The workforce is changing, and the change even has a name: The great resignation. But workers aren’t just resigning. Many are making new demands on the workplace, and this upheaval is more than a temporary adjustment due to the pandemic, according to two NCSL employment policy experts.
They say people are leaving jobs by the millions in search of more flexibility, higher wages and better benefits. They say employers—especially state and local governments—will have to change how they recruit, the benefits they offer and how they incorporate remote work to get and keep employees going forward.
“These are issues that have been on the horizon for some time, but COVID-19 really hit the gas, and we reached the horizon a lot sooner,” Zaakary Barnes says in an NCSL Facebook Town Hall. More than 33 million people have left their jobs since the spring of 2021, he says.
“The labor force also shrank during that time because so many people exited the workforce, due to illness or aging out and retiring or early retirement, so there’s fewer workers overall,” says Barnes, who is a policy associate with NCSL’s Employment, Labor and Retirement Program.
Those who remain are in a strong position. “People want their incomes to keep up with the rising costs, and they’re willing to renegotiate or move to another job to make that happen,” Barnes says.
He notes the July jobs report shows the areas of high demand are professional and business services, health care and retail.
“That gives the employees a really strong negotiating position to advocate for higher pay,” he says. In addition to higher wage costs, employers find inflation makes nearly every other aspect of running a business more expensive, too, he says.
“Despite the added costs, we’ve been seeing really strong hiring numbers all throughout 2022, so it seems employers are willing to take that cost and negotiate with employees,” Barnes says.
Public Sector Scrambling
It’s a different story in the public sector, says Josh Cunningham, a project manager in NCSL’s Employment, Labor and Retirement Program.
The great resignation has left states scrambling to fill jobs in every area, including teaching, state and local government work, and police and emergency services. Cunningham says excluding higher ed numbers, state rosters are down by one-third. That means state services are harder to deliver, and the employees who remain on the job are trying to keep up and some are getting burned out, he says.
“A lot of states are reviewing compensation and benefits packages and raising wages to keep themselves competitive,” Cunningham says, adding that’s difficult when the gap in wage growth between the public and private sectors is higher than ever.
States must plan for a permanently changed workforce, he says. For instance, sweetening retirement plans won’t win over a generation of young workers who have no intention of staying with one employer until they retire. And many employees will insist on the remote work that has become so popular during the pandemic. Cunningham says some states are offering cash incentives and even loosening up state residency requirements to lure employees who want the job but not the location.
“We’ll see states revising and adapting to the changing nature of how work is performed,” Cunningham says. “It’s an issue that is going to be a challenge going forward that state policies and legislators will need to be paying attention to.”
Kelley Griffin writes and edits for NCSL.