The impact and effects of COVID-19-related policies has accelerated the coming demographic change in the labor market.
Many have written on and studied the working habits and behaviors of millennials. While an admitted generalization, millennials value their personal freedom, seek a cause to serve and have less loyalty to a long-term employment position than previous generations. The COVID response put even more emphasis on the need for employers to be flexible, and it pushed certain employees who were close to retirement into retirement, further reducing the number of non-millennials in the workforce.
As a millennial generation seeks for more meaning in their work, and as employers are increasingly challenged to find their “why,” one way to attract top talent is to work carefully to match the company’s “why” to the talent’s “why.” This effort will likely lead to employers finding more ways to be flexible in more than just pay rates. They will also gain the respect and confidence of their talent base, enabling them to better whether the storm we are in now and will likely be for some time.
Studies have also shown that women and minorities have been disproportionally affected by the changes over the last two years.
The disruption of school schedules and caring for other family members traditionally falls to women. This has forced them to leave the labor market in higher numbers than men. However, the shift to working at home has allowed many women to enter the workforce who previously did not want to work outside of home. Many service businesses have sprung up that leverage this underutilized segment of the labor market.
The data on other minorities is harder to interpret. Anecdotally, we know that migrant and undocumented workers have been affected, but their out-of-status situation makes that impact hard to measure. Generally, there has been a broad correlation between skills and the strength of social networks. White-collar jobs moved more easily to homes than blue-collar jobs did. In addition, those with a strong family or relational network could call on that resource to help cover the additional responsibilities of children or the elderly. This has proved to be a source of strength for many minorities, as their lack of mobility keeps them part of strong ethnic communities.
Automation as an Answer?
As employees become more demanding, employers will seek new solutions, including automation. And, since the developing world has begun to catch up to the U.S. in manufacturing ability, more skilled jobs are required here at home. We have seen clients try to address the increasing cost of labor — without the ability to keep up in price increases — by focusing on outsourcing, automation and even geographic changes to access more stable and less demanding workforces.
This does mean more technical skills are needed by many employees, and those who have these skills can demand top wages. But many employers are faced with the decision of teaching their existing work force these skills. That is expensive, and it creates the possibility the employee will leave for a higher-paying job elsewhere. The upshot has been to put more pressure on managers and supervisors to deploy these technologies but with an untrained workforce.
Retention and Re-Attraction
Employers are often surprised when they actually ask what their employees value. There’s no question that pay isn’t everything. That’s been proven over and again, and our experience at MLA shows that employers who demonstrate actual care and concern for their employees, especially through the pandemic, have the respect and benefit of the doubt when it comes to retention of their current talent pool.
And then there are boomerang employees, those who leave and then come back. These may look like a great financial investment; after all, they already know the company and the job, so should not need the same training a new employee would require. This may be true if the employee has only been gone for a short time, but if they’ve been gone for six months or more, an employer should not just assume they are ready to pick up where they left off. It may seem overly precautious, but taking them back through a basic orientation and training is a good investment. Not only may their role have changed in their absence, but the employee will have also changed after taking some time away. They may even have helpful insights on ways to improve the work they do.
The labor shortage is a combination of factors. Some were already with us, but the COVID response pushed them into the foreground by changing policy and workplace norms. The right response is for employers to recognize this problem isn’t going away. Adjusting company culture to fit multiple generations will always be a good thing.
Seth Morgan is the president and CEO of MLA Companies, which he founded in 2006. As a strategic advisor, he brings insight and accountability to business leaders. He also represents sell and buy sides in M&A transactions.
Morgan’s experience includes mergers and acquisitions, operations, internal consulting, controller operations and general management, bank negotiations, compliance audits and negotiation, business valuation experience, risk management, budgeting, and forecasting, and dealing with the pressures and dynamics of small business ownership.
