This Labor Day we need to rethink the employer-employee compact

Once upon a time, before the advent of mattress sales and before it became the unofficial endcap to summer, Labor Day was a day for appreciation and reflection on the value and meaning of American work.

Today, with 10.1 million jobs unfilled – the highest in 21 years – it’s time to return to that thinking. This Labor Day, it’s time to reevaluate the American employer-employee compact – economic growth depends on it.

Over the summer, hotel and restaurant workers quit in record rates – even as average pay has climbed significantly, with increases we haven’t seen since the early 1980s. Meanwhile, manufacturing plants are downshifting production as demand has surged, and packed container ships have idled in the ports of Long Beach and Los Angeles due to lack of labour.

Call centres, especially in healthcare segments are reporting huge turnover numbers due to workload and stress levels and new terms like the Great Resignation have been coined. Workers of every collar are re-evaluating the overall satisfaction that their jobs bring and finding the freedom to walk away when the fulfillment isn’t there. The “quit rate” surpassed the 20-year high this spring and continues to rise.

Some would say it’s a cyclical trend, driven by government stimulus and eviction moratoriums that sought to goose the economy but instead it created a labour shortage. But our labour challenges will not be solved when the stimuli disappear.

The signs posted on nearly every business in every resort town and city this summer – “Help Wanted!” – underscore a reality that’s more than a cyclical trend, it’s a structural change in the economy. The power dynamic has shifted from employer to employee – a shift that was unfolding well before COVID-19. Counterintuitive to many, COVID-19 accelerated it.

Population declines, immigration policy, skills training opportunities, technology and the newfound flexibility and freedom that workers discovered during the pandemic have combined to shift the balance of power from employer to employee. Not since before the Industrial Revolution have we seen such a transfer of power.

Therefore it’s time to think deeply once again about the value of the modern workforce, and exactly how we demonstrate the worth that we assign to work. What is needed is a new compact – one that employers design with more than just wages and safety in mind.

A new compact will account for the near-universal desire for greater autonomy and flexibility in the workplace. It’s a misnomer that these benefits can only be accrued by “do-from-anywhere” professional services jobs.

For example, one of our more forward thinking clients is now offering a “build your own schedule”, in which candidates can pick between one to five days they wish to work. Another client is considering offering a parent friendly 9am-2pm, which allows those who have childcare coverage for standard school hours to participate in the workforce. Both are warehousing clients.

Technology provides the means to adopt more creative approaches to scheduling, shift-swapping and responsibility-sharing, and employers should be proactive about using it to create a more flexible culture that attracts talent.

A new compact will focus on benefits that go beyond gimmicks or quick hits for HR trade publication headlines, but rather are practical, useable, effective, and resonant. More and more employers are exploring college degree earning programmes. Our data shows that the number one reason employees decline to participate in such programmes is lack of time. In a new compact, such benefits will account for this reality with “learn while you earn programmes” that work. Also, given our current skills mismatch, this is a programme that employers universally need to get right.

Similarly, when rolling out mental health and employee wellness programmes, employers should ask themselves whether these initiatives are simply a box checking exercise, or are they genuine manifestations of a business’ concern for its workforce?

To lure workers back to the workplace, employers need to start thinking about the whole employee, the life they lead and the values they hold, not just the individual they see for an eight hour day or a dinner or lunch shift. Employers need to be partners in the lives of their employees – both inside and outside of work (physical or virtual).

The great awakening of the modern workforce, where employees seek a better work life balance, greater flexibility, higher wages and place greater emphasis on their personal health and wellbeing, is a cultural and economic shift that’s here to stay. We need a new compact to reflect this new reality. It’s the right thing to do for our economy, and the long-term growth that we need. And as we contemplate the meaning of Labor Day, it’s the right thing to do to honour the value of America’s workforce.