It’s safe to say that the COVID-19 pandemic significantly disrupted the labor market, but when the first chaotic waves of lockdown rippled across the globe, it became clear that the labor market would not automatically bounce back. Companies started making large-scale layoffs, unemployment offices were clogged with applications, and front-line workers were confronted with a dark reality of compromising their health for a paycheck (prompting many to quit their jobs in droves).
As time marched on, the companies that had to fire large numbers of workers needed to rehire to compete in the post-pandemic market. Anticipating a flood of applications from both unemployed office workers and formerly deskless employees looking to change careers, businesses began a hiring rampage. But then, crickets. Even worse, those who had clung to their jobs to survive the uncertainty started looking elsewhere once pandemic restrictions eased. Again, economists had known that it would take the labor market some time to recover, but when nearly 69 million Americans quit their jobs in 2021, it proved that it would take years for the job market to balance out.
You can thank Dr. Anthony Klotz, an organizational psychiatrist and professor at Texas A&M University, for coining “The Great Resignation” when he first predicted that workers would quit en masse once economies gradually began to reopen. Klotz noticed four different trends that would snowball into higher resignation rates in the year that followed the pandemic’s onset. The first was a re-evaluation of priorities and values among employees which was the partial cause of the second, a widespread burnout causing mass resignations. This was coupled with a backlog of resignations as some employees chose to stay in their positions due to the uncertainty brought on by the pandemic and a resistance among some employees to give up the flexibility that came with remote work. Not only that, the barrier to entry for workers to transition from one job to another was dramatically reduced when workers were performing their jobs from their home offices. Suddenly, job-hopping became easy.
The COVID-19 pandemic radically changed the way people work, so it’s no surprise that it had a seismic effect on worker’s attitudes. The reality was that while the job market was abundant, the workforce was too traumatized to step back into the “old” way of working (as in physically coming to the office five days a week for the same salary), and the leverage was flipped. Companies had to get competitive to not only attract qualified workers, and the sentiment that spawned could be translated into a simple mantra: “if you pay them, they will come.”
Joy Nazzari, Founding Director of Showhere, a presentation platform for real estate firms, complained to Wired back in February that it had never been more expensive for her to hire people. Not only that, it was also incredibly difficult to keep her current staff happy enough to stick around. “You also have to defend who you already have,” she said, “because they’re seeing the bright lights—being hit up on LinkedIn and hearing stories of friends attracted by big salary packages.”
Nazzari’s thinking that The Great Resignation made hiring and retaining talent more expensive for businesses wasn’t a one-off theory. A recent report from ADP Research Institute, which tracks labor market data, shows that the voluntary resignation trend has driven wages up across the board, even for workers who stayed with their respective companies. As of September, job-changers are using their newfound leverage to increase their annual salary by an average of 15.7 percent, and job-stayers have seen their wages increase by 7.8 percent year-over-year.
Last month, LMRE, a specialist PropTech recruitment consultancy, and FifthWall, a venture capital firm, banded together to create the PropTech industry’s first benchmark for salary and employee experience. The report, titled “What It’s Really Like to Work in PropTech,” examined survey data from 500 PropTech employees. The report found that people in PropTech are generally paid well, even after factoring in the variations between job function and where employees live. Thirty-three percent of those surveyed earn more than $150,000 a year in terms of gross salary. For directors and above, that percentage jumps to 45 percent. While those numbers might look agreeable, a whopping 82 percent of survey recipients admitted that they’d quit their job for a higher salary.
Pay matters, that much we know is true. It’s easy to assume that workers are flocking away from their current jobs in pursuit of a higher paycheck. Industries are not made up of volunteers. But while salary disputes are a huge driver, they aren’t the only cause of this reshuffling.
Pride and benefits
The PropTech salary report found that part of the problem driving high employee turnover had to do with a lack of benefits. Only 56 percent of the respondents said that their companies offered paid parental leave, and it only goes downhill from there. Forty five percent of PropTech employees have access to company-sponsored life insurance, 41 percent have access to retirement plans, 33 percent have access to wellbeing stipends, and 24 percent have access to commuting stipends.
Those numbers may sound bleak, but when you start comparing them to employers across the U.S., you begin to realize why the report found that people in PropTech are generally happier compared to other sectors. I won’t throw too many more stats at you, but two highlights stand out: only 40 percent of U.S. employers offer paid maternity leave (not paternity leave) in some form, and most Americans don’t have access to a retirement plan through their work.
Dr. Klotz, the man who saw The Great Resignation coming, said that companies who want to combat the turnover wave should prepare to invest more than ever in their employees if they want to stay competitive. “This could be by offering flexible schedules, or higher pay, or better benefits to working parents, or by building a truly inclusive work environment,” he said. “As long as the investment is aligned with the organizational culture, this could bring a long-term competitive advantage.”
The Great Resignation may not be roaring with the same gusto in previous months, but it’s still reverberating across the labor market, and PropTech businesses are not exempt from the talent war. Even if they are simply casually looking, workers of many sectors are actively seeking a new job. Of course they want more money, but they also want greater benefits, increasing the bar for what up-and-coming businesses must provide top personnel in order to attract them.