The BLS labor stats came out recently, and it’s a bit perplexing for even us industry folks of what is happening to workers. The labor participation rate prior to the pandemic was around 63.3% and in the most recent month, it fell another .1% to 61.6%. Also, most experts predicted that job growth would be robust around 500K additional jobs, but in fact, we only got an additional 190K.
The current unemployment rate has dropped to 4.8% from over 5%. Most pundits would call us fully employed around 4%, and most folks hiring know it’s super hard to hire once unemployment gets under 5%.
Okay, but what does this all mean!?
That’s the problem. No one can figure out what’s really going on, or where are all the workers. The lack of workers is causing supply chain issues, inflation, and high turnover as workers jump from job to job for higher pay and better opportunity, etc.
There are a number of factors at play:
- 2 Million women left the workforce during the pandemic and it’s estimated only half of those have returned and it’s likely the remaining one million will not return in a full-time capacity.
- Older workers who were close to retirement left the workforce because of safety concerns, with unemployment and stimulus that could bridge them to social security. That number is an additional 2-3 million workers. They will not be returning. Plus, each of the next 2-3 years we’ll have giant cohorts of more older workers leaving that are greater than the number entering the workforce.
- Attitudes of GenZ workers have changed around their willingness and desire to work, so we see the lowest participation rates ever for people between 16-22 years of age, which traditionally fill so many entry-level wage jobs.
- Add in a group of folks who truly fear Covid and interacting in any capacity with other people. It’s not a giant number, but even another 250K on top of all the rest causes a problem.
- The US labor force as a total number has been shrinking for years and will continue to shrink as our population is trending towards what aging populations in Japan are already facing. More jobs than workers. We are not having enough babies to replace the number of people dying each year.
Where did all the workers go?
We have more jobs open than we have workers. The workers didn’t go anywhere. Also, lest we forget, prior to the pandemic we had just hit the milestone of having more open jobs than folks on unemployment. We were already facing this crisis, but the pandemic made us forget.
So, what about these millions of people on unemployment? Why can’t they fill some of these roles? They could, but there are a number of factors to this issues as well:
1st – Most employers look at someone on unemployment through the lens something must be wrong with that person. In an environment where everyone is hiring, why are you on unemployment? (It’s just a fact, don’t shoot the messenger. This is the stuff that’s talk about in HR offices around the country behind closed doors that no one wants to admit to)
2nd – A great percentage of folks on unemployment are actually unemployed for a reason, as in they actually suck as being employed. Let’s not be naive, some folks suck at working and you don’t want to hire them.
3rd – We suck as employers for not giving folks a 2nd or 3rd chance. How often do you see someone who sucks at one job (hey, we all make bad decisions) and then kills it at a new job? Happens all the time, and vise versa. You hire a rock star (in your mind), then you get them and they end up sucking.
4th – We love to talk about diversity and inclusion, but at the end of the day we go to our comfort zone and hire those who look and act most like us. We don’t hire someone who is overqualified because we think they’ll leave as soon as they find another job, even though our average tenure sucks anyway. We don’t hire old people because we think they can’t handle the work. We don’t hire someone with a record because while we believe in 2nd chances, we really only believe in 2nd chances for ourselves, not others.
5th – If someone can make roughly the same amount of money being unemployed, some will choose to remain unemployed. So, we have to make it more desirable and attractive to work.
The Future of Employees Will Be Fewer Employees!
The very cool thing about a market-driven economy is that markets are super-efficient. Companies and organizations will figure out how to do what they do with fewer people and still remain profitable. Some won’t and they’ll go out of business. The most talented and prettiest employees will always find great-paying jobs.
The US labor force will face this issue for a long while. We won’t magically just start growing more workers unless there is some radical shift in immigration policy. But, no one sees that happening. But, major immigration might be the only thing that solves this issue the fastest!
Companies will start using more automation, more robotics, etc. You no longer will order fast food from a real person, or order a movie ticket from a 16-year-old kid behind a counter. The world of self-service will continue to grow quickly. If you can’t find human workers, you make your own robotic workers. Does Starbucks really need a barista when it’s proven robotics can make that same drink more consistently and faster and without the judgemental look and tone?
The workers didn’t go anywhere. Well, yours might have walked across the street for more money, but in a free-market economy, they’ll probably walk back across the street if you give them a call and another dollar an hour!
If you Google “Tim Sackett” you’ll find our Tim, and a truck driver chaplain. Our Tim is NOT the truck driver chaplain, although how awesome would that be if he was!? He is a prolific writer in the HR and TA space who just happens to also run an Engineering and IT contract staffing agency (HRU Technical Resources) out of Michigan. He also writes every day at his own blog, the Tim Sackett Project. Weirdly, he’s known as an expert in workplace hugging, which was kind of cool years ago, but now seems painfully creepy, but we still love him and he’s fairly harmless. Tim is also on the board of the Association of Talent Acquisition Professionals (ATAP), lifetime Michigan State Spartan fan, husband to a Hall of Fame wife, 3 sons, and his best friend Scout. He also wrote a book with SHRM called The Talent Fix, you can find it on Amazon.