The current 5.9% unemployment rate, compared to 3.5% before the pandemic, shows that the country is still suffering from joblessness. But the situation becomes more unusual because there are plenty of job openings and a plethora of workers. Unfortunately, the workers who need jobs are not a suitable match for the jobs that are open. Because of this unbalanced equation, the country is finding it difficult to get back on track.
Why Can’t I Hire Anyone?
At first glance, getting the economy moving seems like a no-brainer. With a 5.9% unemployment rate and job openings hitting a record 9.2 million, the people without jobs could just go find one. But things are not so simple.
“The labor market is a matching market where you need to choose something and be chosen by it,” said Julia Pollak, a labor economist at ZipRecruiter Inc., an online employment marketplace. But in this post-pandemic world, the United States has ended up with a “mismatch” job economy between what is open and what people are looking for. The problem of the skills mismatch is throwing a wrench in the works of the economy, because those who are unemployed do not have the skill set needed for the job openings available in the marketplace.
The Mismatch and Other Reasons
Certainly, the mismatch is caused by people’s skills not matching up with the jobs that are open. But there are other factors that come into play. Some people are still afraid of the pandemic and don’t want to go back to work, and for others, their childcare situation has changed. Also, many people just got used to working from home and decided they liked it. The country will have to untangle all these factors in order to get the employees matched up with the companies that need them.
The labor-research firm Indeed Hiring Lab recently polled 5,000 jobseekers in a study to understand people’s reluctance to return to work, and the number one reason cited was fear. Even though the pandemic seems to wane, many people are not comfortable putting their health on the line to go back to work.
The other mismatch is that many people have moved from dense urban cores to suburbs or smaller cities during the pandemic, whether to be closer to family or to have a less stressful way of life. If you can telework, you do not have to live right in your company’s backyard. But those new towns where people move do not always have the infrastructure in terms of restaurant employees or other services, and that causes a strain.
The other cause of the mismatch, interestingly, is the assistance that has been offered by the government. “People are taking their time to find better matches and that is being in part facilitated by the additional support, the unemployment insurances as well as the stimulus checks,” said Michael Hanson, an economist at J.P. Morgan. People are thinking more long term and being pickier. But in the employee’s defense, if you find the perfect job, this could give you better wages and make you a more amazing worker in the long run.
One ripple effect is that employers are changing the job requirements to require unique skills. Employers that need workers are lowering requirements for low-skilled jobs but tightening requirements for high-skilled jobs. The acceleration of automation and digitization is also driving the increase of skills needed for high-level jobs. Matt Sigelman, chief executive at Emsi Burning Glass, said that because the list of needed skills is growing like wildfire, this is “going to close out a lot of pathways into the jobs for people who don’t have those skills yet.”
Another ripple effect is that people are trying to find jobs they really love instead of just settling for anything. Betsy Mercado, senior vice president of human resources at Flynn said “They are trying to figure out what job is going to provide them with the most income and the flexibility they need.”
Will the Economy Recover?
Businesses cannot just use the same old strategies to lure qualified workers. Many are offering hiring bonuses and raising wages. They are also experimenting with hybrid models of work to entice high quality workers to their businesses.
Harvard Business Review reported, “In the past months, some large employers like Amazon, Bank of America and McDonald’s have followed a similar approach, and by our estimates increased the salaries of well over 500,000 workers.”
The Federal Reserve is in a waiting game of its own. Currently, they have lowered interest rates to help get the country back on its feet, but they will be forced to raise them to deal with the logjam and ward off inflation.
In these unprecedented times, the health of the country seems to improve because of vaccines and other mandates put into place. But the economy is not quite out of the woods yet. Although a positive for many people who are trying to find the perfect job, many employers are struggling to keep their doors open. Undoubtedly, the pandemic will echo for years to come.
I like to spend my time giving back with organizations that focus on mentoring aspiring entrepreneurs. I have supported after school programs that focus on entrepreneurial and global initiatives in local primary schools. I recently extended my mentoring to include students at Case Western Reserve University.