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What’s With the Labor Shortage?

Labor Shortage

The labor shortage is a big problem. We know that a historic amount of workers have traded their old jobs for better ones in the past year or so—a staggering 47.5 million in fact. But that’s a labor shift, not a labor shortage. If it seems that there are fewer workers, it’s because there are. Right now, in the U.S., there is fewer than one available worker for every job opening. It’s the lowest that ratio has ever been (historically, the average is 2.7 workers for every open job). “And the ratio continues to fall,” states the U.S. Chamber of Commerce.

“Consider that for a moment,” says The HT Group’s CEO/Founder Mark Turpin. “Even with remote jobs in which you’re not necessarily tied to finding workers in your specific geographic area, your ideal employee may not exist at all. Or, more likely, they exist, but they could be out of the job market.”

So the big question is: Why are these former employees not seeking jobs? Who are they, and what are they doing now? And will they ever return to work?

The first answer: Many are retirees. Businesses had been feeling the effects of Baby Boomer retirements for more than a decade now. The pandemic accelerated retirements among those still in the workforce (and there were many—the youngest among the generation are still only 58 years old). Research indicates that the pandemic prompted 2.4 million more retirements than were expected under normal conditions.

But many more workers contributing to the labor shortage are far from retirement age. These workers have left the job market for various other reasons. A primary one is that they’re caregivers to their young children or their parents, and the logistics and cost of going back to work don’t compute. Some families are still concerned about exposing immunocompromised family members, or they’re immunocompromised themselves. Others can’t afford the rising costs of daycare or nursing home care for their loved ones. The cost of childcare rose 41% during the pandemic. At one point during the pandemic, nearly 3 million workers—primarily women—had left the job market to serve as caregivers. Many have returned, but their numbers within the workforce still lag pre-pandemic numbers.

There are a few steps you can take to win back employees disillusioned by the job market:

  • Make it an easy decision: Consider our recent article on how to recruit and keep top talent. These tips ring true for workers who have left the job market. If you compensate generously and align with their work arrangement needs, you may be able to win them back to the workforce. You may need help finding them if they’re not actively job seeking but, once you do (with the help of talented recruiters), it’s all about easing their worries and appealing to what they loved about their career pre-pandemic.
  • Read between the resume gaps. Now is not the time to be unreasonably skeptical about resume gaps. The number of long-term unemployed decreased dramatically from December to January. In part, that’s because employers are taking chances on workers who have been without jobs for a while. Many just didn’t feel safe working in public or at an office. Others were needed at home, as we pointed out previously. Don’t be part of the reason a worker who has been unemployed throughout the pandemic turns their back on the workforce altogether.
  • Upskill, then fill: This Fast Company article states the case for upskilling as a way to keep great employees on board and happy. Give your employees a reason to stick around by developing their skills so that you can promote them into essential roles. You can then back-fill entry-level jobs with new talent or rely on seasonal, temporary or contract staffing as needed.

Executive recruiters have long battled the challenge of recruiting passive job candidates (workers who aren’t actively searching for jobs). To tackle the labor shortage, this is the year to tap into those skills for various job levels. For more ideas, be sure to contact us.