The Covid-19 pandemic was one of the most disruptive events of the last 100-plus years, on the level of two world wars, although it did not last as long. But like the world wars of the past century, when women were enlisted to work in factories in all manner of jobs previously held by men so the men could go fight, the labor culture shifts were short lived, and soon reverted to their traditional norms. Rosie the Riveter, who symbolized the female factory worker during World War II, pivoted 180-degrees to the former role of the American housewife after the war ended. Think Ozzie and Harriet or Father Knows Best, textbook examples of the portrayal of the housewife in the booming post-war suburban economy.
The pandemic had the same effect. First there was “Work From Home,” which coined the acronym known as WFH, forced upon us by the global shutdown. And as the leverage shifted to employees, the WFH culture gave way to what became known as the Great Resignation. Employees often stopped putting in a full effort for their employers, with some doing as little as possible. Layoffs followed in many industries, especially in tech, and labor markets were simply upended.
The pendulum is now making a slow-motion swing the other way, in part due to the interest rate environment and the Federal Reserve’s attempt to slow the economy and bring inflation down to the 2% target rate Chairman Jay Powell seeks. Remember, tens of millions of workers quit their jobs during the Great Resignation and ditched, among other work, low-wage service employment for higher pay, forging new careers or trading up for promotions at rival companies. But as the labor market cools amid a tightening campaign by the Fed, that massive reshuffling has come to an end. After two-plus years spent quitting and finding new and better opportunities, workers are now voluntarily leaving their jobs at the same rate they were prior to the pandemic.
Workers still looking to take the leap say the labor market has clamped down as leverage shifts back to employers. What was once a ripe opportunity for aspiring job seekers has devolved into a more challenging market as qualified and laid-off workers flood application portals, and companies tap the brakes on job listings to cope with an uncertain economic environment.
And the data speaks for itself: the number of open jobs in the U.S. fell to a two-year low in July, according to a recent Job Opening and Labor Turnover Survey, or JOLTS report. The JOLTS data revealed there were 8.8 million jobs open at the end of July, a decrease from the 9.16 million job openings in the month prior. The report also showed a decline in the quits rate, which acts as a signal of workers’ confidence in their ability to land a new job and fell to 2.3%, the lowest since January 2021.
How workers perceive the economy and their chances of succeeding elsewhere plays a big factor in whether they go on the job hunt. Employers also influence broader worker psychology by signaling cutbacks and inducing fear, or alternatively, by instilling optimism with hiring sprees. Human resources professionals explain that candidates resign and job search when they feel optimistic about the market, but today, there is a general fear across so many sectors.
Fewer consumers, for instance, said jobs are “plentiful” and more said jobs are “hard to get,” according to the latest read on consumer confidence from The Conference Board. The data showed receding optimism around employment conditions, a sentiment that drove down the famed confidence index. If workers believe the external market is scary and daunting, they will stay put, according to many HR professionals.
Times have clearly changed in the labor market. Wage growth is likely to slow in coming months with workers seeing fewer opportunities to increase their income by switching jobs. The Great Resignation is coming to a halt because employees now know they can easily be replaced, and companies understand that. An employee who leaves a position voluntarily is learning that it’s going to be harder to grab something else to replace what they had.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at pviller[email protected]. Follow him on Twitter – @allenvillere.