The Covid-19 pandemic and the resulting labor shortage have left small-business owners scrambling for workers — but a new study suggests the pain may only be beginning.
The new report, by economic data and analytics firm Emsi Burning Glass, highlights how the mass exodus of baby boomers from the workforce, record low participation rates among the working-age population and the lowest birth rates in U.S. history will all lead to a long-term shortage of workers. Already, businesses have begun offering higher wages, bonuses and even offering remote work as an incentive to keep their workers from leaving.
“The fact is, competition for talent is going to become brutal,” said Emsi Director of Staffing Product Ron Hetrick, in a press release announcing the new report. “Businesses can no longer assume there will be enough people to go around. We are already starting to see substantial rises in wages as the market works to find the new equilibrium, along with production slowdowns from those companies that cannot find the talent.”
Dubbed the “sansdemic,” meaning a lack of workers, the report stresses that the latest Covid-induced workforce pains are merely part of a larger, longer-term problem, in which 70% of businesses said they had a manpower shortage before the pandemic even began in early 2020. That correlated with a drop in new college enrollments, from 18.2 million in 2019, to 17.8 million in 2020, meaning future talent will also be reduced.
The labor force has shrank to the smallest proportion of the population since the mid-1970s, and the size of the working-age population has been shrinking since 2008. Meanwhile, a million more baby boomers retired over the pandemic than expected, according to the report.
“Covid didn’t really create the problem. It just hit the accelerator,” said Hannah Grieser, one of the authors of the report. ” I think we’re just seeing the beginning of this kind of shortage
For decades, companies were awash in qualified, highly-educated workers looking for jobs. The baby boomer generation entered the workforce at levels unseen since right after World War II and had college degrees. That meant that companies could pick and choose who they wanted for any particular job, and ultimately created job descriptions that were incredibly specific, with a laundry list of skills and requirements — but now those are unrealistic, Grieser said.
“They could go into the labor market and buy ready-made talent off the shelf. We have seen businesses are still writing their job descriptions with the same specific requirements,” Grieser said. “The reality is those people are harder and harder to find.”
Now, companies are finding they are getting no takers for their jobs, and that requires a mental reset in how to recruit, she added.
“We have businesses putting out postings that are super specific and in the serendipitous event where they find someone who meets these requirements, there are six or 10 other companies that want this same person. They are interviewing the employer,” Grieser said. “Employers need to offer not just a competitive salary, but more flexibility, including remote work and other work-life balance benefits.”
But it also requires an attitude shift.
“What’s happening is really the relationship between employer and prospective employee is being inverted,” Grieser said, and that means re-evaluating pay and benefits. “Definitely this younger generation is more interested in the balance between the hours they spend at work and the hours they spend with friends and families.”
Businesses will need to start focusing more on retention, and not just hiring new employees. Find out what they want and treat them well enough not to leave, Grieser said, stressing the report is hopefully a wakeup call to companies to face long-term trends that will only make the worker shortage more pronounced.
“The biggest takeaway I hope businesses in particular take away is that it’s going to be really important to just value the warm bodies that you have working for you because they are going to be harder and harder to replace. People are not expendable, and talent is valuable,” she said.
Companies should look internally to fill job openings by training those already working for them. Or they can work with local colleges and universities to train the workers they need in exchange for paying for the training.
The focus on the labor shortage has increased amid what many experts are calling the “great resignation” or “great reshuffling” as workers flee their jobs at historic rates. Companies are upping pay and super-sizing bonuses while scrambling for workers as Covid-19 restrictions ease and the economy recovers. Many are offering on-demand pay to differentiate themselves in the tight labor market.
But many workers simply don’t want to be in a physical office. The average worker, according to one study, is willing to take a small pay cut to keep working from home two or three days a week after the pandemic ends. Employees at some of the biggest tech companies are also willing to take a pay cut in order to relocate to a cheaper part of the country — and by a wide margin.
Tech employees at some of America’s largest employers are also willing to forgo a $30,000 raise to permanently work from home, and up to two-thirds of those unsatisfied with their current remote work policies say they would quit their jobs entirely because of them.
This Article is Copied & Pasted from Houston Business Journal. To view full article link: Labor shortage to hit small businesses harder post Covid – Houston Business Journal (bizjournals.com) *Full article credit to Andy Medici of the Business Journals.