Where Are All the Employees? 6 Reasons Behind the Labor Shortage

How did we end up with a massive labor shortage while so many employers still struggle to fill open positions?

| Updated: Jan 07, 2022


You only need to be watching the news, or scrolling social media, for a few minutes before you are hit with a “We’re hiring!” ad or the now almost daily headline “U.S. Job Openings Continue to Climb”.

Yet according to a recent study conducted by The Washington Post, 8.4 million people are unemployed in the United States.

The manufacturing industry is feeling this harder than most, with a historical gap between the number of jobs available and skilled laborers to fill them.

What we thought was a small bump in the road during a pandemic, is actually a long-term problem; manufacturing experts suggest that labor shortages and retention issues will remain consistent well beyond 2030.

A History of Labor Shortage: World War II, The Great Recession, and Today

Traditionally a labor shortage occurs when there are more jobs available than qualified workers to fill them. However, the labor shortage we are currently facing is different from any other we've seen in the past.

World War II completely disrupted the workforce when 20% of the laborers went off to fight. As a result, women had to step up and fill positions. Women in the workforce grew by over 50% during the war, and women were filling positions for steel, lumbar, and construction workers.

The Great Recession of 2008 was just the opposite, there were not enough jobs to go around; 3.5 million people lost their jobs.

Today job openings are up 33%, yet millions continue to remain unemployed.


Six Reasons for the Current Labor Shortage

How could there possibly be labor scarcity when there are so many available positions?

Experts agree that there are six main reasons for this change in the labor market:

  1. School Closures: Kids still needed full-time care when schools started closing, so parents and caretakers had to leave work. Many moms, 1.4 million to be exact, have not yet returned to the workforce. Some are still opting to stay home even though schools are beginning to re-open.

  2. Early Retirement: Nearly 1/4 of manufacturing employees are 55+ years old, so the industry was gearing up to age out a significant portion of its workforce. During the pandemic, 3.6 million employees have retired.

  3. Career Change: Over 20% of employees changed their careers to make ends meet when their employers closed their doors, either temporarily or permanently, during the pandemic.

  4. Employees Moving: Over 15 million people decided to move over the last few years, but the jobs did not. Most moves were to the suburbs, away from cities, and away from manufacturing facilities.

  5. Health Concerns: Some employees stopped working once they were concerned about their health. Either fear of becoming sick themselves or hesitant about the health of their loved ones.

  6. Government Assistance: The government implemented stimulus payments, increased unemployment checks, and helped families with young children. These additions gave employees greater leeway when deciding when they would work again.


Is the Labor Shortage Specific to the United States?

The UK, Canada, Australia, and many EU countries are all experiencing a labor shortage making it hard for everyone to recover across the globe.

One of the greatest examples of how connected we all are can be seen in the automobile manufacturing industry which is currently taking a $270 billion dollar hit to the industry.

With a lack of available employees to produce foreign-made chips needed for cars, the automobile industry in the United States has been forced to pull back production; the impact can be felt globally.

"Virtually any shortage or production interruption in any part of the world affects companies around the globe, and the impacts are now amplified due to all the other shortages, " said Dan Hearsch from industry consultant AlixPartners.

While there is little relief in sight, what is being seen on a global level is the ability to recover a workforce.


What Can Manufacturing Companies Do to Recover?

What is agreed upon is that employee-centric companies are going to recover quicker.

Many are attracting skilled employees by offering more flexibility, on-site childcare, increased training, more overtime, paid time off, and higher wages.

Whether this is permanent or not, is something yet to determine. What is known is that manufacturing companies need to be willing to reconsider their policies when it comes to their workforce, the majority of whom are hourly employees.

Labor shortages are not likely to equal out anytime soon, so this is a great opportunity to change, grow and set the foundation for future success.

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