Is America Facing the Biggest Skilled Labor Shortage in Recent History?
The skilled labor shortage in the United States is not a new phenomenon. The gap grew wider in 2020 during the series of lockdowns but the stats in 2021 are more worrisome. CNBC reports that the economy only grew 2% compared to 31.2% in 2020. While the slow rate cannot be completely blamed on the skilled labor shortage, economists believe that this is one of the major contributing factors leading to a delay in economic rebound.
The Bureau of Labor Statistics reported 9.3 million job openings by the end of April 2021. Employers have been facing dual challenges of finding new employees and retaining older ones. As the stats of vaccinated people increased, employers were optimistic about welcoming their employees back but their expectations were not met. As a result, many businesses are operating at limited capacity. For example, restaurants have reduced their menus and hours to serve the existing customers better.
The skilled labor shortage statistics have forced several states to take drastic measures. In order to deal with complacency, as believed by the lawmakers, many unemployment benefits have been reduced. The idea is to push people out of their comfort zone and encourage them to earn their livelihood rather than just receive it. The general consensus is that such measures will not bring positive changes.
An economy cannot progress without skilled labor. In 2021, if the United States does not even have enough labor to recover, then, how will it progress? Money does not seem to be the sole factor motivating employees to get back to work. It extends beyond that.
How Huge is The Skilled Labor Shortage in America?
To meet the demands of consumers, whether B2B or B2C, businesses need labor. In a complex economy like America, there has always been a chorus of employers claiming that they can’t find enough bona fide employees. This chorus has become louder about the skilled labor shortage in 2021. The National Associate of Business Economics, through its Business Conditions Survey, found that 47% of the respondents are finding it tough to fill in the available job positions, especially in the goods-producing industry. The good news is that there is a decline in the unskilled labor shortage.
But, the skilled labor shortage statistics are alarming. One of the main reasons behind the shortage is the risk of getting infected by COVID-19. Most skilled workers are not ready to take chances, especially the ones who have to look after the welfare of their families. There is also an ongoing trend where employees are quitting their current jobs for better positions, which is not hard to find given a competitive economy. Unfortunately for business owners, the situation is unlikely to get better in 2022.
Why Is This Happening?
The pandemic is one of the reasons for the skilled labor shortage. Despite the many people who lost their jobs in 2020 now actively looking for employment opportunities, there is still a gap between employers and employees. One of the major reasons behind this shortage is trust. Workers who were laid off during the lockdown do not have faith in their industries anymore. The idleness gave them the opportunity to invest in themselves. Many have either joined different industries or started their own businesses. Some have even retired because they are too afraid that history will repeat itself.
The other reason is the age of baby boomers. Every day, approximately 10,000 baby boomers turn 65. While the retirement of an entire generation is not the issue, the problem is that the next generation is not filling their empty positions fast enough. As businesses are not running enough apprenticeship programs, baby boomers are also unable to pass on their knowledge to the next generation. This is another major factor adding to the shortage of skilled workforce.
The younger generations – Millenials and Gen Z -- are not too enthusiastic about taking up skilled work. It seems they want to do more tech-intensive jobs rather than physical work.
The Impact of COVID-19
COVID-19 led to job losses, pushed many below the poverty line and disturbed the economic machinery. Even if these changes are short-term, their impact will be long-term. Records show that if the workforce remains unemployed for a prolonged period or does not have a steady source of income, it can cause deskilling. They start losing their interest in work and their productivity also declines. Most low-skilled and temporary workers were affected by this as their tasks were almost impossible to be conducted from home. Now, they are reluctant to return to work even though their skills are needed again.
Vaccination also has a huge impact on the COVID-19 economy. According to a survey conducted by Gartner, over 46% of organizations plan on making COVID-19 vaccination necessary. Such rules will also have an impact on the labor market as not everyone is ready to get vaccinated. This could further increase the skilled labor shortage.
Why Future-Proofing is a Must
Future-proofing is important for the sustainability of any business, especially if you want to avoid the skilled labor shortage. COVID-19 further highlighted this need. There are several unforeseeable internal and external threats that can affect the growth of a company. Future-proofing allows you to deal with turbulent times more effectively.
When planning for the future, you have to think beyond your company and industry. Plans should rely on innovation to create a model that allows your business to function smoothly under every circumstance. They should also look for ways to increase employee retention and prevent the skilled labor shortage. Businesses can achieve this by keeping current and prospective employees engaged.
We live in a world of digitization. With virtual training and onboarding, you can help your existing employees in improving their skills while welcoming new employees. Invite them for virtual events, boost their morale and make them feel relevant.
Boost Employee Retention With Cloud Solutions
The skilled labor shortage is fixed in America. COVID-19 has made the situation more serious. While it is not a new problem, technology has new solutions for it. With cloud-based solutions, businesses can easily onboard new employees, train the existing workforce and interact with everyone.
Book a demo with Ingage to see its impact on your business.