I read a fascinating ebook, The Demographic Drought, that outlines the causes of the US labor shortage. It’s timely and relevant for recruiters, and it’s free, so please download your copy. I’ll share some of the most salient points (for me) here. It’s been very easy, and tempting, to blame COVID and various social programs for the current candidate shortage, but that is far too simplistic. As the authors point out, COVID was merely an accelerant to a problem that has literally been ~50 years in the making.
You may think that if all the people who are currently staying home due to extended unemployment benefits and/or childcare struggles simply went back to work, the US labor shortage would solve itself. But you’d be wrong. For starters, an estimated 3 million Baby Boomers left the workforce last year – a 50% increase from a typical year. Many of these Boomers are senior or executive-level employees with massive amounts of institutional knowledge and experience that simply cannot be easily transferred to new, younger, or less-experienced workers. While Millennials are currently the largest portion of the labor force, there are still nowhere near as many Millennials as Boomers.
Maintaining the US population means that every female needs to have 2.1 births. That doesn’t GROW the population; it merely keeps it stable. But since 1971, the birth rate has been nowhere near that level. Which means that the Baby Boomers did not have enough children to replace THEMSELVES and further generations have continued that decline. Anecdotally, my parents each came from families with 5 children, but neither they nor their siblings had families that large (our family of 3 kids is the largest). US population growth is slowing, and is expected to start shrinking within forty years.
For companies, this means the difficulty in finding top talent is real and becoming increasingly dire. In February 2020, 70% of US employers – a record high – reported a talent shortage. That number more than doubled in five years, from 32% in 2015. There are currently more than 10 million unfilled jobs in the US. The US labor shortage is in part driven from very low labor force participation rates. The children and grandchildren of retired Baby Boomers have not replaced them in the workforce. More workers than ever are seeking part-time work, gig work, or no work. Prime-age men (ages 25-54) have steadily declined as a segment of the workforce since 1980, by larger numbers than can be explained by the increase in working women. The opioid epidemic is a key factor in this: more than 850,000 men were absent from the workforce JUST in 2015, due to opioids.
Companies will increasingly have to provide on-the-job-training to upskill and retain the workers they have. More partnerships between businesses and educational institutions will be needed, as both are fighting over the same diminishing pool of people. Educational institutions are already seeing enrollment declines, with a shift toward more nontraditional students. I believe skilled recruiters will continue to be in demand for the foreseeable future. Employers do not have the well-developed networks that are needed to find and attract top candidates.