As of today, 11 million jobs across the United States are waiting to be filled. Over the past two years, people have left their jobs for a myriad of reasons, some forced to do so by the pandemic, while others simply opted for early retirement.
After the Great Resignation, we are seeing a new trend called the Great Retirement. It is almost a tsunami-like wave of Baby Boomers exiting the workforce. They are not the only ones quitting jobs, however! With changing priorities, many millennials are reconsidering the traditional 9 A.M. to 5 P.M. grind. And because so many US workers have decided to quit, there’s a hiring shortage. In fact, the rate of resignation is the highest it has been in decades.
Workers Aren’t Quitting. They Are Retiring!
Americans have been re-evaluating what they want from their employers, especially after the pandemic. It’s not the usual contract to hire vs direct hire debate, in which workers leave when offered a better position. The worldwide recession has prompted many to re-evaluate their professional circumstances, despite the record-high job postings with many new opportunities and exciting perks.
People above 50 and 55 years remain far more vulnerable to the COVID virus than younger workers. This threat, combined with the risk of layoffs and furloughs, has prompted many to choose retirement. Before the pandemic, many retirees transitioned to part-time jobs. This was known as the ‘unretirement’ approach. Today, retirees aren’t unretiring. They have chosen to leave the job market completely as workplace safety and vulnerability remains a pressing concern. This has added to the shortage of workers in nursing, retail, and other fields.
American retirement during the pandemic has jumped from 18.5 percent to 19.5 percent.
Boomers Are Leading the Exodus
The Boomer demographic is the largest one resigning from active work. According to the Pew Research Center, approximately 30 million Baby Boomers left the labor market, most retiring in the third quarter of 2020. The study also found that the COVID-19 pandemic played a significant role in the exodus of Boomers from the market.
Of course, older workers retire all the time. The fact that they are choosing to do so in large numbers is because of them being a high-risk group in terms of COVID-19. As people age, their health inevitably declines. Lifestyle choices can speed up or slow down this decline. The threat of infection during a pandemic forced seniors to reassess their priorities. Many also reevaluated their finances during this time, finding them sufficient enough to live on. As a result, a large population of boomers realized they are able to live safer and more fulfilled lives outside of the workforce.
Who Will Fill the Hiring Gap?
Replacing such a large chunk of the retired workforce is not simple. There are just not enough Generation X workers to meet the hiring storage. Of course, Gen X possesses the most work experience and has decades of industry/job insights. But not all Generation Xers can continue to work full-time. Many have children and aging parents to take care of, and so would prefer workplace flexibility to manage their work-life balance.
A flexible or remote work model may be suited for a mortgage staffing agency but not every role. However, Millennials and Gen Z can provide a part of the additional workers your company will require to address the skills gap produced by retiring Baby Boomers.
Besides Gen X, millennials are the most experienced members of modern workforces. Unfortunately, they haven’t been able to compensate for the growing skill gap. Most of the workers who have retired are Boomers with years of developed skills. This has limited Millennials’ ability to climb the business ladder as swiftly as Boomers.
If this trend continues, the pool of highly educated individuals will shrink in the coming years. This will only add to the difficulty of finding talented candidates through techniques like decentralized recruitment without making a bad hire.
How to Address This Challenge?
The long-term repercussions of a Baby Boomers’ retirements are severe. This trend can slow down economic development in the country. Instead of waiting for workers to returns, one way to address the labor shortage problem is to create better jobs. To stay competitive, employers must compete for workers by offering higher salary packages, more perks, and more flexible working conditions.
Instead of dismissing younger workers, particularly Generation Z, employers may begin to consider investing in comprehensive ongoing training. It may prove efficient for businesses to create the skills they need instead of shopping around for them every few months. In tandem, government and labor policymakers will have to step in to ensure workers receive fairer pay, safer working conditions, equitable perks, and other benefits appropriate to job.
Consistently low employment over the long-term will slow economic growth. The shrinking workforce will diminish real incomes and output. It will also trigger an increased reliance on government social programs.
Unless addressed, the shortage will also exacerbate the country’s vulnerable fiscal condition. Workers won’t return on their own and this trend may not be temporary. If this labor shortage is left unchecked, this may cause a ripple effect across domestic and foreign economies alike.
Companies should divert a larger portion of their profits towards the benefit of the people who make their profits possible. While some businesses may be experiencing difficulty recruiting and retaining employees, they have some control over solving this issue: offering better working conditions, expanding benefits to include childcare options, and better medical coverage. Most effectively, they need to invest in training workforces for upskilling.