Labor Shortage Sign of an Evolving Workforce
Why the Labor Shortage Isn’t Going Away Anytime Soon
After vaccines became readily available and health and safety restrictions for businesses were relaxed, many expected available workers to scramble for new job openings. COVID put millions out of work and shuttered businesses. In July 2020 alone, unemployment reached a staggering 31.3 million.
But, like most assumptions about “returning to normal,” 2021 proved different. Instead of being inundated with resumes, many industries remain understaffed. Across the country, businesses are grappling with a persistent labor shortage. The trend shows no sign of slowing. Employers are increasingly worried that workers will continue quitting at faster rates through the end of the year.
The pandemic reshaped nearly every aspect of life — socially, economically, physically — and the workplace was no exception. We’ve already covered the shift to working from home and the rising interest in a four-day workweek.
Now, even more workplace shifts are emerging. Here's what current labor trends reveal for employees and employers, especially small business owners.
Some of the Numbers
New Attitudes Toward Work
According to Korn Ferry, 45% of people are more likely to quit without a new job lined up than they were pre-pandemic. Of those planning to quit, 36% said the pandemic prompted them to re-evaluate their priorities.
So how are these new attitudes affecting the job market?
The U.S. Department of Labor’s JOLTS Report (Job Openings and Labor Turnover Survey) tracks monthly changes in job openings, hires, and quits. As of August 9, job openings reached a record high of 10.1 million — up over half a million from the previous month.
Social media is full of frustrated posts about drive-thrus closing early, with handwritten signs citing “understaffing.” It’s not just fast food — healthcare and other public service sectors are also feeling the pinch.
Understaffing creates a domino effect. Fewer workers increase the burden on those remaining, contributing to a toxic cycle of burnout and resignations. In 2021, the number of people quitting steadily climbed. According to JOLTS, quits rose 2.7% from the previous month, hitting 3.9 million. The rise was notable across professional services, manufacturing, retail, food service, and state and local government.
The National Federation of Independent Business (NFIB) reports that 49% of small business owners have job openings they can't fill. Additionally, 27% are planning to raise compensation in the next three months to improve retention — both record highs in nearly 50 years.
So what’s behind the mass quitting and slow return to work?
The Unemployed Perspective
Many point to emergency unemployment benefits as the reason for the labor shortage. But surveys suggest it’s not just about the money.
In a BTIG survey of 300 individuals, flexibility was ranked just below higher pay and better benefits as top priorities. Many job seekers want flexible schedules, not just a paycheck.
Stagnant wages are a longstanding issue. In 1968, the federal minimum wage was $1.60/hour. Adjusted for inflation, that would be $12.68 today. But in 2021, it’s still just $7.25/hour. Workers were underpaid before the pandemic — now, they finally have the leverage to demand better.
Prospective workers also want improved working conditions. Many employers pushed unreasonable demands pre-pandemic, but workers lacked bargaining power. Today, flexibility and work-life balance are seen as necessities, not perks. During lockdowns, businesses proved they could be more flexible — remote work, adjusted hours, childcare accommodations. Now workers expect that flexibility to continue.
Some people also used the pandemic as a reset, taking time to reassess career goals. Many realized they were on an unfulfilling path and chose instead to build something of their own, start a business, or pivot entirely.
Looking Ahead
The workforce will undoubtedly continue to evolve — which can feel intimidating or empowering, depending on your position. A NEST Financial Plan helps reduce uncertainty so you can move forward with clarity and confidence.
Whether you're an employee who resigned to pursue a new path, or a business still trying to adapt, NEST offers guidance and strategy. We love collaborating with entrepreneurs, small business owners, and creative thinkers to navigate change and build something meaningful.
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DISCLAIMER: This article is for educational purposes only and is not financial or investment advice. For personalized guidance, contact us directly at info@nestfinancial.net.