SECTOR SHIFTS
In April, 11.6M jobs were available while the number of unemployed workers was only 6M.¹ That math doesn’t add up to the pandemic causing the current labor pinch though, and this is why: most unemployed workers are back to work, but the needs of the market look completely different than pre-pandemic. Industrial and transportation are booming, while leisure, government, and education are in decline.
NEW BUSINESS STARTS
A large contributing factor to the shortage is the record number of people starting new businesses. In 2010, the number of new business applications was 2.50 million. In 2020, this number was 4.38M, an increase of 75%. Over the last two years that number has continued to grow as entrepreneurs cite being laid off or the changing needs of the consumer market as opportunities to start these new businesses.² While returning to work in new and growing industries is ultimately good for our economy, it does not help employers looking to backfill existing positions. The construction industry is no stranger to the workforce struggle as skilled trades were difficult to staff even before the pandemic. However, as e-Commerce has boomed, so has the trucking and manufacturing industries which often pull labor from the same pool as construction.³
OTHER FACTORS
Other factors contributing to the current labor shortage include lack of childcare, having more in savings from federal stimulus money, and baby boomers (defined as anyone born between 1946 and 1964) leaving the workforce. This generation’s youngest workers were age 56-58 in the last two years, and many of them opted to take early retirement. We will dive deeper into this issue in our five-year labor outlook.
Sources:
- Uschamber.com
- Census.gov
- Axios.com
