Finding and Retaining Talent Is a Challenge: Not Everyone Plans to Rejoin the Workforce

After sharp adjustments in 2020—layoffs and shutdowns for some; widespread remote work for others—2021 was expected to be a return to normal. Instead, many workers could not or would not return to traditional office environments and thus, widespread job and career switching eclipsed all other labor trends. Now that 2022 has arrived, we can see the results: not everyone is coming back. Many American workers are simply not resuming their place in the workforce.

Changing Careers

A recent study from last fall about the job market revealed that 20% of workers surveyed said they left their jobs to pursue new careers or switch fields. While that reflects a positive trend in workers actively seeking more satisfying and flexible work, it has also created labor challenges for businesses, who have been left to grapple with high turnover rates and excessive job vacancies. The widespread pursuit of new fields has also left shortages in certain fields that not as many people are migrating toward. The teaching profession is experiencing shortages in many districts as thousands of teachers in both public and private education left the profession in 2020 and 2021 to pursue jobs in other fields. Low pay, underappreciation, health concerns during Covid, and burnout are some of the main reasons teachers cite for leaving the field. Hospitality work has also witnessed a huge labor drop off that is not recovering as quickly as other industries. Going into the new year, leisure and hospitality industries still had over one million jobs openings.

Retiring Early

The pandemic prompted millions of people who were approaching retirement to do so earlier. Approximately 3.5 million people retired during over the last two years alone, according to Pew Research. By the last quarter of 2021, over 50% of U.S. adults over 55 were retired from the labor force. Despite the financial pitfalls of the pandemic, personal savings and home values saw increases and allowed many people to pursue retirements earlier than they may have otherwise planned.

Starting Up

Entrepreneurs make up a large, growing segment of the economy. Many Americans left jobs over the last year in order to launch their own businesses. Business applications with the government reached well over 5 million in 2021. Worker dissatisfaction and a desire for more independent working conditions pushed a record number of people into self-employment. The need to create or subsidize income during the pandemic—combined with historically-low interest rates on loans and the surge in demand for new products and services—compelled many people to join “The Great Resignation” in order to become their own boss.

Some of the industries that saw a surge in new business openings in 2021 include:

Retail trade

Food services

Health and social assistance

Construction

Real Estate

Technology

Higher salaries are helping to lure more people back into the workforce, as is the diminishing impact of the virus as vaccination rates continue to go up and cases of severe illness come down. Inflation is holding steady, so higher costs for goods, services, utilities, and healthcare may also help push people back into the workforce in the coming months.

While no one can say exactly when the labor shortage will end, we do know that workers in 2022 have come to expect more flexibility in their jobs—in relation to both their schedules and their ability to work remotely. Offering higher salaries alone does not appear to be enough to entice and retain high-quality professionals, and many employers have had to get creative. Employers whose expectations match up well with workers’ expectations will have the best chance of finding and retaining talent. Entrepreneurs (many of whom launched new businesses because of their own previous job dissatisfaction) are best positioned to understand workers’ concerns and therefore create a positive business environment that makes employees want to stay.