Shortages of workers, like a shortage of any good or service, can have rippling effects on our economy. What is the status of our workforce and what does the future hold?
Current Labor Shortage
According to the US Chamber of Commerce, there are 8 million job openings with only 6.8 million unemployed workers. Even if all those unemployed workers were in the necessary location, had the right qualifications, and wanted the job, many jobs would still not be filled. Of course, many workers looking for employment will not fill those positions for one reason or another.
The cause of this shortage is multifaceted and has been over ten years in the making. The labor participation rate, the number of working-aged civilians actively in the workforce, has slowly decreased from 66% in 2010 to 62.6% today. Fewer people choose to participate in the workforce, and the large Baby Boomer generation has reached retirement age, pulling even greater numbers from the workforce.
Post COVID 19 Workforce
The COVID-19 pandemic caused major changes in how businesses were run and operated, and the workforce has grown accustomed to those changes. The option to work at home appeals to many workers, so much so that according to the US Chamber of Commerce, 49% of unemployed workers are not willing to take a job that does not offer some remote work.
The change did not just impact the people looking for work, but also those considering retirement. The major changes brought on by the pandemic pushed many to retire earlier than they would have normally. According to the Pew Research Center, the number of adults 55 and older leaving the workforce due to retirement increased from 48.1% in Q3 2019 to 50.3% in Q3 2021.
When the pandemic hit, childcare demand fell as more parents went home to work and workers left the industry. As parents returned to working on-site, they had difficulties finding childcare as there simply weren’t enough workers. This forced some parents to stay at home to watch their children, as some employers restricted the amount of work from home after the pandemic subsided.
What Does the Future Hold?
According to the Bureau of Labor Statistics projections, in 2023, 6.7 million workers will join the workforce in the next 10 years. That should help the situation, and it does to some degree, but there is some hidden nuance in that figure.
Some industries are getting a heavier percentage of that workforce compared to others. Industries with a higher demand for new workers are also receiving them. Healthcare and social assistance are projected to get the largest percentage of growth, which will help with the shortages already in the industry and the higher demand for healthcare as the Baby Boomers continue to age.
Similarly, computer and math-based jobs are in the second highest-growing occupational group. This will help meet the increased development of AI and other computer-based services.
Though the US population is still growing, like most in the developed world, the growth rate is slowly plateauing, with a few countries experiencing a shrinking population. That projection of 6.7 million new workers in the next 10 years is nearly 10 million less than the previous 10 years. This is complemented by technological advancement, requiring fewer workers to complete the same job as compared to the past.
Conclusion
The main issue lies in the allocation of workers. Not everyone has the skills, knowledge, or experience to do any job. This means that even if there are as many jobs as there are people looking for jobs, workers could still struggle to find a job while employers struggle to find a worker. This tends to be what we see to some degree now, which does not appear to be going away any time soon.
Schedule a Consultation
We have helped our clients answer these questions and more. If you want a clear understanding of your financial future, and need help making changes to reach your goals, schedule a consultation and we can get started.
The material has been gathered from sources believed to be reliable, however Bedel Financial Consulting, Inc. cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through Bedel Financial Consulting, Inc. Advisory services are only offered where Bedel Financial Consulting, Inc. and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place.
Recommended Articles
Russo-Ukrainian War: Impact on the World Economy
The direct damage caused by war and conflict is clear and...
