Headlines about the “labor shortage” have become a near daily occurrence. Millions of Americans are quitting their jobs and looking for better offers.
But in reality, there isn’t a shortage of people who want to work. It’s just that more people are rejecting the low pay and sub-par benefits that many jobs offer.
Many companies are struggling with this. They don’t want to raise wages or change benefit structures. And they’re losing their employees as a result.
But what’s bad for established companies can be very good for startups.
Startups are perfectly positioned to snap up new talent right now. Here are two major reasons why the “Great Resignation” is good news for startups.
Before the pandemic, only 17% of American employees worked from home five days or more per week. During the pandemic, that increased to 44%. According to Ladders (a jobs site for positions that pay more than $100,000), 3 million professional jobs became permanently remote in the fourth quarter of 2021. By the end of 2021, 18% of professional jobs were remote.
And this trend is not stopping. A survey by Owl Labs found that one in two workers won’t return to jobs that don’t offer remote work after the pandemic. 77% of respondents said that being able to work remotely — even after COVID — would make them happier. And more than 20% of full-time workers said they’re willing to take a pay cut of more than 10% to have at least some remote work flexibility.
In short, the demand for remote work is not going away. Many employers have found that their employees are just as productive when they’re not in the office. And if they’re smart, employers will continue to offer that flexibility long after COVID is no longer a public health emergency.
This is where startups shine. According to Y Combinator, 70% of startups offer remote work options. That’s a 6.4x increase from 2020 to 2021.
Startups are known for offering non-traditional work spaces. And many have been remote long before COVID-19 ripped across the globe. They’re already equipped to onboard remote employees — something that companies that pivoted to remote work during the pandemic are still struggling with. Startups can offer the hybrid working environment that a growing number of employees crave.
And given the huge increase in hiring on the Y Combinator platform, workers are taking notice. This will only benefit startups further as they snap up talented and motivated employees.
The other advantage startups have is purpose. A growing number of employees want their company’s values to align with their own — particularly millennials. According to The Cone Communications Millennial Employee Study, 64% of millennials won’t accept a job if the employer doesn’t offer a robust corporate social responsibility policy. And 83% said they would be more loyal to a company that helps them contribute to social and environmental causes.
Given that millennials will comprise 75% of the workforce by 2025, companies should pay attention.
Purpose-driven startups have been growing fast during the pandemic. And just like with remote work, this trend is going to continue long after COVID retreats into the background. There are tons of social and environmental problems that predate the pandemic (and will continue to be a problem after it).
Climate change is a huge one. And dozens of startups are rising to tackle it. Some use artificial intelligence, some use sustainable packaging and some are even revisiting older business models to close the waste loop.
And climate change is only one cause. There are thousands of other mission-driven startups focusing on closing pay gaps, increasing diversity in the workforce, ending world hunger and more.
These startups can offer workers the chance to make a difference in the world. And with so many startups embracing remote or hybrid work as well, they are likely to attract a massive number of workers over the next decade. In doing so, these startups will have a better chance of fulfilling their goals and becoming successful businesses — for their founders, their employees and their investors.