I’m mad as hell and I’m not going to take it anymore,” declared the longtime news anchor Howard Beale in the 1975 film classic Network.
A similar debate is raging across the world about the future of work, and there is a lot more at issue than how often to commute. The way of working that is emerging could alter the basic elements of our work life.
- A whopping 65 percent of employees said they are looking for a new job, according to a PwC survey;
- And 88 percent of executives said their company is experiencing higher turnover than normal.
Most businesses are struggling to fill open jobs. Many have raised wages and offered bonuses to no avail. What has resulted is intense competition for talent.
A Long-Term Shortage of Workers
The new report by economic data and analytics firm Emsi | Burning Glass, highlights how the mass exodus of baby boomers from the workforce, record low participation rates among the working-age population, and the lowest birth rates in U.S. history will all lead to a long-term shortage of workers. Already, businesses have begun offering higher wages, bonuses, and even offering remote work as an incentive to keep their workers from leaving.
“The fact is, competition for talent is going to become brutal,” said Emsi director of staffing product Ron Hetrick. “Businesses can no longer assume there will be enough people to go around. We are already starting to see substantial rises in wages as the market works to find the new equilibrium, along with production slowdowns from those companies that cannot find the talent.”
Microsoft’s 2021 Work Trend Index found that 41 percent of the workforce is considering leaving their employer this year. The relationship between employer and prospective employee is being inverted, and that means re-evaluating pay and benefits. The younger generation is more interested in the balance between the hours they spend at work and the hours they spend with friends and families.
Strictly speaking, there isn’t actually a labor shortage — defined as not enough available workers to fill open jobs — because there are 9.5 million people classified as unemployed and looking for work, and there are 9.2 million job openings. It’s more a case of what employers have been calling “The Great Resignation,” as more employees switch jobs.
Gone to Texas (and Florida)
The pandemic has made one thing clear — where companies do business matters. It’s why a recent survey of CEOs by Chief Executive magazine shows that 44 percent are more open than before the pandemic to examining new locations for their business, and more than one-third of CEOs are considering shifting or opening significant operations in a new state.
Countless companies nationwide have already announced major decisions to relocate as they reassess everything from business costs, skyrocketing taxes, and regulations that will impact their talent attraction and retention. The quality of life in states like Texas and Florida, and the ease of doing business there, effectively gives employees an immediate 11–13 percent pay increase because they’re not going to be paying California or New York state and New York City taxes.
The prospects of a diverse talent pool, lower corporate and personal taxes, a cheaper cost of living, and lifestyle benefits in these two states are driving more executives to look south. As one executive said, it’s almost corporate malfeasance for a C-level executive at a Fortune 500 publicly traded company in San Francisco or New York not to be considering or studying a potential move.
The CEO of FileTrail, an information risk management company, commented on this firm’s recent relocation to Austin: “My employees were constantly saying, ‘Look, my commute is horrible, and my rent is astronomical for what I’m getting,’ To be perfectly honest, I also told them, ‘I’m not going to pay you $400,000 per year so you can buy a house in Silicon Valley.’ So, we were really looking at improving their lives and moving somewhere where they could start accumulating assets.”
The pandemic has made one thing clear — where companies do business matters. Many tech startups were having trouble hiring in the San Francisco Bay area, so they have moved out or are allowing people to work from wherever they choose in order to improve their quality of life. People are realizing that a commute is mostly a disruption, and business travel is not like vacation travel.
In late 2019, Florida signed legislation with the goal of making it the No. 1 state in the nation for workforce education by 2030. That timing was fortuitous — the pandemic put those efforts to the test immediately.
The experience led to the “Get There Florida” initiative, a partnership with the state’s university and technical colleges to accelerate the time to completion of in-demand industry certifications, from advanced manufacturing and logistics to healthcare and information technology.
Remote Work is Here to Stay
Remote work, in some manner, is here to stay, as evidenced by the fact that large organizations are suddenly hiring for a new position that will change work life forever: “chief remote work officer” or “head of remote work.” Companies are looking at making future real estate decisions through a team of technology, human resources, and real estate executives, as remote work teams become the standard.
Just as CFOs evolved from merely managing a company’s accounting to important executives who advance growth, chief human resource officers (CHROs) are evolving from payroll and employee benefits managers to C-suite advisors that are maximizing human capital to achieve better business outcomes.
Disability insurance company Breeze surveyed 1,000 Americans who are working or looking for work that can be done remotely asking what they would give up if their employer offered them full-time remote work. The results showed that:
- 15 percent would take a pay cut of 25 percent, which showcases how desirable full-time remote work remains, and how much workers are willing to give up for it.
- 39 percent of workers would give up their health insurance benefits.
- 46 percent would give up a quarter of their paid time off, and 15 percent would give up all their paid time off.
- 53 percent would work an extra 10 hours per week.
- 36 percent would give up their 401(k) or other retirement plan.
- 52 percent would give up Netflix, Amazon, or their favorite streaming service for the next year.
For now, workers seem to hold all the cards in negotiations with prospective employers, with quit rates high and labor shortages pushing up wages. However, there is also another side to this: Perhaps the most disturbing finding — Two-thirds of supervisors surveyed by the HR Knowledge Center at the Society of Human Resources Management said they considered remote employees “more easily replaceable” than onsite workers.
For now, workers seem to hold all the cards in negotiations with prospective employers, with quit rates high and labor shortages pushing up wages.Concern/Cost of Employee Turnover Is Very Real. The average cost of employee turnover for a 150-person company is $921,865, and studies show 35 percent of current employees who are looking for new opportunities are seeking better compensation. That has HR leaders really concerned.
Not only is wage pressure an issue, but employees are under pressure to perform. For example, many Amazon workers have spoken out about grueling conditions at warehouse locations and say they are under intense pressure to work faster. Packers at some Amazon warehouses are required to pack at a rate of 700 items per hour, and workers can be fired for missing rates. Pickers can be expected to always pick 400 units within an hour or within seven seconds from picking an item. Employees are tracked by a computer the entire time.
Warehouse employers are responding to the worker shortage in a variety of ways. They are raising wages, offering signing bonuses and incentives, and even offering more flexibility in shifts and allowing paid time off to be taken in smaller increments than a day or half-day. Others are investing more in the employees already there, deploying warehouse labor management systems, and also allowing robots to take on more of the work. For example, Pitney Bowes is installing automated parcel sorting systems from Ambi Robotics in its e-commerce hubs, which will help it increase sortation speeds and help current employees as labor costs rise. DHL is using more Locus Robotics-assisted picking robots to bring items to human pickers, reducing the time employees spend walking and increasing the time they spend picking items.
Robotics has partially eased the sting of labor shortages, but the fundamental driver of warehouse employment demand, in particular, is the e-commerce boom, and that is not going to change anytime soon.
Susan Arledge is president of site selection and analytics at real estate firm, esrp.