Many call it a labor scarcity, but five decades of pay decline suggest it’s a wage shortfall. Yet, the job market is changing structurally.
Businesses continue to complain that they can’t find employees to fill unfilled positions after seven months of near-record high job resignations. Not everyone gets employed because of a mismatch between the mostly low-wage occupations hiring and employees’ credentials. Labor issues are complex and intertwined.
Here are some possible explanations for a labor shortage. However, don’t get desperate; remember to always hire the best.
Does everyone just want more cash?
Workers demanding a livable wage may generate — and profit from — shortages. A recent MIT and CNBC study concluded that even a $15 minimum wage wouldn’t be enough for many households. Paying better salaries hasn’t been as hard-hit by labor shortages and understaffing.
Wages have risen as firms compete for employees, but economist Heidi Shierholz of the left-leaning Economic Policy Institute says increases are still catching up with epidemic losses. The Bureau of Labor Statistics reports a 4.8% increase in average hourly wages since November 2020. Wages in typically low-paying leisure and hospitality have risen 12.3%.
Workers are unsure whether they like their employment.
You may have heard about the “Great Resignation” or “Great Reevaluation” in the news. Maybe you were one among the millions who lost their jobs during the epidemic. Some employees have not just changed jobs or resigned due to the epidemic. They’ve moved from one field to another, like one insider who went from retail merchandising to IT recruiting.
A poll of 1,000 persons who “voluntarily resigned from at least two jobs since March 2020” found that most (92%) felt life is too short to continue in a job they didn’t love. Flexibility in occupations remains in high demand.
Leisure and hospitality labor are some of the hardest-hit sectors.
Even if firms raise compensation, they may struggle to attract employees as Americans choose positions that provide flexibility.
Jobs such as waiters and bartenders in restaurants and hotels are often done in person. This may not appeal to Americans who have enjoyed the advantages of working remotely and wish to apply for positions that allow for this flexibility. Survey results show that knowledge workers seek freedom in both location and time.
Childcare concerns and caregiving tasks restrict the labor force.
Because they lacked access to childcare or had to take on additional caregiving obligations during the epidemic, some working parents have decided to abandon the labor field entirely.
Daycare services and jobs are still recovering from the outbreak. Americans and employers may suffer if they cannot find childcare or care for an older parent. The childcare business has witnessed a very gradual recovery, which has a huge influence on the rest of the economy according to Daniel Zhao, senior economist at Glassdoor.
Many have pandemic fears and vaccination hesitancy.
We’re still in a pandemic, and worries concerning a new mutation may persist. Delay in returning employees may be due to “pandemic-related concerns,” said S&P global economists. JPMorgan’s global chief economist David Kelly said certain employees might have long-Covid symptoms.
The epidemic kept 1.2 million individuals from looking for a job in November. Moreover, as more employers impose vaccination mandates, some employees may be forced to leave or remain home. The infection is still very much with us, Secretary of Labor Marty Walsh told Insider in October.
More employees may retire than average.
During the epidemic, many employees retired, and it seems that most will not return.
Goldman Sachs estimates that 2.5 million of the 5 million unemployed are pensioners, 1.5 million early retirees. Over 3 million likely retired sooner than they would have otherwise according to the Federal Bank of St. Louis. Some of the younger retirees may return — over 2.5% of retirees “unretired” in October — but not all.
Immigration may be slowing the labor force.
Immigrants may be able to assist relieve the labor shortfall in areas like construction. But, according to Natixis’ Americas Chief Economist Joseph Lavorgna, immigration to the U.S. has decreased, worsening the labor shortfall.
There are probably 1.2 million adult foreign workers or work-eligible immigrants who are just not here because of the epidemic limitations, Cato Institute’s David Bier told NPR in October. The rise in job vacancies is around a fourth.
Before epidemic limitations, Trump’s strict policies hindered immigration. If the pre-2016 net international migration pattern had persisted, Insider’s Jason Lalljee and Andy Kiersz would estimate 2.1 million additional immigrants between 2017 and 2020.
There’s a gap between available employees and available employment.
Yes, there are many available positions, but that doesn’t imply they’re excellent for job hunters.
Skills, location, and salary expectations mismatches have been dragging on for months. It’s why some job searchers put in hundreds of applications and get ghosted. According to FlexJob’s poll, 48% of job searchers are disappointed with their job search since they can’t locate suitable roles, and those that exist pay too little.
Self-employment is the big watchword.
Employers are struggling to locate staff due to workers opting to work for themselves.
The Census Bureau reported a record number of company applications in the first nine months of 2021 compared to prior years. In July 2021, the U.S. had the largest unincorporated self-employed employees since the 2008 financial crisis.
Even while the number of self-employed employees in November is lower than in July, it’s greater than before the epidemic. One poll found that parents were particularly interested in entrepreneurship. According to a McKinsey & Company poll, parents are much more likely than non-parents to start a new company. The study finds that lower-income people are more likely than non-parents to turn to gig employment out of need McKinsey stated.