Recently, Acworth’s Pizza, Pints & Pigskins event was postponed due to inadequate staffing. Taste of Smyrna was modified to a college football viewing party for the same reason. Business Insider reports 10.9 million jobs are available, a fifth-consecutive record high, and, according to the New York Post, 8.7 million people are seeking employment, which translates to a deficit of 2.2 million employees nationwide.
Many businesses are more concerned about staffing than any other issue, including regulations and taxes. The growth of the economy is difficult to take advantage of when businesses cannot fill available positions. Even Chick-fil-A had to close stores temporarily due to labor concerns. It is discouraging to see businesses turning away opportunities to increase revenue, when many were receiving government subsidies last year.
It is well known that there is a massive skills mismatch in the workforce; too many people do not have the necessary education or training required in our 21st century economy. Location also is a factor, since many people live in areas without industry and with high unemployment. These people are unable to commute or move to areas with growth and increased income potential. COVID-19 has not offered a remedy to this issue, with many having to take care of kids or aging parents, as well as the availability of extended unemployment benefits.
However, the labor shortage is not due to the pandemic. Even if the virus were eradicated tomorrow, we have not done a sufficient job in preparing for the inevitable. Pew Research reports that 28 million baby boomers have retired, an increase of 3 million from last year. When you consider they represent 25% of the workforce, along with a significant amount of talent and experience, they are not going to be easy to replace.
Generation X is too small to fill the gap, and, while we are nearing our prime earning years, we already are outnumbered by millennials. Even by factoring in immigration, it is unlikely that the millennial workforce can reach the peak size of the boomers, which was 66 million in 1997.
To replenish the workforce, we need to rethink education radically, especially post-secondary education. Some politicians have suggested a K-14 model, which makes sense, as additional training and skills are attractive to employers. Others have pointed to models popular in Europe, such as short-time working, where employees agree to a reduction in time and compensation while the government makes up for the lost wages. Often, employers will use the part-time status to put their employees into training programs.
Considering we have the most educated population in history, and our largest skills mismatch, one could argue we’re sending too many kids to college. Universities need to foster a connection with the business community, because students don’t know what employment opportunities exist, and, often, their teachers don’t, either.
Some believe an increase in wages will lower unemployment, but companies don’t have unlimited margins. Most companies are offering the highest wages they ever have, and, in many cases, generous sign-on bonuses and benefits. Recently, I heard about an employer offering $5,000 for new welders. Ironically, pay is the fourth most important factor in the workplace, according to surveys produced by the Fabricators and Manufacturers Association. The top three, in order, are opportunity for advancement, environment and flexibility. More than half (55%) of workers want to be remote, so companies may be offering the wrong incentive to new hires.
In an era where staffing challenges may span a generation, organizational culture is king. I would argue that it always was.
– Ryan Blythe is the founder of Georgia Trade School, which for the sixth consecutive year, was named one of the Cobb Chamber Top 25 Small Businesses of the Year.