Today’s labor shortage has multiple causes
Published 3:02 pm Tuesday, May 3, 2022
The signs are everywhere. Whether you are talking about local grocery stores, fast-food restaurants, health-care facilities, or retail businesses, everyone seems to be looking for someone to do the work that keeps the doors open to keep the money flowing.
Last week, Food City hosted a job fair at its stores, hoping to hire 1,500 workers.
It’s not just a Carter County or Tennessee thing, it’s happening everywhere. There seems to be a shortage of workers everywhere.
The coronavirus pandemic and the uncertain closings and openings and restrictions that were part of the social distancing response to limit exposure have had an impact few could have seen a couple of years ago. Back in 2020, as restaurants were closing their dining rooms and people were being laid off or losing their jobs left and right, it seemed like when the world got back to normal there would be a lot more people in need of work than jobs available.
But with people getting vaccines and the COVID numbers dwindling, the economy has started to spin. Unfortunately, the lack of a labor force is making it chug like a sluggish auto more than humming like a well-designed sports car.
Some blame the number of people still choosing to collect unemployment, which has had a nice federal supplement. Others blame a lack of appreciation for our lowest-paid workers and the high cost of having a job when it comes to things like child care. Still others have liked the comfort and convenience of working from home and have found jobs that allow them to.
Even among those who have jobs, people are rethinking their options. Front-line workers are reporting high levels of burning, causing some to move to other jobs.
There is also growing evidence that a lot of people want to do something different with their lives than they did before the pandemic. The coronavirus outbreak has had a dramatic effect on workers, and people reassessing what they want to do and how they want to work, whether in an office, at home, or some hybrid combination.
People who used to work in restaurants or travel are finding higher-paying jobs in real estate, the medical field, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road.
Consider one labor report that revealed that grocery stores shed over 49,000 workers last year and nursing home facilities lost nearly 20,000.
Economists describe this phenomenon as reallocation friction, the idea that the types of jobs in the economy are changing and workers are taking awhile to figure out what new jobs they want — or what skills they need for different roles.
There’s also been a wave of retirements as workers over 50 quit because they don’t want to return to teaching, home health care or other front-line jobs. More affluent Americans say they are retiring early because their retirement portfolios have surged in the past year and the pandemic has taught them that life is short. They don’t want to spend as much time at a desk, even if it is safe.
But for sure, workers are not going to be working for the same wages they did before the pandemic.
The cause of the labor shortage is probably not simply higher unemployment checks, low wages, or lack of daycare, but a combination of factors greater than the sum. That means a solution is going to have to address multiple problems to fill the need. And recognizing that economic phases operate like pendulums, times will be part of that solution.
The overall expectation is still for hiring to pick up this summer as the economy reopens fully and more people are vaccinated. But the past year has fundamentally changed the economy and what many Americans want in their working life. This big reassessment — for companies and workers — is going to take awhile to sort out and it could continue to pop up in surprising ways.