Thanks but No Thanks

Unemployment is near record-high levels. So why are many people turning down jobs?

After laying off one-third of its employees at the beginning of the pandemic, the manufacturer saw its business increase slightly in the summer. So, the hiring manager started going down the list of furloughed employees, asking when each person could start again. A large number came back with a surprising reply: “No thanks.”

The coronavirus instigated an economic crisis that has thrown millions out of work. But many hiring managers say they are finding that they can’t find the people they need for open roles. And while most are lower-paying roles from warehouse stocker to administrative assistant, the void is one of the reasons large companies in multiple industries are struggling to reopen. “It’s been a big problem for large employers,” says Christian Hasenoehrl, a senior client partner and global account leader at Korn Ferry.

Part of the hesitancy among workers is the virus itself. There has been plenty of justifiable fear of catching an incurable but potentially fatal virus at work. Many people who are asymptomatic may still be spreading the virus. Meanwhile, particularly early on, many companies didn’t have personal protective equipment or the ability to test employees for the virus. Experts say fear has been a major cause of not only applicants turning down jobs but also absenteeism by people who have jobs.

Another more controversial factor may be related to the amount of money unemployed workers can currently claim each week. As part of its coronavirus relief packages, Congress and the White House agreed to an extra $600 in weekly unemployment money for people thrown out of work. “That would diminish the urgency to be employed,” says Cory Morrow, a Korn Ferry senior client partner who works with many retailers on compensation and rewards issues. Still, with the benefit scheduled to end this month, and no assurance what future benefits might come from Congress (legislators started negotiating a new relief bill this week), any disincentive appears to fade.

Whatever the causes, the lack of urgency to jump back into the workforce, particularly in retail, is a sharp contrast to the last time there was a big downturn. Before 2008, annual retail turnover among retailers was upwards of 80%. During the Great Recession, that figure fell dramatically to near 50% as workers clung to their jobs, says Craig Rowley, a senior client partner for Korn Ferry and global practice leader in the firm’s Consumer practice.

Before the pandemic, retail turnover had climbed back to near 70%, depending on the retailer, but so far, employee turnover has held steady. More than three-quarters of retailers, 77%, tell Korn Ferry that their employee turnover among both full-time and part-time employees has barely changed.

Experts say deploying everything from hero pay to more assurances about safeguards may help. For remote work, firms can also now extend their hiring to a larger geographic area. Reigniting the momentum that kept many essential workers on the job during the early days of the pandemic will be the challenge for some leaders, experts say.