As COVID-19 has changed the way people think about work, a clear mismatch has emerged between what employers need and what workers want. The story is not solely an economic one — in fact, the psychology of today’s worker has fundamentally changed over the last eighteen months. Talent leaders have to think differently about culture, recruitment, advertising, hiring, onboarding and what they can really offer as a workplace in order to grow and retain a strong workforce.


Let’s stop guessing: Here’s what’s truly changing about work

The mindset of today’s workforce, according to data

By Professor Peter Cappelli, Director of the Center for Human Resources, Wharton Business School

As we head into another season of COVID-19, countless analysts are trying to predict shifts in the labor market or translate the latest jobs reports into a clear roadmap for what’s ahead. At the same time, evidence shows businesses struggling to hire and workers dissatisfied with the market they see. 

But what if that current evidence doesn’t tell the whole story? 

There seems to be a mismatch between what employers need and what workers want as revealed by new data from Indeed. The mismatch points to a shift  in the mindset of the workers. 

So the question is: Has the pandemic rewired worker preferences? 

The way to answer this is to explore what we know about

  1. How today’s workers have experienced the pandemic so far,
  2. Job seeker behavior throughout the pandemic,
  3. Lessons from history and 
  4. Myths and facts about today’s labor market.

From there, we can glean context, lessons and recommendations for how employers can meet workers where they are now in order to grow and retain a strong workforce.

The pandemic experience at work

New data from Indeed collected in March 2021 shows that the pandemic has changed how employees feel about work, and not always in the ways you would expect. 

As the chart below shows, many reported feeling more energized; greater senses of trust, support and purpose; and even increases in learning.

The pandemic also changed what employees care about most. Another analysis from Indeed found that flexibility and having a good manager became more important, while having a sense of purpose, achievement and learning became less important. 1

In the middle of such a devastating crisis, what, exactly, made people feel relatively more positive? What specifically prompted these shifts in priorities? One answer is simply that perspective changed. Fifty million people — almost one-third of the labor force — were unable to work because of the pandemic early in 2020.2 Those lucky enough to keep their jobs may have felt better about them overall, knowing that it could have been much worse. Camaraderie helps too — and people bonded over the collective struggle against COVID-19, likely leading to some of the improved attitudes reported here. Yet those factors represent a moment in time. And that moment will pass, if it hasn’t already. But other changes that led to these results can be sustained — and that provides an opportunity for employers.

Working from home, for those who could, fundamentally forced managers to work differently with their teams.

Employers had to trust their employees and in the process back away from “face time” and micromanagement. Likewise, employees had much greater control over what they did and when they did it. Smart employers required supervisors to check in on their subordinates and build, or rebuild, relationships with them — something that often gets lost in office culture but can be crucial to employees’ feeling valued and supported. This kind of management — more trust, flexibility and support driven by genuine concern and desire for connection — can and should continue, even after workplaces adjust to something more “normal.”

As many as 70% of those who said their jobs could be done remotely were working from home during the pandemic, and that preference has lasted for many.3 Some surveys suggest that many employees say they would quit if they could not work from home.4 Others show that hourly workers would be willing to take about 9% lower pay to have the ability to work from home.5

But the ability to work from home is not the only benefit that employees would take a pay cut for. The chart below shows the percentage of employees willing to take a 10% pay cut to get each benefit, including training opportunities, paid time off for community service and extensive mental health benefits. The fact that employees are willing to take a cut in pay to get training should be a wake-up call about how little training is going on now and how much is needed.

The interest in mental health benefits may well suggest a greater need as a result of the pandemic. This focus on things beyond just pay shows up in recent job search data too. Indeed data shows that the job attribute “back-up child care” rose 446% in job searches from July 2019 to July 2021. The takeaway here is that job seekers are looking well beyond compensation as they search for jobs.

Employers should think broadly about what they have to offer, advertise it and act in order to meet candidates where they are now.

Job seekers and COVID-19

An Indeed survey of US workers, both employed and unemployed, shows some surprising findings about their interest in finding new jobs. Overall, more of the unemployed actually say they are not open to looking for a new job, and more of those with jobs are searching, even if in a non-urgent manner (see graph below). The question, of course, is why.

So Indeed researchers asked those who were not looking urgently, why not? As you can see in the chart below, many cited fear of COVID-19, care-giving responsibilities, being prepared for a lay-off (“financial cushion”) or the fact that many families are now living on one income. Interestingly, unemployment insurance payments, which have been extended significantly in the pandemic, were the least important factor, cited by less than 10% of respondents.

In fact, some states ended their extended unemployment benefits precisely to push recipients back to work. Yet an Indeed study found that, while job searches did spike in those states around the day when the benefits were cut, it dropped back to its previous level within a week. Similarly, another study found that ending the extended unemployment insurance plans did increase employment but by only 4%, a relatively trivial amount.6

So what else drove this lack of urgency in job seekers? 

Some were not searching for a new job because they were expecting to be recalled to their previous ones.7 Many of those who have been out of work for a year and a half have learned to adjust even if the adjustments were not pleasant. For example, 2.6 million young adults moved back in with their parents during the pandemic, making this era the first time since the Great Depression that a majority of those ages 18 to 29 now live with a parent.8 These young people are not necessarily desperate to take any job just to survive. This ability to adjust and find ways to get by absent a truly great job may be the most important attitudinal shift in how many are thinking about work. It represents a new perspective on what role work might play in someone’s life.

But the most important reason that the unemployed are not searching aggressively for new jobs is that they are waiting for more and better opportunities. Consider a survey from the Federal Reserve in Dallas asking those who lost their jobs during the pandemic whether they would go back to their previous jobs and pay (graph below). Perhaps counterintuitively, their willingness to do so declined as the pandemic went on — even as they remained unemployed.9 While that behavior seems irrational, at least economically, it may reflect what psychologists call “escalating commitment“:

The longer we have been out of work, the more committed we likely are to finding a better job before going back to work.

Interviews and reports from workers in the restaurant industry support this. They show that many do not want to return to their old jobs or even to new jobs in that industry because those jobs were bad ones, with low pay, long hours and often abusive management. Having a break may have clarified all the things that they did not like about working in the restaurant industry. 10 As people spend time away from work, they reevaluate what they want out of a job and become even more committed to finding something that really fits physically, mentally and financially. That holistic approach to job hunting is a new characteristic of today’s job seekers. Employers can respond by thinking differently about what a workplace has to offer and how a job might fit into someone’s life. 

Lessons from history

Even as the vaccines have brought hope, the delta variant has renewed fears, and many employees are rethinking what level of risk is acceptable to take on behalf of a job. 

As employers think about how to manage this next stage of COVID-19, it may be helpful to look back at previous pandemics. In the United States, the closest analog is the Spanish flu of 1918-1919, which killed 50 million people worldwide, three times more than World War I. One-quarter of the US population got it and 675,000 died, proportionately about four times more than COVID-19 to date. The experience of battling that pandemic sounds very contemporary — decentralized responses and local battles between the public-health concern of quarantining and business concerns with keeping things open. Many cities imposed ordinances with fines requiring that masks be worn in public, and there were also protests against these regulations. Extensive efforts during the pandemic to discourage people from kissing and shaking hands had some effect but didn’t last long. Neither did the fear of urban areas where infection risks were greater. Cities boomed when it ended. In fact, society rebounded rather quickly. 11

The most recent pandemic was the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak in southeast Asia, which was less infectious but far more deadly than COVID-19, killing 34% of those infected. In Singapore, after about a month of shutdown, the country reopened with a coordinated campaign to get people into the public again, and society shifted quickly back to its pre-SARS behavior. 12 But many individuals reported post-traumatic stress disorder and depression that continued afterward. 13

Society will also rebound from COVID-19. The lesson for employers is the need for mental health support.

If people in Singapore reported high rates of PTSD after one month of shutdown, imagine the havoc that COVID-19 has had on the mental health of so many Americans. The evidence is already there — COVID-19 has brought with it increased rates of depression and anxiety, and many scientists worry that it will continue even after the pandemic is over.14 That shared trauma must be a factor in how employers think about good workforce cultivation and management. Employers who prioritize mental health — in culture, resources and management style — will have a happier, more productive and more stable workforce going forward.

The pandemic labor market: Myths and facts

As employers think about the future of work, there is no shortage of stories in the media about what is driving today’s labor market challenges. Yet many of these stories don’t show the whole picture. 

Myth: The number of job openings signals a fundamental change. 

Fact: It’s not the number of job openings, but rather the speed at which they opened, that presents the biggest challenge for employers.

The truth is, there are always a lot of vacancies. Even in the worst of the COVID-19 job cuts, in March 2020 when about 14 million people lost their jobs, there were still 6 million open vacancies and 5 million people hired to fill them.15 Vacancies tend to stay open for a while simply because the recruiting and hiring process takes time — more than 40 days on average in the U.S.16 It is also common to hear that we face “the most vacancies ever” without noting that the data shows that, as the economy grows, we also have the most jobs we’ve ever had almost every additional year. But that larger pie also means more vacancies, all else equal. 

Yet it’s true that this moment is a unique one. As of July 2021, there were 11 million job openings, more than any time in the past 20 years. In July 2019, there were 7.2 million vacancies, also a substantial number. What is different now is that, as vaccinations rates rose and restrictions lifted, the increase in job openings happened quickly. 

Consider the construction industry, which did not experience a shutdown during the pandemic.  Its vacancies as a percentage of jobs in February 2020, just before the pandemic, was 3.8%. A year later, with the pandemic raging, it was at 3.9% — barely a difference.17

In contrast, food service and accommodation, where there were substantial restrictions, saw the percentage of vacancies virtually double when restrictions began to lift.18 In short, while there are a lot of openings now, the situation is not as indicative of systemic change as news reports suggest. It is a temporary situation, albeit an unprecedented one caused by a unique shock to our economy. But it’s not a structural change; rather it’s a phenomenon driven by the rapid reopening of some industries.

Myth: There is a shortage of workers to fill open jobs.

Fact: There are millions of unemployed, talented people looking for work if you think broadly about recruitment.

Another myth is that there is a shortage of people who could do these jobs. There are still a lot of people unemployed (8.4 million in July 2021), which is defined as without a job and actively looking for a new one. Another 5.7 million people want a job but aren’t looking and aren’t counted as unemployed, and 4.5 million people want a full-time job but can’t get one. That is a large pool of people able and willing to work.19    

Yet many vacancies are filled by people who already have jobs.

Even in the heart of the pandemic, from May 2020 to May 2021, the US filled roughly 73 million jobs out of a workforce of 160 million. Sixty-four million people left their jobs in that period, creating vacancies that had to be filled and a large pool of individuals who filled them — but most of these individuals were already employed.20 In fact, employers are reluctant to hire the unemployed, despite no good evidence that the long-term unemployed cannot step back in and be productive again.21 Still, studies show that, when otherwise identical resumes are sent to employers, candidates who have been unemployed long-term get far fewer call-backs and interviews.22 Here, the lesson is that employers should make more efforts to focus recruitment on both employed and unemployed candidates and tap into the talent of millions of productive people who are ready to work, yet often overlooked. 

Myth: Wages are rising dramatically, yet the worker shortage persists.

Fact: Wages are not rising dramatically, at least on average. 

A shortfall between a big demand jump and a modest increase in supply should not necessarily cause a shortage in a market economy. It should cause prices — in this case, wages — to rise.  

There are many stories about higher wages, especially at the lower end of the pay scale. But while many employers are paying more, the truth is that, for today’s job seeker, it is not necessarily enough. The employment cost index, which measures what employers are paying, was up 2.9% year over year in July 2021 versus 2.7% the previous year, a very modest increase.23  

At the same time, the consumer price index was up 5.4%, so real wages were actually falling by quite a bit. In other words, the idea that wages are rising dramatically just isn’t true.24 At the same time, workers are living in a world where their money isn’t going as far as it used to due to rising costs of goods and services. For employers, this means looking beyond just signing bonuses and modest wage increases, instead considering what’s possible in compensation in order to attract and retain the workforce you need and want.

Myth: Current quit rates signal a fundamental change. 

Fact: Quit rates are varying across industries, with some significantly higher due to changes over the last eighteen months but many at similar levels to recent years.

There has been no shortage of stories about a “Great Resignation” in the workforce. But something more complex is at play. In part, these stories are being driven by surveys asking people if they intend to quit. “Intention to quit” is a well-researched topic in psychology, and it does not relate closely to actual quitting. The reason in part is that it takes no energy to report, “I want to quit,” on a survey.

For most everyone, we need a better job in hand before we actually quit.

The numbers tell a more nuanced story too. Overall, quit rates have gone up, but only by about 1.5 percentage points — from a monthly rate of 3.3% in July 2019 to 3.8% in July 2020 and to 4.8% in July 2021.25 It is higher now but not dramatically so. Still, some sectors have seen high quit rates. Quit rates in retail, for example, are up almost one-third from their 2019 average in July 2021.26 Meanwhile, others haven’t seen any meaningful change. Finance and insurance, for example, has remained relatively steady, with a 1.2% July quit rate.27

In sum, quit rates always jump up when more jobs are available, as they are now. But across the board, quit rates are lower now than we might expect, perhaps because COVID-19 and other fears are holding back some job searches. 

Top takeaways for employers

Despite these persistent myths, there is clearly something new going on in today’s labor market. In fact, the most compelling evidence that something different is happening in the workforce comes from new, forthcoming Indeed analysis about job searches, which mainly looks at people who are already employed. While people continue to look at job ads, Indeed data indicates that the percentage who actually apply has dropped dramatically during the pandemic. For example, retail saw a 59% decrease in applications between July 2019 and July 2021, while logistics (planners, coordinators, analysts, etc.) saw a 68% decrease over that same time period. The same trend is happening in the percentage of job seekers responding to employer requests for resumes. In healthcare, for example, 26% fewer job seekers responded to resume requests in July 2021 versus before the pandemic in July 2019.

What is unique and arguably unprecedented in the current moment is that so many employers want to hire so many people at the same time, while many workers are waiting to change jobs or reenter the workforce.

And this brings us back to the question of whether or not the pandemic has rewired worker preferences. The answer is yes, at least for a while. Employed people are reluctant to change jobs. Employers remain hesitant to hire long-term unemployed candidates. And workers everywhere are rethinking what is important to them in a work environment. 

As a result, employers must think differently about advertising, hiring, onboarding and retaining a strong workforce. Here are some strategies to do that:

Think broadly about recruitment: Employers often have a bias against long-term unemployed workers, yet those candidates can be just as successful and productive as employed ones. Make a concerted effort to focus recruitment broadly. Train hiring managers and HR professionals to resist the implicit bias against unemployed, but truly qualified, candidates. 

Think beyond compensation: Evidence shows that benefits like childcare, mental health resources, training opportunities and flexibility are just as valuable to employees as money. Be holistic in how you think about what you have to offer — consider culture, inclusivity, family-friendly policies and other nontraditional benefits that may matter to candidates now more than ever. 

Be prepared to pay more for talent: Money isn’t everything, but of course it matters. With consumer prices going up and pandemic circumstances like job loss leaving many families strapped, a modest increase may not be enough. Think about what you can realistically offer, recognizing that the labor market is tight, and advertise accordingly. 

Prioritize mental health: Americans are going through a shared and unprecedented assault on their mental health, and it’s likely to continue even after the pandemic ends. Show that you understand that by offering extensive resources, mandating that managers check in on their teams and fostering a culture that encourages cultivating good mental health practices.

Teach managers to lead with trust, support, flexibility and autonomy: Working from home forced managers and employees to interact differently with one another — less face time, less micromanagement and fundamentally more trust. Employees want to have the flexibility to manage their own work and their own time, regardless of whether or not they are in the office. It costs nothing to give — and in return, you’ll have an easier time retaining your people. 

Make safety a top concern: As the delta variant continues to spread, safety remains a huge priority for workers. Show commitment to employee safety with regular, informed and sensitive communication, policies and action. 

Hire a chief medical officer: A CMO or professional consultant can stay up to date on the latest information and help you and your employees make safe, informed decisions about COVID-19 and other concerns. 

Educate candidates about the market by showing you can compete: Some candidates may be waiting on better offers. Show them they are not missing out by proactively telling them what’s out there. If possible, promise that if competitors raise wages in the future, you’ll do the same automatically. 

Show flexibility from the beginning: Some good candidates cannot start the job right now. Give them more time — and the flexibility to do what they need — to lock them in now rather than hoping they will still be there later. 

Maintain relationships with former workers: Just-in-time hiring is expensive. Employers who keep relationships with laid-off workers or keep them on furlough are able to restart faster when it’s time to expand. 

Reengage employees returning to the office: These employees need to be reoriented to the values, culture and workplace environment. Think of it as a chance to deepen your relationship. 

Think carefully about work-from-home policies: Not everyone wants to work from home, and it can be much more challenging to manage a group working remotely than one at the office. There may be other, more subtle changes that give employees flexibility over their schedules, which is the underlying demand. Survey your employees to find out what they really want and use that to inform your policy decisions.

Conclusion

In the middle of such an unprecedented global event, it’s impossible to tell exactly what the future of work will look like. But data gives us a sense of what’s happening. Going back to the four things we’ve explored, here’s what we know:

  1. What today’s workers have experienced over the last eighteen months has changed their priorities and their values. Employers can respond to this by thinking beyond compensation to mental health benefits, flexibility, childcare options, overall culture and more in advertising, recruiting and hiring. Employers can retain employees by sustaining the best of the management techniques that emerged out of the pandemic — leading with trust, support and autonomy for their teams.
  2. Meanwhile, job seekers are experiencing a similar evolution in their thinking. Many are waiting to jump back into the job market, holding out for a job and a workplace that fits well into all aspects of their lives, rather than just more of the same. 
  3. History shows us that, above all, society will bounce back from this as it has from pandemics past. But the collective trauma of the experience is a widespread phenomenon, and employers need to address it. That means thoughtful mental health offerings, genuine efforts toward building connections among colleagues and strategic reorienting for those workers who are returning to the office after months away. 
  4. Finally, the media narrative oversimplifies the reality. It’s important for employers to look beyond the headlines, think long-term, look at the data, talk to peers on the front lines of talent management and think carefully about the kinds of systemic changes required to succeed in this new world of work.

The views and opinions expressed in this post are those of the author and do not necessarily reflect the official policy or position of Indeed.


1 Forrester Consulting on behalf of Indeed, Indeed Workplace Happiness Report, a commissioned study (n=4,033 US adults), (2021).
2 Bureau of Labor Statistics, Supplemental Data Measuring the Effects of the Coronavirus (COVID-19) Pandemic on the Labor Market, September 10, 2021, https://www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm.
3 Kim Parker, et al., How the Corona Virus Has – and Has Not – Changed the Way Americans Work (Pew Research Center, 2021).
4 For example, a survey of professions found 29% reporting this sentiment, while 62% said that, in future job searches, they will prefer employers offering remote-work options. Max Woolf, Is Remote Work Here to Stay? (LiveCareer, January 2021), https://www.livecareer.com/resources/careers/planning/is-remote-work-here-to-stay.
5 Alexandre Mas et al., Valuing Alternative Work Arrangements (American Economic Review 107, no. 12, 2017), 3722–3759.
6 Kyle Coombs et al., Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment, and Consumption (Working Paper, August 2021). Sarah Chaney Cambon, et al., States that Cut Unemployment Benefits Saw Limited Impact on Job Growth (Wall Street Journal, September 1, 2021).
7 Robert E. Hall, et al., Unemployed with Jobs and without Jobs (NBER Working Paper No. 27886 October 2020, Revised June 2021).
8 Richard Fry, et al., A Majority of Young Adults in the US Live with Their Parents for the First Time Since the Great Depression (Pew Research Center, September 4, 2020).
9 Robert S. Kaplan, et al., The Labor Market May Be Tighter than the Level of Employment Suggests (Dallas Federal Reserve, 2021), https://www.dallasfed.org/research/economics/2021/0527.
10 The NY Times reported many such stories in 2021 including: Peter Hoffman, Restaurants Will Never Be the Same. They Shouldn’t Be, (New York Times August 10, 2021).
11 Laura Spindly, Pale Rider. The Spanish Flu of 1918 and How It Changed the World (New York, Public Affairs Press, 2017). John M. Barry, The Great Influenza: The Epic Story of the Deadliest Plague in History, (New York, Penguin Books, 2005).
12 Chia Mui Hoong, Coronavirus: Fighting a Psychological Battle (The Straits Times, February 9, 2020).
13 Samatha K. Brooks, et al., The Psychological Impact of Quarantine and How to Reduce It: Rapid Review of the Evidence (The Lancet 395(10227), 2020), 912-920.
14 Alison Abbott, COVID’s Mental-Health Toll: How Scientists Are Tracking a Surge in Depression (Nature, February 3, 2021), https://www.nature.com/articles/d41586-021-00175-z.
15 Bureau of Labor Statistics, Job Openings and Labor Turnover: March 2020, https://www.bls.gov/news.release/archives/jolts_05152020.pdf.
16 Information on how long vacancies stay open is not collected by the US government and comes from proprietary surveys. The best source has arguably been the periodic surveys conducted by jobvite.com, which put the average just below 40 days before the pandemic. Anecdotal reports indicate that it is up considerably since then. See Jobvite 2019 Recruiting Benchmark Report: Fuel Optimization Efforts with Exclusive Industry Data, https://www.jobvite.com/wp-content/uploads/2019/03/2019-Recruiting-Benchmark-Report.pdf.
17 Bureau of Labor Statistics, Job Openings and Labor Turnover: February 2021, https://www.bls.gov/news.release/archives/jolts_04062021.htm.
18 Ibid.
19 US Bureau of Labor Statistics, The Employment Situations: July 2021, https://www.bls.gov/news.release/archives/empsit_08062021.htm.
20 Bureau of Labor Statistics, Job Openings and Labor Turnover: May 2020, https://www.bls.gov/news.release/archives/jolts_07072020.pdf. BLS data from the August 2021 report suggests that only about one-third of vacancies are filled by the unemployed.  Government data does not report statistics on  employer-to-employer moves, but researchers who generated estimates indicate that they would account for about half of all hires. For general evidence on employer-to-employer transitions, see Gizem Kosar, et al., Just Released: Are Employer-to-Employer Transitions Yielding Wage Growth? It Depends on the Worker’s Level of Education (Liberty Street Economics of the Federal Reserve Bank of New York, September 28, 2018).
21 When the number of jobs in the economy expands significantly, more unemployed are drawn into jobs, but the adjustment is not fast or automatic.  More hiring and turnover can be accommodated with the same size workforce simply by keeping vacancies open longer, by expanding the use of overtime among existing employees and so forth rather than dipping into the ranks of the unemployed to fill existing vacancies.
22 Oberholzer-Gee, Felix, Nonemployment Stigma as Rational Herding: A Field Experiment (Journal of Economic Behavior & Organization 65, 2008), 30-40.  Kory Kroft, et al., Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment (Quarterly Journal of Economics 129(2), August 2013), 1123-16. Stefan Eriksson, et al., Do Employers Use Unemployment as a Sorting Criterion When Hiring? Evidence from a Field Experiment (American Economic Review 104, 2014), 1014-1039.
23 Bureau of Labor Statistics, Employment Cost Index Summary (July 30, 2021), https://www.bls.gov/news.release/eci.nr0.htm.
24 Bureau of Labor Statistics, Occupational Employment and Wage Statistics, (July 30, 2021),  https://www.bls.gov/oes/current/oes353023.htm. There is a lot of variation across industries, of course, and the hottest for wage growth was “accommodations and food services” or hotels and restaurants, which were reopening and in some cases needed an entirely new staff.  In the quarter ending in December 2020, before the pandemic, they were up modestly at an annual rate of 2.4%, below the average for the economy. They jumped considerably in the quarter ending in March 2021, when hiring jumped up again to an annual rate of 6% and now in July to over 10%.
25 Bureau of Labor Statistics, Job Openings and Labor Turnover: May 2020, https://www.bls.gov/news.release/archives/jolts_07072020.pdf.
26 Bureau of Labor Statistics, Job Openings and Labor Turnover: July 2019 and July 2021, https://www.bls.gov/news.release/archives/jolts_09102019.htm and https://www.bls.gov/news.release/archives/jolts_09082021.htm.
27 Bureau of Labor Statistics, Job Openings and Labor Turnover: July 2021, https://www.bls.gov/news.release/archives/jolts_09082021.htm.