december2022january2023 - 19

THE LABOR LAW ADVISOR
Worker Shortages May Be Permanent
U.S. employers' most common complaint across almost
all business sectors is an inability to find workers. The
coronavirus pandemic and its aftereffects helped generate
this continuing problem for many employers. Following the
pandemic, roughly three million fewer workers are participating
in the labor force today than in February 2020. In addition,
more than 10 million job openings exist with fewer than 7
million unemployed workers to fill them.
The lack of workers presents a
problem to more than just employers.
It has impacted many across the
country. Travelers have faced flight
delays and cancellations due to a
shortage of pilots and attendants.
Understaffing at many hospitals
has led to stressed and overworked
nurses who are quitting, which
further exacerbates the shortage.
A shortfall of 80,000 truck drivers
has contributed to clogged ports,
which in turn leads to limited supply
and higher consumer prices. Staffing
shortages have caused retailers,
restaurants, and other service sector
businesses to struggle to provide their
standard level of service.
The reasons for the ongoing
worker shortage flowing out the
pandemic are varied. Some have
not returned to the workforce as the
result of the government financial
assistance received during the
pandemic. It is estimated that 68% of
workers were earning more on unemployment
during the pandemic than
they made while working, enabling
some to add to savings. Other workers
received pandemic-related bonuses
and wage increases.
Combined with increasing home
values and reduced mortgage payments,
many found a greater level
of financial security than before the
pandemic. Together these factors permitted
some workers to remain out of
the workforce longer than expected.
Some chose to leave the workplace
permanently. A substantial number
of workers 55 and older, who comprised
25% of the workforce before,
opted for early retirement rather than
a return to a workplace.
Among those workers 65 and over,
there were 7% more retirements than
would otherwise have been expected
in a given year. The loss of these older,
experienced workers is especially
difficult because a sudden loss of
decades of institutional knowledge
is difficult to replace.
The loss of so many older workers
in the pandemic underscores the
primary reason for the anticipated
shortfall in the number of workers
moving forward. We have an aging
population and hence an aging
workforce. And the U.S. is not alone in
this. The age of workers in the manufacturing
sector of several developed
countries best illustrates the problem.
In the U.S., 25% of manufacturing
workers are 55 and older.
In Canada it's 22%, the U.K., 20%,
and 30% in South Korea. In Japan, the
majority of their workforce overall is
between the ages of 45 and 54 and is
expected to lose at least 20% of its
workforce by 2040 due to aging. The
It is possible that the seemingly
looming recession could result in at
least some of those workers returning
to the workforce as their new small
businesses struggle. Secondly, the
frustrating and exhausting experiences
of many workers during the
pandemic, including the stresses of
working in understaffed workplaces
operating under COVID protocols, the
stress of school closings and childcare
issues, caring for elderly relatives, and
similar daily challenges, resulted in
a greater focus by many on work/
life balance. Work/life balance
aging problem is easily explained.
Birth rates in most of the developed
countries have been falling for years.
In the U.S. the birth rate in 1970 was
23 births per 1,000 people. Today, it is
eight births per 1,000 people. By 2035,
adults 65 and older will outnumber
children under the age of 18 for the
first time in history.
Other factors contributing to
the shortage of U.S. workers coming
out of the pandemic include laid-off
workers took themselves out of the
traditional workforce by choosing to
become self-employed. To the extent
that numbers are available, it appears
these self-employed workers exceed
2019 levels.
has long been a focus of millennials,
who comprise the majority of
today's workforce.
The desire for flexibility in their
job to permit sufficient time for
family matters has caused some to
remain on the sidelines awaiting
that perfect job. Relatedly, the labor
participation rate for women fell
more than 3% during the pandemic
and remains below the pre-pandemic
level. In many cases the initial exit
from the workplace of working mothers
came with the closure of schools
and childcare facilities.
Where financial conditions permitted,
many formerly working mothers
made the decision to stay home
permanently. Finally, the
continued implementation
of advanced technology
increasing automation of
the workplace eliminates
some jobs and creates
jobs for new skill sets that
many workers do not currently
possess. The U.S. is
not unique in this regard.
Across
the
developed
world more than 10 million
manufacturing jobs
remain vacant because of
a worker skills gap. While
many employers are investing in
reskilling and upskilling, it will take
time to sufficiently train a more
modern workforce, but regardless,
automation of the workplace grows
by leaps and bounds in the meantime.
When we consider all the factors
that impact the labor participation
rate, along with long-term trends
that may reduce the overall number
of workers, employers could be
facing a permanent struggle to
find workers. ■
DECEMBER 2022/JANUARY 2023 ■ www.CPAPracticeAdvisor.com
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