Another week, another befuddling batch of employment numbers. In November my home state of Georgia set an all-time record low unemployment rate of 3.1%. Several others aren’t far behind. In normal times, this would be seen as cause for celebration.
But these are not normal times. There’s a tremendous amount of disruption in the jobs market, enough to have generated a trendy nickname - the Great Resignation of 2021. Politicians often promise “a land where everyone who wants a job can get a job.” Why is everyone so unhappy now that we’ve seemingly reached that point?
Economists maintain it’s a sign of a healthy labor market when workers are willing to quit their jobs, presumably in pursuit of a better one. Not only does this reflect confidence that greener pastures exist, it opens up positions enabling upward mobility for others.
Following the Great Recession of 2008-10, however, even after employment levels rebounded many workers scarred by the experience clung to the stability of their existing paychecks rather than venture out for advancement (after all, when layoffs hit the last to be hired are usually most at risk). The recovery wouldn’t be complete, so the theory went, until we saw a return to fluid job movement.
Enter the Great Resignation of 2021. Is there any doubt that anyone who wants a job today can find one? Yet somehow the scenario isn’t as rosy as imagined.
(This will eventually relate to credit unions and fintech- I promise.)
Obviously, an entirely new layer of disruption entered the equation in 2020. More than 2 million Americans are missing from the labor force compared to pre-pandemic levels- actually more, since in ordinary times the workforce increases by roughly 1 million annually.
One quick takeaway- which has been apparent for some time- is that the traditional unemployment rate is a lousy indicator of economic health. The metric’s denominator is people employed or actively looking for work. Even though fewer people are now working, since they’re not currently in the job market, voila! The unemployment rate declines. Conversely, if those two million people suddenly declared themselves ready to report, the unemployment rate would rise even if half of them were hired instantly.
I also suspect that traditional measures fail to accurately capture nuances of the modern day workforce. The gig economy was already flourishing prior to the pandemic- it no longer requires a business license to turn a side hustle into an adequate income stream. Whether enduring temporary layoffs or learning to navigate a new work-from-home reality, perhaps some of these service workers realized over recent months they could earn roughly as much independently, with more flexibility (psst- some of these people may also be working “off the books”).
Typically Americans applaud such entrepreneurial spirit. Amid the current upheaval, however, it may cause resentment as the legacy economy struggles to adjust to the disruption.
Which brings us to the real kicker- businesses, including credit unions, have been pursuing artificial intelligence and robotic process automation initiatives as a substitute for roles on the lower rungs of the pay scale. In the long run these projects will lead to higher value, better paying and more fulfilling jobs. In the short run, however, some workers would inevitably be displaced due to skill set mismatches. Tellers and call center reps are no doubt reading about conversational AI and the “death of the branch” nearly as often as management. To the extent that CUs face a labor shortage in frontline roles, is it possible this talent believes they’re jumping ship before they get pushed?
Of course labor markets are far too complex to summarize in 600 words- we haven’t even touched upon the chronic shortage in tech talent to address growing needs like security and open banking. But if credit unions can find ways to preserve a sense of workplace community equal to their member value proposition, and enunciate flexible career paths built to outlast essential tech upgrades, the movement will thrive well beyond the Great Resignation.