WORKFORCE CHALLENGES HOLDING BACK ECONOMIC DEVELOPMENTA common barrier to growth that businesses large and small across the country are facing is a lack of workers. The US Chamber of Commerce reported in March of this year that there are approximately 8.1 million job openings nationwide but only half as many workers available to fill them. No doubt you’ve seen “Help Wanted” signs posted in shop windows around the community, or signs on the doors to short-staffed restaurants asking for your patience with overwhelmed waiters or line cooks. The labor shortage hurts all of us, causing longer waits for products and services, higher prices, unnecessary business failures, and slower economic growth.
What’s causing this problem? The answer is complex and includes a variety of short- and long-term trends. In the short-term, the biggest culprit is the COVID-19 pandemic. Some people are reluctant to return to in-person work due to health and safety concerns, and others left their jobs to take care of children who attended school remotely or family members who needed to stay home. The pandemic also led many people to rethink their relationship with work, and many are now wanting greater flexibility, work-life balance, and pay and benefits from their employers. A poll published in the Washington Post this month found that 22% of American workers plan on switching jobs post-pandemic, and 28% considered moving sometime during the pandemic. Additional pandemic-related federal benefits to unemployment insurance are thought to be incentivizing folks to stay out of the workforce. However, South Dakota eliminated the benefit in June, and the roughly 1,500 people who were receiving it would not put much of a dent in the more than 24,000 openings posted on the state’s largest jobs database, SD WORKS.
But even with the country returning to normal after the pandemic, long-term factors mean businesses will still be squeezed to find employees for the foreseeable future. Clare Coffey of Economic Modeling Specialists International—a company that focuses on analyzing labor market data—identifies three trends signaling that labor shortages and workforce issues are here to stay. First, record numbers of baby boomers are retiring. Given the sheer size of the boomer generation, replacing them as they leave the workforce will be incredibly difficult. Second, the number of men in the workforce has significantly declined. Between 1980 to 2019, the male labor participation rate declined from 95% to 89%, and millions more switched from full-time to part-time work. These shifts can be attributed to a variety of factors from changing social norms to the ongoing opioid crisis, but there is no evidence to suggest that they will be reversed any time soon. Third, birth rates are low. Since the 1970s, the US has been below the rate of 2.1 births per woman necessary for population growth.
So, what can we do to ensure economic success in a world without enough workers? Coffey recommends that businesses recruit outside traditional demographics and that communities and businesses work together to invest in programs that help give people the skills employers need and keep existing workers in the community. While businesses must endeavor to provide the wages, benefits, and working environments that today’s employees desire, those of us in the development world must try just as hard to make our communities great places to live. This means boosting funding for our children’s education, improving public amenities like parks and pools, and increasing affordable housing and childcare options. While these investments can often be expensive, the struggles our businesses will face mean we can’t afford not to make them.