A Bureau of Labor Statistics (BLS) report highlights the gravity of the problem. A record-breaking 4.3 million Americans quit their jobs in August 2021. This comes as employers struggle to fill more than 10 million job openings. According to the Wall Street Journal, since last summer, the labor participation rate “has hovered near its lowest level since the 1970s,” despite strong economic and wage growth.
The phenomenon is being driven partly by workers who are no longer willing to tolerate inconvenient or long hours, low compensation, or unsafe working conditions. But the shift may be long-lasting. The Wall Street Journal goes on to say:
“Some economists are concerned that worsening worker shortages reflect longer-term shifts, such as the pandemic-driven acceleration of retirements, that won’t reverse. Many expect the labor shortage to last at least several more years, and some say it’s permanent. Of 52 economists surveyed by The Wall Street Journal, 22 predicted that participation would never return to its pre-pandemic level.”
One sector of the economy has been hit particularly hard. Research from The Pew Charitable Trusts found that school districts, especially those in rural areas, are grappling with a nationwide shortage of school bus drivers: “Bus routes have been shortened or extended, drivers are working longer hours, and in some cases, administrators, mechanics, and even teachers are climbing behind the wheel.” In a joint survey published in August by the National Association for Pupil Transportation, the National Association of State Directors of Pupil Transportation, and the National School Transportation Association, 51% of respondents said their shortage is “severe” or “desperate.”
Why It Matters
The extreme measures employers are taking to respond to the worker shortage are creating new risks in the workplace. CBIZ, one of the nation’s largest HR services providers, reports that businesses experiencing challenges filling jobs with experienced workers have “resolved to hire a large number of inexperienced workers. Unfortunately, this practice comes with workers’ compensation risks. Inexperienced personnel can lack safety training and may be more willing to take unnecessary risks.”
Writing for Business Insurance, Matt Zender, a senior vice president of workers compensation strategy at insurer AmTrust Financial Services Inc., cites an additional problem: “With fewer workers, employees are working longer hours, with the average number of hours worked per week hitting 35 in 2020 — the highest level in the last 15 years. Traditionally, longer hours worked contributes to workplace fatigue, which increases the likelihood of workplace injury.”
These new risks have tangible implications for both employers seeking to manage workplace risks, and workers’ compensation insurers seeking to reduce loss costs.
Earne Bentley, President of Risk Solutions at Origami, has led innovative risk management and claims initiatives for numerous corporations, insurance companies, TPAs, risk pools, healthcare organizations, and government agencies. He offers these thoughts on how risk managers and insurers can approach the challenges of the Great Resignation:
- Promote a safe working culture – Institute ongoing safety training and implement effective workplace safety policies. A safe workplace could be a hiring advantage, helping you attract and retain talent.
- Provide non-monetary incentives – Compensation is not the only driver of employee churn and its associated risks. Flexible time off, flexible work schedules, and flexible locations can help lower stress and the risks of burnout.
- Put technology to work – The right technologies can be an investment in keeping employees safer. For example, telematics to support a culture of safe driving, risk management software to address risk hot spots and help employees feel safer, and telehealth to minimize treatment delays reduce employee stress.
Hiawatha Franks is Division Director, Workers’ Compensation Claims Administration, at the Texas Association of School Boards (TASB). His is one of the many school districts where mechanics have been called upon to drive school buses. He offers these insights:
- Develop a succession planning strategy – Include planning for potential turnover in every role, along with staff development to prepare staff for roles they are interested in moving into. Stay engaged with staff — track what they need and want and how that changes over time.
- Initiate knowledge transfer – Ensure highly experienced staff are sharing their knowledge with other team members well before they retire or leave your organization.
- Be flexible with remote and hybrid working arrangements – Ensure these arrangements align with the long-term goals of your organization and do not negatively impact your organization’s culture.
The Great Resignation reflects a shift in attitudes toward work that may be long-lasting. On the surface, it appears to be a recruiting and retention challenge. But the risks run deeper, from the “brain drain” to overstretched staff to workers in roles they weren’t meant to occupy. How well employers and insurers respond to these emerging risks could have implications for their business success far into the future.
Ultimately, the Great Resignation calls for a renewed focus on employees. Hiawatha Franks offers these closing words of advice: “Leaders have to remember that they need to nurture and develop their staff, because if employees don’t feel a connection to their manager, their team, or their organization, they are more likely to leave.”
To learn more about Origami’s solutions for workers’ compensation, visit our workers’ compensation professionals page or start a conversation with us.