Much has been talked about and written as to why the US is continuing to face shortages of workers in all facets of employment. At first, people thought it was brought about by Covid and the mere absence of workers willing to expose themselves to this ugly disease. Then the Covid-19 Economic Relief Benefits were blamed as being so liberal and long-lasting that workers simply stayed home to be paid. I speak to many clients, and frequently it is (falsely) assumed that people are just sitting home, getting fat checks, and have no incentive to work. I wish it were that simple, but it is not.
After studying this topic for several months, conferring with experts from the ASA (American Staffing Association), and reading loads of articles of speculation and blame, it has become clear to me that the problem is based on a number of factors that appear to be ongoing, with no clear end in sight.
For example, the most troubling statistic is the aging population. This is a fact that can’t be adjusted by interest rates or any other well-intentioned manipulation. Americans are aging, and there are simply less young people filling the roles as the Boomers exit the workplace for retirement. People aged 65 and older represented less than 15% of the population just a few years ago (2019), and by the end of this decade, that number should be closer to 20%. And again, fewer young people are entering the workplace to backfill those jobs.
Another troubling and somewhat inexplicable stat is the Labor Force Participation decline. From 1990 to 2000 it was a rather healthy 68% on average, but now it is barely above 60%. You might think, well, that’s just a few percentage points, but the magnitude of a greater than 10% drop in this category is enormous. And the worker participation rate is significantly less with younger workers. Why?
There are many reasons for this besides “the kids these days,” although there is some truth to that. The Participation rates for the youngest working category, ages 16-19, is at a ridiculously low 35%, down from an average of about 50% over the last 75 years. This would explain why the McDonald’s of the world (first jobs, high school/college jobs) are having such trouble finding workers.
Why is this so? Many speculate that in the past, kids had to work to put themselves through school, but that’s not as common with this generation as in years past. With less population (less kids to put through school) and a richer society, many parents are able to afford to send their kids to school without them having to work. This has a major effect on entry-level jobs that are going unfilled, despite pay of around $20/hour in a futile effort to fill them.
And let’s not forget the impact of the social pressure for our kids to get a college degree; a factor that cannot be denied, which really impacts employment. The need for the trades (welders, machine operators, electricians, plumbers, carpenters, HVAC techs, for example) is enormous and keeps our economy ticking, but the societal pressure to get that bachelor’s degree costs fortunes and puts so many into long term debt (college loans with their criminally high-interest rates and terms), but most importantly, keeps them out of the workplace for years.
This is a problem that has legs and isn’t going anywhere, but we will absolutely find a workable balance going forward. Capitalism has a way of self-correcting, and we will rise to face these challenges, as we always do.