In July of this year, more than 4 million Americans quit their job. This led to what HR professionals are calling “The Great Resignation”. With so many people quitting in high-performance industries like tech, healthcare, and education many are wondering what is driving these people to quit, switch industries, or start their own business. We took a deep dive into why this is happening and identified 3 contributing factors that could be causing you to see more resignations. We have also looked into what you can do to help prevent any other current employees from resigning and what will help you attract future talent.
The rising cost of living and current economic failures have employees searching for jobs with higher and more stable pay
Year by year the tax rate has increased driving up the cost of living, from putting food on the table to providing a roof over your family’s head. For example, the warehouse job I worked from 2007 to 2011 had a set pay rate for an operator at $15 an hour. I went back to this job in 2021(10 years later) and the pay rate had only increased 75 cents. Not only had the cost of living gone up in those 10 years but other warehouses in the area had increased their starting pay rate to $18 and $22 an hour.
It’s frightening to consider, but my grandparents, who were a young couple in the 1960s, with a combined income of around $5600 could easily afford a home at the average market value of $11,900 which is about 2x their yearly salary.. . They also owned two cars and put my mom through college on a middle-income salary. Despite an increase in wages most recently (2.9% as of August of 2018), income inequality has increased, leading even more to feel they aren’t keeping up. Today the average 2 person income is around $73,000 and the cost of a single-family home average- around $247,210.
Today the average house costs more than 3x the average household income. This makes it incredibly difficult for current homebuyers to feel like they have a chance at actually getting home. If pay and cost of living rose at the same rate the average household income would have to be $117,719. Meaning each person in a household should be bringing in around $60,000 a year or around $28 an hour.
While the stock market has benefited those with savings and 401(k)s, most don’t feel it. 40% of Americans had trouble paying for food, medical care, housing, or utilities in the last year. Nearly half of Americans have no retirement savings, creating increases in stress-related illnesses and heart disease.
63% of Americans do not have $500 of cash on hand to handle emergencies or other significant expenses
70% of college grads have $15,000 or more of loans outstanding in their first year of work
4 in 10 Americans now have a “sides hustle” to make more money to help make ends meet.
What are companies doing about this?
HR and business leaders are well aware of these financial issues, yet are afraid to raise wages.
Apple, for example, recently announced that its quarterly revenue grew to $61 billion (making it a $250 billion company) and that it generated $13.8 billion in profit (almost 23% profit). This means that for every dollar you spend on an Apple product or service, 23 cents goes to the bank.
What is Apple doing with this money? They’re returning it to the shareholders. The company announced it will distribute $210 billion to shareholders through stock buy-backs and will increase its dividend as well. If you own Apple stock, you see a good return, but if you’re an Apple employee, you may or may not see a thing. (P.S. Apple pays only a 14.5% tax rate.)
Apple, by the way, has about 80,000 employees, so if the average employee makes $100,000 per year (which is high), Apple could give them all a 5% raise, and it would only cost the company $400 million per year, which is less than 0.2% of the cash the company is using for stock buybacks.
In other words, Apple management believes the company should return cash to the shareholders
(which enriches its stock price) then it is to invest in the salaries of its employees.
Some things that could be done across the board to help balance the scales would be
Invest in the salaries of employees with more than fair wages, raises, incentive programs, and or bonuses instead of just the shareholders
Partner with other companies to offer employee discounts through your companies
Petition to put a cap on the housing market
Employees with dependents prefer remote or hybrid work environments after working from home during the pandemic
Being a single parent is challenging when remote work is not offered. COVID 19 Guidelines for schools and childcare facilities, the rising costs of child care, and having a disabled parent all add stress when it comes to me being present and focused at work. If my child gets sick or something happens to my parent I have to call into work and let them know what is going on and see if I can come in late or work from home. Having remote or hybrid options helps people like me not have the added stress of things that are out of my control in my personal life.
The past year has proven that employees can be just as, if not more, productive working from home as they are working in the office, especially with software such as Slack, Whatsapp, and Viber, whose design allows employees to work from home permanently. Roughly half of U.S. professionals believe their companies will allow them to telecommute at least part of the time after the pandemic, according to LinkedIn’s Workforce Confidence Index. That percentage is even higher in industries including tech (73%), finance (67%), and media (59%), which see flexible work as the future.
Which companies have moved to a remote or hybrid option and seeing positive benefits from it?
For example, the Australian software company Atlassian (a leading provider of collaboration, development, and issue tracking software for teams. With over 150,000 global customers) won’t be closing its offices, in an internal blog post published in August, the company told employees they could work from home forever, CNBC reported. Instead of measuring how long staffers work, Atlassian will reportedly measure outcomes, though few details were provided. Also, The cofounders of credit-card startup Brex sent employees an email in August announcing their remote-first shift. Henrique Dubugras and Pedro Franceschi said they, and their leadership team, will telecommute most days, offices in major cities will remain open.
“Off-sites will be a big part of Brex as is a remote-first company. As soon as Covid is over, we’ll have frequent company and team events (i.e. once every ~2 months) focused on building deeper team relationships, rather than heads-down work,” the co-founders Brex, which adjusts employees’ salaries based on geographic market, also announced that those who relocate to areas where pay rates are different may see their compensation change. For current employees who relocate before September 2021, Brex said it will not make any such adjustments until September 2024
Employees with a balance between work and life are happier and more productive
I’ve worked multiple jobs that have a set schedule but it is always overruled by daily mandatory overtime that makes it next to impossible to plan for personal things like your children’s extracurricular activities, medical appointments, and or time to just decompress. I can recall on multiple occasions while working for a previous company when I was forced to miss medical appointments, time with my child, and doing the things I love because they had mandatory overtime at the very last minute.
The need for work-life balance is more important than ever. Especially given the unpredictable, often under-pressure workplace environment and the added blurring of lines between work and personal because of the need to work from home more often due to COVID and the dominating presence of millennials in the workforce. With the millennial generation of workers projected to take up 75% of the workforce by 2025, many leaders think it’s time to redefine what work-life balance looks like.
How does work life balance affect stress levels?
Work-life balance has become almost taboo nowadays. Employees feel guilty when it comes to things such as making a bigger impact at work and in the world (but without sacrificing your personal health or happiness for it).
Having a positive impact on your kids’ lives, Being present in the moment (with actual space to think),
Prioritizing what’s important to you (including self-care) without guilt, shame, or apology, having strong boundaries that you feel good about enforcing, and Letting go of trying to do/have it all. No one feels content anymore in making the choices that are best for their mindset when their job becomes a factor.
Workplace stress is estimated to be the 5th biggest cause of death in the United States. Additionally, a quarter of Americans identify their jobs as their number 1 source of stress.
Chronic stress is one of the most common health issues in the workplace. It can lead to physical consequences such as hypertension, digestive troubles, chronic aches and pains, and heart problems. Chronic stress can also negatively impact mental health because it’s linked to a higher risk of depression, anxiety, and insomnia.
Too much stress over a long period leads to workplace burnout. Employees who work tons of overtime hours are at a high risk of burnout. Burnout can cause fatigue, mood swings, irritability, and a decrease in work performance. This is bad news for employers because according to Harvard Business Review, the psychological and physical problems of burned-out employees cost an estimated $125 billion to $190 billion a year in healthcare spending in the United States.
What can companies do to stop “The Great Resignation”?
It is important to remember that not everyone is ready to go back to normal. There are people on your team that has spent the last 18 months or so feeling incredibly independent about managing their time and their tasks. If you expect everyone to jump back in like nothing happened you are going to be met with resignations. If you expect new talent to jump in and accept lower wages you are going to have vacancies. Every company is different and the needs of each company are different. Now is the time to take a good look at who you are, what you expect, and what you can do to keep and attract the talent you want.
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