The concept of lifetime employment has been dying a slow death over the past 50 years. While average tenures in the US have risen in the last few decades as the workforce has aged, the average person will change jobs 12 times in their lifetime. The pandemic dealt another blow. In Europe, government subsidies were aimed mainly at firms that retained furloughed workers. But in the US, most of the benefits were distributed directly to the dislocated workers themselves, widening the schism between workers and employers.
More than 50 million Americans quit their jobs from January 2021 to February 2022. Some call it the Great Resignation. At a minimum, it is a Great Reassessment: Our research found that 58% of workers globally are rethinking their work-life balance as a result of the pandemic. Many workers are reconsidering what they want from a job; firms are reconsidering how they can create the workforce they need for the bumpy and uncertain road ahead. That turbulence includes the job market’s robust recovery from Covid-related dislocations, rising inflation, and the mounting risk of recession.
Recently, much has been done to address pay and flexibility in response to the pandemic and the Great Resignation. Much less has been done to address job security. That’s a mistake. Security is one of the top three factors that matter most to employees, according to a recent survey by Bain & Company on worker preferences (see Figure 1). The factors that define the content of work or the nature of the working environment are important, but much lower in the preference order.
Pay, flexibility, and security matter most to employees
Historically, job security was at the heart of the social contract between the worker and the firm. Long-term trends in outsourcing, offshoring, and automation took an axe to that contract for many blue-collar workers. Digitalization and accelerated automation have been doing the same for white-collar workers in knowledge jobs. When your “human” activity is one algorithm away from being fulfilled by a computer, job security craters. Such insecurity is one of the primary reasons that workers are looking for new jobs.
At the same time, the costs of preparing to enter the workforce have risen far faster than wages in the US. According to the National Center for Education Statistics, the average cost of annual in-state tuition and fees at a public, nonprofit university grew by a staggering 2,580% between 1970 and 2020. The federal minimum wage grew by 353% over the same 50-year period. What’s more, new jobs often demand new skills. Today, many employers believe the skills acquired through formal training and education are only able to keep workers market-relevant for perhaps five years, or even less in highly dynamic job disciplines.
There is good news. Yes, digitalization and technology are changing and displacing millions of jobs, but millions more are being created as the composition of the workforce shifts. These new jobs tend to pay more and offer better career opportunities. Many of them draw on skills like empathy, creative problem solving, judgment, or personal communication—those skills where humans have a distinct advantage over machines.
The challenge is that employers are struggling to fill those jobs, and young people are struggling to attain them. Most roles require more than a high school education, as well as specific skills and experiences that can be difficult to acquire and demonstrate.
Often, the first reaction of firms is to increase external hiring, but this can be slow and expensive in a tight job market. It frequently comes with high failure rates, particularly for experienced workers who may struggle to fit into their new firm’s culture.
Instead, we believe firms need to look within and reskill their employees at a much faster rate than ever before. The changing nature of work and the employee-employer relationship has led to lower engagement in general, with more stress and burnout. According to our survey, 63% of US workers under the age of 35 describe feeling overwhelmed or stressed out. Regardless of the macroeconomy and overall worker participation rates, these secular trends will continue to reduce the quality of work—and of the workforce—if unaddressed. Continuous skill development is vital to reducing job insecurity for workers and creating the workforce firms need.
Leading employers are moving quickly to rethink their views on meaningful credentials and experience, adapt new hiring and talent-development practices, and invest more in developing their future workforce. Some employers—like Walmart, through its Live Better U program, and Amazon, through its Career Choice program—have recently decided to pay in full for employees to receive college degrees or skill certifications from other organizations, such as coding bootcamps. Walmart and Amazon alone will each invest a billion dollars or more to upskill their employees into high-demand professions over the next few years.
Other companies have taken it a step further. Boeing, which also has an extensive tuition reimbursement program, works with high schools and colleges to increase interest in STEM and engineering careers. By targeting those who are still in school, Boeing can help shape their educational curriculum and supplement it with internships and experiential learning. Boeing has also removed degree requirements from some positions, recognizing the importance of nontraditional career paths. This holistic approach is geared toward creating the inclusive and capable workforce that the organization needs today and in the future.
In some industries where future worker shortages are even more severe, companies are relying on backward integration, expanding into training and development. For instance, United Airlines recently acquired a flight school to train future pilots in order to meet projections for the 10,000 new pilots that the airline expects to hire over the next decade.
These leading firms are pivoting from talent-taking to talent-making, cultivating individual jobs and career paths that provide continuous development with just-in-time skill building. This resembles a return to the past: Employers are creating the possibility of lifetime employment or at least lifetime skill building.
The benefits are shared. Employees can more frequently and affordably develop new skills, reducing economic uncertainty. Employers get a workforce that’s more dynamic and loyal.
The firm’s scarcest resources have always been the time, talent, and energy of its workforce. Building and sustaining a high-performance culture by designing jobs, career paths, and work environments that embrace flexibility, interesting work, and continuous learning will be enough to get miles ahead of competition. It could even have the powerful additional advantage of increasing social cohesion, making workers once again feel like they benefit from being part of the system.