The Perfect Storm Impacting Our Talent Pipeline

By Mary Runkel, Arvada Chamber Program Director

Working daily with local businesses of all sizes, the Arvada Chamber of Commerce is well-aware of changes in the labor market as they happen. We know from meetings and the supporting data that a talent shortage exists – we’re still missing 4.3 million workers nationwide – and we wanted to know why. So we started asking questions.

We’re not subject matter experts or analysts, but we have started to gain a broad understanding of what’s taking place, and that is: everything. Many factors are playing out at the same time. Employees are choosing to leave due to burnout, higher pay, and opportunities for flexibility; market conditions are forcing others to exit; and now more than ever, systemic barriers are exacerbating these issues in very significant ways. 

Top Reasons Employees Are Quitting

One in 23 Colorado workers left their jobs in September, according to one report, elevating the state’s quit rate to the fourth-highest in the US. This data is unusual with the unemployment rate so high, but hiring rates were also elevated, suggesting quitters were likely transitioning from one job to another.

• BURNOUT AND MENTAL HEALTH: In this Employee Care Report by the Limeade Institute, 40% of employees cited burnout as a top reason for leaving their job. Around a quarter of people (28%) left their jobs without another one lined up.
  
• FLEXIBILITY/ WORK-LIFE BALANCE: This poll suggests roughly two-thirds (66%) of working Americans are interested in switching jobs. Further, 62% of Americans would take a pay cut to work from home, specifically parents (72%), Hispanic Americans (76%), and Black Americans (75%).
  
• BETTER BENEFITS, HIGHER PAY:  Better compensation was a central motivation for people to switch careers – 37% of this report’s respondents indicated. For those in healthcare (42%) and food service/ hospitality (41%), wages were the number one reason they chose to switch jobs.
  
• COMPANY CULTURE AND LEADERSHIP: Only 55% of employees felt like their organization cared about them, according to the Employee Care Report, mentioned above. Of that, only 16% strongly agreed, down from the 31% that strongly agreed in the same report in March of 2020.
  
• RETIREMENT: One year after the pandemic hit, almost 2 million older workers left the labor force. Currently, the number of older workers still employed is down by about 5 percent, according to the Schwartz Center and AARP. Interestingly, until the COVID pandemic struck, adults ages 55+ were the only working-age group of people since 2000 to increase participation in the labor force. (Pew Research)
  
• INVOLUNTARY RETIREMENT: Among people with incomes at or below the national median, 55% of retirements as of July, 2021 were involuntary. By contrast, among the top 10% of earners, only 10 percent of exits were involuntary. (NY Times)
  
• PANDEMIC EPIPHANIES: Ulrike Malmendier at the National Bureau of Economic Research has been researching how global crises that affect individual-level jobs influence individuals’ beliefs, capacity for risk, and choices. There’s growing data that shows individuals are likely to act as if past experiences will occur again, even when informed of the likelihood of an occurrence. 

Market Conditions Impacting the Job Shortage

Many things are happening in the market outside of consumer control. While wages are increasing in many industries, inflation and expanded pricing of goods and services may be offsetting those income increases and giving rise to concerned citizens.

• WAGES: Not all wages increased the same during the pandemic. The average hourly rate in hospitality is up about $1 compared to the pre-COVID rate. By comparison, warehouses have increased wages by more than a dollar and now pay $26 hourly on average, much higher than the ~$18 hourly in hospitality. (WSJ)
  
• INFLATION: In one study, 90% of respondents said they were at least “somewhat concerned” about inflation and 60% said they were “very concerned.” Worries crossed generational, racial and partisan lines.
  
• PANDEMIC-RELATED INCOME CUTS: Due to the pandemic, roughly 29.3% of Coloradans lost hours or income at a job, 17.2% struggled to afford basic needs and 11.9% total lost their jobs, according to the Colorado Health Access Survey conducted in October, 2021.
  
• AUTOMATION: In one global survey, automation concerns were paramount. The concerns were most common among younger workers, with 46% of those in their twenties and 41% of those in their thirties saying they had become more worried since the prior year about technology putting them out of work.
  
• COLORADO’S EQUAL PAY FOR EQUAL WORK LAW: Colorado’s “Equal Pay for Equal Work” Act may impact Colorado’s recruitment and retention ability; some employers are excluding Colorado applicants from applying to open jobs nationally.
  
• LABOR MOVEMENT Nearly 40 workplaces across the nation went on strike as of August of 2021, according to Bloomberg Law, almost double the number during the same period last year.

Systemic Barriers Impacting the Job Shortage

Large, system barriers are also impacting the talent pipeline in significant ways. Mothers are exiting the workforce at a higher rate. People of color have been disproportionately affected by financial hardships brought on by the pandemic. The Colorado cost of living and infant child care are at all-time highs. 

• COVID-19 DEATHS: Over 200,000 people in the working-age range (18 – 65 years old) have died of COVID-19 in the United States since the onset of the pandemic. Others have been put out of work due to health concerns.
  
• CHILDCARE CONCERNS: Colorado has some of the most expensive child care in the US, or 21% of a median family’s income for an infant. It’s considered “affordable”, if it costs up to 7% of a family’s income. (Denver Post)
  • MOTHERS EXITING THE WORKFORCE: The Pew Research Center reported around 10 million U.S. mothers living with their own school-age children were not actively working in January, 2021, which was 1.4 million more than in January of 2020. (Pew Research Center)
    
  • CHILDCARE, COVID & RACE: According to the Colorado Health Access Survey, Black or African American parents were more than twice as likely to report not being able to find child care as white Coloradans (18.7% compared with 7.1%).
    
• COLORADO COST OF LIVING: In Jefferson County, a family with two working adults and two children needs to have each adult making $24.90/ hour or more in order to support themselves and their families. (MIT LIVING WAGE CALCULATOR)
  
  • ARVADA HOME PRICE & RENT: The median list price for a home in Arvada is $545,000 – $607,000. To rent a 2 bedroom apartment takes $1,632 monthly. (Apartment List)
  • ARVADA MEDIAN HOUSEHOLD INCOME (2019 dollars): $84,717 (US Census)
    
• RACE AND ETHNICITY: According to the Colorado Health Access Survey, American Indian/Alaska Native, Black or African American, and Hispanic/Latino Coloradans were more likely to report job loss, reduced income, and other financial hardships due to COVID-19.

All of these conditions are connected, but each are uniquely contributing to the problem. Now we want to hear from you: What did we miss? What are you experiencing or reading as your business tries to navigate in the world of COVID’s “new normal”?

Let us know by joining the Talent conversation of the Arvada Chamber Mighty Networks community! Click here to join!