What is Driving the Worker Shortage and What You Can Do About It 

In March 2020, the world entered pandemic mode. Many businesses closed. Increased unemployment benefits helped some workers take extended leaves from the labor force. Others reconsidered their careers entirely and left their jobs. At one point, the Bureau of Labor Statistics estimated there were nearly 17 million unemployed workers.

Since then, the economy has made great strides toward recovery. Businesses have opened, jobs have been created, and unemployment rates have returned to pre-pandemic levels.

Unfortunately, we now face a new problem: a labor shortage. Recent data shows that there are over 11 million jobs available in the labor market. But, despite low unemployment, employers are struggling to find enough workers to fill these open positions.

Today, I’m taking a deep dive into some causes for the worker shortage to figure out what we as managers can do about it!


What caused the worker shortage?

Many factors can affect labor participation. While it might seem easy to blame the Covid-19 pandemic for our economic troubles, the worker shortage is a bit more nuanced. Examining some of these factors can help us figure out more specific causes that can lead to potential solutions.

Some of the biggest drivers of the current worker shortage include:

Slower population growth

Population growth usually helps ensure a growing pool of eligible workers. But, since 2007, population growth has slowed for many countries, including the United States. Currently, the population growth rate is lower than the replacement rate. This means that there are fewer people entering the workforce than there are leaving it.

There’s potential here for the shortage to continue for generations before we once again match or exceed the replacement rate. So, it’s important to be realistic about staffing and make sure we create an attractive workplace!

Skills gap

The skills gap is the difference between the skills and education a job seeker has compared to the skills and education the position requires. Currently, there seems to be just such a gap afflicting the job market as employers search for skilled laborers to fill open positions.

While this can help fuel the fire of a worker shortage, some experts debate the causes for these skills gap concerns. Some claim that employers often raise skill and education requirements during times of high unemployment. A recent study supports this, citing a similar skills gap that occurred during the rising unemployment rates that followed the Great Recession.

Aging/retiring workers

Before the pandemic, Baby Boomers were actually staying in the labor force in higher numbers than previous generations had when they were the same age.

But the pandemic forced many Boomers into early retirement. Others, some of whom previously continued working after reaching retirement age, decided to finally leave the workforce for good. In all, nearly two million workers retired in the two years since the pandemic began. With fewer eligible workers to replace them, this caused open positions that became difficult to fill.

Shifting worker needs

The Covid-19 pandemic helped many workers understand the value of their time. This made many workers reconsider their basic on-the-job needs and assess their work-life balance. This affected the benefits and perks job seekers looked for when applying for a new position. Workers now sought jobs that offered such things as:

These new expectations for employment led to two big shifts. First, many workers left their current jobs. In fact, so many workers left their job that it became known as “The Great Resignation.” Second, job seekers returning to work became more selective about the jobs they applied to and accepted. This left a lot of jobs open with fewer applicants vying for them.

What can I do about the worker shortage?

As an employer, there are actions you can take that can help fill open positions and increase labor participation. Now that we understand some of the root causes of the shortage, we can figure out ways to solve it. If you have open positions during a worker shortage, you might:

Create a positive work environment

A positive work environment can increase morale and reduce worker stress. It’s also become an important priority for those returning to work. The great thing here is you have many options to choose from and can totally customize your workplace to suit both your business and your employees. Some ways you can enhance your employees’ experience at work include:

  • Offering unique workplace perks
  • Hiring compassionate, empathetic leadership
  • Giving your employees a voice
  • Assessing the workplace for areas of improvement
  • Removing toxic elements

Invest in training programs

If you’re experiencing a skills gap, you might consider offering training programs to new recruits. This can help you hire standout applicants who might otherwise lack some required skills. Best of all, by offering on-the-job training, you can help ensure that they learn your company’s preferred methods for completing tasks and following processes.

Training programs can also help you upskill current employees, preparing them for promotions and filling open leadership positions.

Alternatively, you can:

1. Reassess skill and education requirements

It never hurts to take a look at your current job requirements. Do they match the responsibilities of the position? It’s possible that you’ve inadvertently—even subconsciously—set your skill and education requirements too high. If you can lower these requirements and still adequately staff the position, you might consider doing so. This helps widen the pool of potential employees and can increase your chances of finding the right person for the job.

2. Offer flexible arrangements

One lesson we’ve learned during the pandemic is that many jobs can sustain more flexible work arrangements. Remote work, flexible schedules, compressed workweeks, and family leave can all help your employees find a work-life balance that works for them.

To help make sure your business remains productive, you can always work together with your employees to figure out an arrangement that works for you, your team, and your business.

3. Pay a living wage

I will bring this up every time because it’s so important. Your employees know the value of their time. It’s important to them that you do the same. They’re devoting their time and effort to help you keep your business alive and successful. The least you can do for them is pay them adequately for their work. This includes paying them extra for any extra time or work they provide.

If you can’t afford to pay your team, it’s time to reconsider your business model.

Struggling to hire and retain employees?

It may be time to re-evaluate your processes and systems.