Why are people leaving the workforce, creating a labor shortage?

The question of the hour: why is our economy suffering from a labor shortage amid social and economic unrest? When stability should be a priority for the workforce, workers are quitting en masse. Short staffing forces businesses to cut down on hours and close on certain days of the week. Despite hiring managers and employers offering retention bonuses, higher pay and shorter hours, the global resignation rate has remained unprecedented for months. It seems a glaring contradiction that millions stay unemployed while more and more leave their jobs, but there’s more to it than a surface-level contradiction.

Psychologist Anthony Klotz predicted what he terms “The Great Resignation,” a period of epiphany amid worldwide upheaval in which the population re-imagines and reprioritizes life. In the United States, our identities are inextricable from our roles as laborers. We are valued according to our levels of productivity. The pandemic forced many to think differently about their value after businesses sent them home or laid them off.

The pandemic isn’t the sole source of “The Great Resignation.” Before COVID-19’s entrance, many workers suffered from burnout. Work-life balance has taken center stage. To achieve that balance, some have forgone work altogether, some have found other avenues of income and some have returned to academia seeking a new career path. For many, it’s all of the above or a combination.

Perhaps, above all, it’s fear of the virus. Why return to work and risk your family’s and your health and safety? TMS sought out insight from employers, workers, academics and more on the topic. Here’s what they have to say about the labor shortage.

New avenues of income

“The pandemic has made people realize the normal 9-5 is stacked against them,” says Tarik Khribech, founder of AllBetter. “Self-employment and gig work allows people, especially young people, to have more freedom in what hours they work and the responsibilities they have. Whether you are a home contractor or a delivery driver, gig work instead of the daily grind will often be a more attractive choice."

“The pandemic has forced people to see that having a ‘day job’ does not equate to job security,” says Jake Hare, chief executive officer of Launchpeer. “Anything can happen that can make you lose wages or lose your job completely. We have seen a mass exodus of people from the workforce, and many are choosing to start their own businesses instead. The startup life can be attractive because it helps entrepreneurs balance work and necessities like child care while prioritizing their mental health."

“The reasons for labor shortage had been building up for years,” says Jordon Scrinko, the founder and marketing director of Precondo, a website that helps investors and first-time buyers get advice and access to preconstruction developments across Canada. “Poor wages, poor working hours and conditions. The working class has been in the thankless grind for years; however, only the pandemic prompted the global resignation.

“This might be because it’s only now that people stopped and realized that this is not a way of living and there are other ways of making money. The era of the internet has brought equal opportunity to everyone, so maybe people just chose to take the risk and try having a better and happier life,” Scrinko concludes.

“[People] have discovered another source of income that pays better than minimum wage and allows them to make their own schedules: independent contracting,” says Kyle MacDonald, director of operations for Force by Mojo, which provides GPS fleet tracking for small businesses. “The layoffs during the pandemic required people to find a way to make money, and in many instances, people discovered they could make more money delivering food or driving people around while having more control over their work schedule. I don’t think we can go back. We need to be prepared to pay more for what we buy because in order for corporations to win employees back, they are going to have to pay a higher wage. I think the pandemic has caused a permanent change that business owners will have to adjust to or become obsolete.”

Debunking myths on the labor shortage

When commenting on the source of the labor shortage, conservatives and moderates tend to point to unemployment benefits, which recent September reports have proved erroneous. The Biden administration, spurred on by business groups and Republicans, projected that cutting off federal jobless aid would force people to rejoin the workforce.

Based on the underwhelming number of added jobs and people seeking work over the past month, the projection was wide of the mark. The administration’s theory relies on a classist depiction of the working class – that they won’t work when given the opportunity. It’s not that people don’t want to work; they don’t want to work under current conditions. The organization of the workforce repels rather than attracts.

Historian and political scientist William S. Bike describes America’s lifestyle as a response to capitalist propaganda perpetuated through our societal values and our emphasis on instant gratification. He names our pathological need to work harder, earn more and spend more as the culprit behind our increasing emotional and physical distress.

“This lifestyle was a continuous upward spiral of frenzy causing more stress, health and emotional problems, including a decreasing life span – with incomes stagnant and workplaces becoming miserable, and the eight-hour day only a nostalgic memory – at the micro-level,” explains Bike. “At the macro level, the overuse of resources such as water and the increase in carbon emissions have literally been killing the planet.

“Then during the pandemic, people realized that they could get by on less … People found that their former side-hustles or part-time jobs could provide some money, while reduction of consumption resulted in less of a need for money. The result is the ‘Great Resignation.’

“People opting out of the system by choice means that they will produce less. So now there are less products on the shelves because there are fewer people to pack them and to deliver them … We all need to get used to product, service and personnel shortages.”

Learning to value our labor

Our society conditions us to value ourselves based on productivity, but we often don’t feel valued even when we run ourselves ragged at the office. We often aren’t treated like we’re valued. Employers demand more for less, often citing studies that human labor was at risk of becoming obsolete due to technological developments.

“For years, we were told that human labor is fast becoming unimportant and redundant,” says Chris Nddie, co-owner of ClothingRIC, a website that helps consumers save money, “and how artificial intelligence is set to replace ‘unskilled’ workers. The pandemic all but destroyed this narrative. Employees now know they are skilled, important and not that easy to replace. They also know that they deserve better wages and facilities. Business owners must wake up to this new reality. It’s time to give workers better wages along with improved working conditions.”

What triggered our ability to value ourselves beyond our productivity? Most likely a combination of an uptick in pandemic self-care and employer panic amid the labor shortage. “When some people demonstrated or even went on strike for higher wages, better benefits or more humane working conditions in recent years, bosses and pundits said, ‘If you don’t like it, quit,’ never dreaming that people would actually take their advice,” says Bike.

“So now those corporate leaders and pundits who have extolled the free market for the last 40 years are baffled, confused and angered when the free market works in favor of labor instead of management. Yes, American society is going through a permanent change in which companies will have to pay higher wages, give better benefits and create better environments to attract workers.”

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