Seven million is the number that has been put on the labor shortage currently in America. Every business I know is having difficulty finding skilled labor. Why? And why is this true for every industry and in every geography? Why are there so many unemployed while there are so many job openings? This is an unprecedented time in our economy. I don’t have all the answers, but I do have some ideas.
How Are People Supporting Themselves?
One curiosity is that a lot of people aren’t working and are being slow about returning to the labor force. Research is starting to show that government intervention on a massive scale has allowed people to not work and to be very selective about returning to work. PPP loans and extended unemployment benefits are part of it. Eviction moratoriums have allowed renters to live virtually rent-free. Foreclosures on student loans have provided relief to many. Plus, people are spending less on travel and entertainment. And spending less on commuting and parking while at work!
Other Reasons to Defer Returning to Work
Many with children can’t find childcare any longer. Many childcare providers are permanently out-of-business. For many couples, they’ve found that they can live on one income. There has been a huge increase in household savings, which is providing many with a financial cushion.
There are also the unvaccinated, who may be afraid to return to the workforce but are dug in with their beliefs against getting vaccinated. We’ll see how many change their minds when financial pressures mount. The vaccine mandates are beginning to cause people to lose their jobs which, in the short-term, exacerbates the labor shortage.
The Great Resignation
Then there is the fact that many people have found they like more family time. Without a commute, many in our area have gotten back two-to-three hours a day they previously spent in their car or in a bus. And then, many have found they really didn’t like their job and don’t want to go back if they don’t have to. Values have changed and many people are deciding to pursue a different line of work. Or start a business.
The fundamental relationship we’ve had with work has changed and it is unlikely to go back to what it once was.
Mismatch of Skills
Covid caused an acceleration of trends that were underway prior to the pandemic. We were transitioning to online shopping and entertainment already, but the pandemic caused an acceleration of ten-years’ worth of change in eighteen months. Of course, that is going to cause a mismatch between the skills employers need and the skills the unemployed have. Maybe many of those restaurant and hotel workers can go to work for Amazon, but for more skilled positions, this isn’t going to be so easy.
What’s Next?
Some are advocating opening up immigration to fill the open jobs that Americans can’t or won’t fill. Maybe that would help, but I’ve got a different view on this. I think the workplace disruptions are just beginning and will get worse going forward.
I think when we get past Covid, we’re going to be starting into an era of transitioning to autonomous vehicles and delivery robots. Plus, the Amazon warehouses and much of e-commerce can be automated. I believe that millions will lose their jobs over time: rideshare drivers, long-haul and delivery drivers, pickers in warehouses. Google’s Waymo is beta testing taxi service without drivers in Arizona; it works. Frozen food warehouses twenty years ago had robots picking orders from inventory; it’s only time before Amazon does this. Drones are being tested to deliver food and packages to consumers and it works.
There will be millions who lose their low-tech service jobs while the tech companies won’t be able to get enough people to help with the automation efforts. The skill mismatch will only get worse. Tell your kids to study computer science. In the meantime, I’m betting on a huge industry to retrain people for these skills needed to address this mismatch. Education will be a growth industry.
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