In February 2021, the US job market surged to a 2-year high, especially in the hospitality and tourism industry. However, US employers and companies are increasingly facing worker shortages.
What Are the Reasons that US Companies Are Facing Labor Shortages of Skilled Workers?
Unfortunately, the US is facing a double challenge of increasing demand and decreasing supply. There is a nationwide shortage of over 1 million skilled workers which is expected to rise to 2 million over the next 5 years. Much of this shortage is the result of the retiring baby boomer generation, which has also been accelerated due to the global pandemic. This has led to a spike in demand for workers on top of a decreasing supply.
Low Productivity in Industries
Many would expect that the increased use of automated technology will increase the productivity of US companies. However, productivity is steadily declining or flatlined as there is a shortage of skilled workers to operate and maintain the highly automated machines. Hiring less-experienced workers costs the company in terms of training and errors. Meanwhile, companies are finding it difficult to hire laborers, let alone highly specialized trades workers.
Backlog Projects Due to No Raw Materials
Many companies rely on offshore raw materials for at least a part of their manufacturing process. However, the ongoing global pandemic has significantly limited the supply chains. Due to the worldwide travel and border restrictions imposed to control the spread of the Covid-19 virus, many companies are facing a backlog of projects.
Low Level of Post-Pandemic Workforce
The global pandemic forced many baby boomers into early retirement. This significantly reduced the supply of skilled workers in the market. On top of that, many people are choosing not to return to work due to health and safety concerns. Many are receiving the stimulus benefits, giving them financial protection for at least a while.