The Great Resignation and Inflation
The U.S. economy has rebounded from the pandemic most unusually, with two phenomena on the frontline.
The first is inflation. The high demand for goods occasioned by the supply chain disruption during the pandemic has pushed inflation rates to historic highs. As of February 2022, the inflation rate was at 7.9%. Inflation hasn’t been this high since January 1982.
The second phenomenon is the mass exodus of U.S. workers, a trend that has been dubbed the Great Resignation. The unusual pandemic times forced millions of American workers to rethink their work conditions, compensation, and schedule flexibility. Employees are quitting in record numbers as they find better pay from other hiring companies. According to the U.S. Bureau of Labor Statistics, 4.4 million workers quit voluntarily in February 2022.
Like most hiring managers, you most likely have your eyes on these two factors, seeking to know how inflation and the so-called Great Resignation interrelate. Understanding how these two factors connect will help you fine-tune your recruiting strategies accordingly.
The Nexus Between Inflation and the Great Resignation
We are seeing a cyclic relationship between inflation and the Great Resignation.
On the one hand, the high cost of living caused by rising inflation is pushing more employed workers to search for better-paying opportunities while on the job. Given the current U.S. labor shortage, these workers are negotiating higher wages successfully, as most companies are struggling to hire skilled workers. Thus, inflation is one of the reasons behind the Great Resignation.
On the other hand, the Great Resignation is also fanning inflation. As more workers quit in droves amidst an ongoing labor shortage, companies searching for new employees are forced to offer higher wages to attract the resigning workers. At the same time, companies are raising wages to retain their skilled workers.
The result is fierce wage competition among employers, competition that increases inflationary pressure. According to the Federal Reserve Bank of Chicago, the Great Resignation raised inflation by around 1% over 2021.
How Does Inflation and the Great Resignation Affect Your Recruiting Strategy?
As a hiring manager, CEO, or business owner, you have to adjust your recruiting strategy to attract skilled workers who are quitting their jobs. From executive search to recruiting rank-and-file workers, you must factor in the rising inflation to offer an enticing compensation package to all potential applicants.
Don’t forget the other reasons like job flexibility behind the Great Resignation. You may have to rethink your company’s work policies to align with the new mindset of the modern workforce. You’ll also want to revise your entire hiring process from executive recruiting to entry-level recruiting. This can be a handful, given that individual workers have different work expectations. Ghost Mountain can help.
Ghost Mountain : Your Reliable Staffing Partner in an Evolving Workforce
Amidst a workers’ revolution triggered by the Great Resignation and the prevailing desire for higher wages to caution against inflation effects, it can be challenging to attract new employees and retain your current workers. That’s where Ghost Mountain comes in.
At Ghost Mountain, we are familiar with the needs and demands of the modern workforce. We’ll leverage our business consultancy knowledge in multiple niches to help you fine-tune your compensation package to attract the top 1% of talent.