The Future of the Great Resignation: Weighing Labor Market Trends as 2023 Approaches

Is the “great” part of the Great Resignation over? This is one question that is top of mind for human resources (HR) executives as workers continue to hop job opportunities in search of something better.

The Bureau of Labor Statistics (BLS) reported that the overall quit rate dropped to 2.7% in August 2022 from a peak of 3.0% in December 2021. Leaders are left to wonder if this downward trend will continue, particularly in light of economic uncertainty, geopolitical instability and rising inflation. The BLS also reported that non-farm employment rose by 315,000 in August and the unemployment rate was 3.7% compared to 5.2% one year prior. These are mixed signals, at best.

There are two talent acquisition and rewards scenarios that HR leaders should watch for as they plan for 2023:

Scenario 1: The Great Resignation as we know it is over

In this scenario, two-plus years of rapid change have reached an inflection point. The tide will turn again: The Great Resignation will slow down, labor supply will exceed job demand, and employers will lead the market.

All the rewards employees have increasingly demanded in the 2020s — like higher pay, broader benefits and greater work flexibility — will still matter, but employees will no longer have the same level of bargaining power.

This shift has implications at every level of a company’s approach to talent management and HR. The biggest unknown is how employers should respond once this shift starts. Are the recent larger-than-normal pay increases associated with competitive forces now being replaced by inflation pressure? How far back to “normal” should employers swing regarding on-site vs. virtual requirements and standard work schedules?

Scenario 2: There’s no turning back; the market will remain employee-led

In this scenario, what were once normal ebbs and flows in rewards levers resulting from labor market conditions have become permanent changes in employee expectations.

Has the pandemic proven that work can forever be performed where and when it’s most convenient for employee, rather than the employer? Are demographic and generational trends permanently changing the negotiating power of the workforce? Does the new ubiquity of social media tip the transparency equation in favor of employees?

If this is the case, we are truly in new territory. Employees will still have significant power to ask for the rewards they want, and employers must remain competitive on rewards packages that attract the talent they need most.

What about the gig economy?

The gig worker market saw a pre-pandemic rise in prominence, then fizzled in recent years. But don’t count gig workers out; they will continue to bring value in both scenarios. For organizations navigating the uncertainties of the labor market, gig workers can be part of an effective mitigation strategy.

The tradeoff is that gig workers, while temporary, are more expensive than regular employees. In the long run, gig workers may be an effective element of companies’ talent strategies, especially for HR teams that aren’t ready to make big bets on reskilling existing employees or building new teams in emerging areas of their operations.

Hire for agility over special expertise

In any scenario, workers who will continue to bring value are the agile learners who can adapt quickly to change. In the past, organizations hired for workers that were deeply skilled in one area; that strategy was effective because the work environment and its associated technology remained relatively stable for longer. But today, the world and its technology change at such a rapid pace.

Employers should look for people who are flexible and can learn quickly within their skillset. From there, employers can train or reskill these agile employees or hire gig workers to fill the gaps as needed.

No matter which way the market swings, HR leaders planning their talent acquisition strategies for the next few years must weigh the variables that most significantly affect their organizations. Factors like the industry, profile, geography and scale of the business may shift how the Great Resignation looks for these teams.

The Great Resignation that occurred during and after the COVID-19 pandemic upended the normal cyclical nature of labor trends. As the market stabilizes, be prepared to pivot — and hire those who can pivot, too — to find a talent acquisition strategy that best fits your team’s needs.

By David Reed

Courtesy of Sedgwick

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