What the labor shortage is really telling us 

North American employers are dealing with a unique type of desperation that few would have seen coming just a couple of years ago. By late April 2021, job openings increased to an unrivaled 9.3 million in the U.S. alone. In June the number of employees choosing to quit their jobs rose by 164,000 to 942,000. Similarly, in Canada, the number of job vacancies jumped by a staggering 22%. 

Many economists predicted that as the economy reopened and more people got vaccinated, people would hasten to get back to work. But that’s not how things have gone, which isn’t all that surprising. After all, even before the pandemic, there were signs of unrest, to put it lightly. Turnover rates rose from an already problematic 54.5% in 2016 to a mind-blowing 69.7% in 2020. 

 In this article, we explore common misconceptions and show you how you can deal with the ever snowballing labor shortage. Stick around until the end to learn how  Sherweb can help your MSP offer consistent support during these turbulent times. 

The myth of worker laziness 

In an attempt to combat the ongoing worker shortage, many states have chosen to cut or vastly reduce Covid-level unemployment benefits, which run anywhere from $300-$600 weekly. The primary belief here is that reducing benefits will make people want to go back to work. And yet, states that have cut unemployment benefits have not seen a rebound in hiring.  

The thing is, the majority of unemployment beneficiaries (those in 47 states) still received less money via benefits than they made at work, so clearly it’s not all about the money. Plus, according to a BTIG report, only 3% of people were making enough with unemployment that they didn’t have a financial need to go back to work. Interestingly, the report also found that just 6% of unemployment recipients would be motivated to return to their jobs when their benefits ended, and that, lo and behold, after better wages and quality benefits, job flexibility was the top motivator for luring someone back to an hourly wage position. Guess it wasn’t as simple as curbing benefits after all.  

The question remains, what’s really behind the current labor shortage? What message do we need to hear about employment as a whole? 

What does a worker want? 

This (not) just in: the answer is less about worker pay and more about worker rights. Until the pandemic ravaged the economy as we know it, few employees were well-poised to make demands. As such, many went without benefits packages and put up with all sorts of terrible treatment. Hell, few even fewer workers had time to take stock and come to the conclusion that their jobs weren’t worth the low pay, bad treatment, and overall exhaustion—to name just a few. But now, there are larger numbers of people with bargaining power and motivation to boot.  

So—what exactly do workers want? 

Better pay is undeniably one of several factors in the equation. Static wages have been deeply problematic for many decades. In a nutshell, wages haven’t kept up with inflation—not by a long shot. For instance, in 1968, the minimum wage was $1.60 an hour.  The equivalent of this in 2021 should be $12.38, but it’s only $7.25. So even pre-pandemic, workers were being grossly underpaid. The only difference is that now they have some actual leverage. 

Better working conditions are also on the menu. One noteworthy indicator of this is the fact that union enrollment grew in 2020 after decades of steadily declining. People no longer want to put up with employers who prohibit them from pursuing claims via collective action, instead of forcing them into individual arbitration to resolve employment disputes. 

Better work-life balance and scheduling flexibility is right up there on workers’ wishlist as well, and rightly so, which surely explains why some have dropped everything to start their businesses (hello YOLO economy). Since Covid forced many businesses to offer telecommuting, more workers have discovered that greater work flexibility is more than doable. So now they expect to at least have the option. And when they don’t, they’re quitting in droves. Interestingly, in high-skilled tech jobs, a parallel demand is playing out: some workers are resigning in a refusal to accept a shift to permanent all-remote work! Fascinatingly, workers at both ends of the spectrum are challenging the idea that they shouldn’t have a say in how to manage their time and balance their lives. Many employees now prefer a hybrid approach to achieving work-life balance. 

How do you deal with the shortage of labor? 

While dealing with the labor shortage isn’t always easy or straightforward, adapting is the big idea here. Here are a few labor shortage solutions to help you do just that. 

• Expand recruitment. Expand your recruitment radius by widening your search geographically, and consider applicants from diverse backgrounds (this should already be a given, but maybe the shift to remote work has widened your pool, for instance). If you reach out to applicants from further afield, your chances of finding someone qualified is vastly increased.  
• Recruit proactively. If they’re no longer coming to you, go to them. Promote job ads online, work with staffing agencies in your local area, and spread the word through community centers. Also, try to make your job description stand out from the pack. Get creative. 

• Offer an employee referral bonus. Consider offering referring employees a cash bonus or some other type of incentive if they refer a friend, and that friend gets hired and stays for three months or longer. 
• Find partners. Consider partnering with local organizations, job fairs, after-school programs, and other grassroots initiatives that may have just the talent you’re seeking. You might offer free training or skill-building in exchange for a term of employment. A win-win, right? 
• Automate admin tasks. Invest in technology that automates the more tedious and time-consuming administrative tasks such as inventory and reservations. This will save your skilled staff a ton of time and energy and improve retention. 
• Be flexible whenever possible. Why wouldn’t you be? When putting together your employee schedule, factor in staff preferences and the demands of their personal lives. Even if you can’t please everyone all the time, demonstrating sensitivity to work-life balance can go a long way toward employee loyalty. 
• Get creative with perks. If you can offer competitive wages, great, but if not, try making up for it with other perks. You might offer your staff professional training and development opportunities, for instance, or overtime opportunities. Or maybe you can offer some of your part-timer employees full-time salaried jobs with benefits packages.  

Bottom line

As all kinds of companies continue searching for ways to cope with the labor shortage, it will become increasingly important to do away with the idea that things will return to their pre-pandemic settings. Employers that find ways to accommodate worker needs will draw the best candidates, and those that resist new ways of doing things will struggle.  

Only one thing’s for sure: the pandemic set in motion a rare and accelerated transformation of the employer-employee relationship, and the only feasible option is onward and upward! 

And if you’re an MSP having trouble closing the service loop and offering continuous support our experts are here to help.