Myth or reality ? – Twin towns

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One of the fastest growing economic trends this year has been the ‘Great Resignation’, a phenomenon linked to the record number of people who left their jobs in April 2021. In July, that record was broken, as he reported. been again in August and September. Media reports have rushed to these “quits” as evidence that American workers are pulling out of the workforce at an unprecedented rate.

Bruce Helmer and Peg Webb

But for anyone considering throwing in the towel at work, or for business owners facing the talent shortage, the reality is more complicated.

THE GREAT RESIGNATION IS NOT TO LEAVE

Most of the so-called “quits” are not about people giving up their jobs, but about a job change to better and better paid positions. This is certainly the case with the hospitality industry, which, along with healthcare and technology, has seen more quits than any other sector of the economy. But the flip side is interesting: The accommodation and food services industry added 2 million employees in 2021, more than any other industry, according to a recent article in The Atlantic.

We are also seeing the highest level of job vacancies on record, in most sectors, which remain largely vacant. Consumers, who pushed back on shopping during the pandemic, are eager to spend. This, along with supply chain disruptions in manufacturing and transportation, creates huge demand (and higher prices for almost everything). With so many opportunities, people are willing to take their chances by quitting their current job, especially with employers who are reluctant to offer remote work, or if those jobs are inherently low-paying, high-wage positions. rotation.

IT’S DIFFERENT THIS TIME

What is different between the Great Resignation and the Great Recession of 2008-2009 is that for many workers, their overall financial situation is much better today. As Harvard labor economist Lawrence Katz points out, an expanded social safety net and (now shrinking) stimulus payments are in place to support the unemployed who are reluctant to return to the office or the workplace. The wealthy continue to perform well on the stock market and have increased their household savings. But even workers at the lowest income and wealth distribution levels have come through this period in relatively better shape than previous recessions. Some take the opportunity to focus on providing care, to invest in retraining or opening new businesses – or simply wait and look for something better.

What is less clear is whether the sidelining of so many workers is temporary or permanent. As Katz points out, the slowness with which large numbers of the unemployed are returning to the workforce is particularly puzzling, given the number of job openings, even as stimulus payments dry up and pressure mounts to restore their incomes.

Clearly, employers in many industries will need to be more competitive in terms of wages and benefits to attract and retain workers, at least in the short term. They will also have to review their conception of the traditional employer-employee relationship with regard to flexible working arrangements, the design of a pension scheme, retraining of professional skills, etc. Employers who are empathetic to the challenges their employees experience due to hybrid work relationships, financial stress, caregiving responsibilities, and who can tailor their benefit models to better support the overall well-being of their employees , may be better placed to compete for talent.

PENSION RATES ARE RISING, BUT NOT DRAMATICALLY

There are three reasons why workers leave the workforce: they can quit voluntarily, they can be laid off or made redundant, or they can announce their retirement. Indeed, the retirements announced among adults aged 55 and over increased during the pandemic and are the cause of some exits from the labor market.

Half (50.3%) of seniors are inactive due to retirement, according to the Pew Research Center, in the third quarter of 2021, an increase of 2 percentage points from the third quarter of 2019. Unlike the Great Recession . , while falling asset values ​​(including house prices) have prompted many older workers to continue working and postpone their retirement, the latest figures suggest that workers over 55 who have graduated minors with a bachelor’s degree are retiring at a rate three times that of workers with a high school diploma or less.

RETHINKING THE WORLD OF WORK

Business owners and employees continue to face a wide range of work-related challenges. As the relationship between bosses and worker bees evolves, the two will need to bridge the understanding gap as to what matters most. It is possible that the reluctance of some people to stay in or return to the workforce reflects a permanent radical change in people’s values. We wouldn’t bet on it, though. American culture has always been industrious and focused on creating value. What we think is happening is more of a realignment of what matters most to people than a big resignation.

Plus, as tempting as it may be to step off the ship of your current job, there are many complex questions you need to answer before you retire. As we wrote in this column in September and October, there are as many good reasons to retire as there are terrible reasons. And the best reasons have nothing to do with having more free time or less commuting.

Instead, the desire to retire should be about freeing up time to do the things that matter to you, supported by a resilient, well-funded portfolio that can handle your spending needs, your expected tax burden, and planning. of your inheritance throughout your life. Deciding to quit a job for immediate gratification, instead of objectively thinking about the emotional and financial aspects of life after work, may not be in your best interest.

Finally, whether you are a business owner or a pre-retiree, an experienced financial advisor specializing in both employee benefits and wealth management can help you assess how and when might be the best time to shift gears on your plan. pension or benefits.

The opinions expressed in this document are for general information only and are not intended to provide specific advice or recommendations to an individual.

Bruce Helmer and Peg Webb are Financial Advisors at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM Sunday Morning. Email Bruce and Peg at [email protected] Securities offered by LPL Financial, member of FINRA / SIPC. Advisory services offered by Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.


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