of the resignations are coming from people who were forced to work remotely and decided they liked it so much that, when they were told to report back to the office, they decided to look for another remote opportunity instead.

Since then, the labor market has remained notoriously tight. Indeed, the higher wages employers feel forced to offer in order to attract workers are a major component of the recent dramatic rise in inflation. For evidence, all you need to do is notice the number of “help wanted” and “we’re hiring” signs you see each day, everywhere from fast-food restaurants to retail establishments to large manufacturing concerns to over-the-road trucking companies.

But recent research by global management consulting firm McKinsey and Company may be indicating that the hiring playbook has shifted in some fundamental ways. In fact, unless employers rethink their traditional incentives and offer practices, they may have a hard time filling all those positions that were vacated during the pandemic layoffs and the ensuing Great Resignation.

McKinsey’s research suggests that a number of factors are in play, including the demand for workers across the economy driven by the low unemployment rate and stubbornness on the part of employers, who are relying on traditional levers to attract and retain people—things like compensation, titles and advancement opportunities. With 11.3 million job openings across the economy (up from 9.8 million about a year ago), workers now have the opportunity to reevaluate what they want from a job, and they have the chance to negotiate to get it.

What are they looking for? A survey found that workplace flexibility, mental health support, meaningful work, and career advancement topped the list. Of the people who quit without a new job in hand, only 29% returned to traditional full-time employment; they prioritized care for children and elders over a higher income. Just 35% who quit in the past two years took a new job in the same industry; that number rose to 65% of workers in finance and insurance, and reached 72% of workers in the public and social sector.

Some companies, it seems, are taking notice. There is a trend toward widening the use of parental leave and offering parents more flexibility around school holidays. Google, Cisco Systems, and Patagonia now offer on-site childcare, physical therapy and subsidized housecleaning services. And even companies that were resistant to the remote work concept are beginning to realize that, in order to attract the best talent, they may need to offer a remote or hybrid working arrangement to new hires.

In the past, it may have been possible to give people an attractive salary and keep them in the office despite having a toxic boss. Today, people are leaving their jobs merely because they sense that their leaders are uncaring or uninspiring. And a significant number of workers who participated in the Great Resignation simply felt that there were limited opportunities for personal or professional growth in their current job. The bottom line is that the workplace is changing, now that workers have the leverage to demand it.

Bernhardt Wealth Management is committed to staying abreast of the most current trends and research in order to provide authoritative guidance for entrepreneurs, founders, and other business leaders. To read inspiring stories of visionary pioneers in business and industry, click here to read our latest “Profiles in Success.”

Buen Camino!

31 views0 comments