How Employers Can Address the ‘Great Resignation’
With a record 47 million workers quitting their jobs in 2021, the Great Resignation has led to a workforce crisis, making it hard for companies of all sizes to remain fully staffed. However, it also creates an opportunity. By understanding the factors behind employee exits, companies can stem the outflow while also improving their own pools of talent.
How Significant Is the Great Resignation Trend?
Americans have been quitting in record numbers. In February 2022, another 4.4 million Americans representing nearly 3% of the American workforce voluntarily resigned their positions, according to the U.S. Labor Department’s monthly report on job openings and labor turnover. In fact, since April 2021, roughly 3% of the labor force has quit every month, representing a sizeable increase from the historic monthly average over the past 20 years of 2%.
As a result, job openings in the U.S. have remained at a consistent level from July 2021 through February 2022, hovering at approximately 11 million, according to the Labor Department. Previously, there had not been a single month since 2000 in which job openings exceeded 8 million.
This trend is likely to continue. Surveys indicate that workers continue to be restless and dissatisfied. According to a Prudential survey of American workers in October 2021, 20% were actively looking for a new job and another 26% were considering joining them. Among millennial workers, discontent has been even higher with 59% either actively looking or considering it.
Learning from Worker Dissatisfaction
A closer look at why employees are restless offers employers willing to reassess their benefits packages clues on how to retain and attract new talent in what has become an ultra-competitive job market.
- Lack of Retirement Benefits. Mercer’s annual survey, Inside Employees’ Minds, asked workers what factors would most attract them to seek new employment. More than two-thirds of the 2021 survey respondents said: “Better pay or benefits.”
A 2019 Millennium Trust survey of smaller businesses and their workers received a similar response. It also found that roughly half of the surveyed businesses didn’t currently offer a retirement plan. The majority of employers without sponsored plans cited costs, complexity, or their firm’s size as reasons for not offering a retirement plan.
Workplace Savings Programs address these obstacles for companies of all sizes, by offering access to individual retirement accounts such as SIMPLE IRAs (which are generally for businesses with 100 or fewer employees and aren’t as administratively costly or complex as 401ks) or SEP IRAs (typically used by sole proprietors or small family-run businesses). An even simpler option may be payroll-deducted IRAs, where employers of any size can make traditional or Roth IRAs available to employees with contributions made via payroll deductions.
- Need for Financial Wellness Options. Since the onset of the global pandemic, the number of Americans suffering from financial anxiety has been on the rise, even among those who remained employed. A recent survey by the Society for Human Resource Management found that about one-third of workers and two-thirds of the unemployed report having finance-related anxiety or depression. Meanwhile, 83% of workers surveyed by Betterment said they view financial wellness benefits, which are designed to alleviate some of those fears, as a sign that “my employer values me and my work.”
Besides retirement, the financial wellness benefits that are among the most desired by workers include financial planning education and emergency savings funds. These workplace programs add to peace of mind by allowing workers to set aside small, routine contributions to their emergency savings in the same, user-friendly, and automated way they save for retirement through a 401(k).
- Burden of Unreimbursed Healthcare Expenses. The physical well-being of workers can’t be overlooked. Among workers considering quitting their jobs, nearly half say they feel physically or emotionally exhausted. While expanding healthcare coverage to address these issues may not be financially possible for many businesses, other benefit offerings can go a long way toward addressing workers’ physical well-being. Consider that the single biggest reason workers deplete their emergency savings funds is to pay for out-of-pocket medical expenses.
It's no wonder that respondents to a Betterment survey cited Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) as the benefits with the most appeal after retirement and financial wellness benefits. HSAs allow workers to set aside and invest money pre-tax to cover out-of-pocket health care expenses while building a reserve for health-related expenses incurred later in life. Flexible Spending Accounts (FSAs), which are more of a budgeting tool, allow workers to put away money on a pre-tax basis each year to cover that year’s out-of-pocket expenses and un-reimbursed medical expenses.
Fortifying Benefits Can Stem the Flow
Regardless of the size of your business, there are a variety of affordable, and scalable, workplace solutions that can help stem the outflow of employees. More importantly, by offering what job seekers want, it can help you attract the talented employees you seek as you grow your business.
The material in this blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Millennium Trust Company performs the duties of a directed custodian, and as such does not offer or sell investments or provide investment, legal, or tax advice.