We’ve all heard about the skills gap - the difference between the skills required for a job and the skills employers are able to find. It has become an increasingly growing issue for companies in the US over the past few years.
Unfortunately, this problem is set to escalate in 2021 as we move into the post-pandemic world. In fact, the issue is no longer just a skills shortage. It’s a complete shortage of workers in general.
Small and medium-sized businesses were hit hard by the pandemic in 2020 and 2021, which resulted in thousands of layoffs across the US. Yet despite these massive layoffs, US businesses are still struggling to find the workers they need to fill open roles.
In this blog, Conexis VMS is going to look at why the US worker shortage is an issue, what could offset some of these workforce challenges for companies and what you need to do to position your company at the top of the list for potential workers.
Why is the worker shortage a growing challenge for US companies?
According to a new report published Tuesday by the US Chamber of Commerce, the US is suffering from a “workforce crisis” that is slowing the nation’s economic recovery.
The Labor Department reported this week that the US had a little more than 9.2 million vacant job openings in May, a record-shattering number despite the 9.3 million unemployed Americans. For comparison's sake, before the pandemic shut down broad swaths of the nation's economy, there were roughly 7 million available jobs.
The Chamber estimated there are about 1.2 available workers per job opening; before the crisis, the ratio was hovering around 1.
These statistics point to the fact that the skills gap is no longer the only challenge when it comes to businesses filling open positioning. Now the challenge is just filling open positions in general, whether skilled or unskilled workers are needed.
In a blog post, Chamber economist Curtis Dubay wrote: “While some skills mismatches remain, the major problem is that the available workers are reluctant to go back to work, whether because of lingering COVID-19 concerns, childcare issues, or generous government benefits.”
The report from the US Chamber of Commerce points at a number of reasons for this shortage in workers, including:
Unemployed workers aren’t interested in coming back to work
One of the biggest challenges that’s intensifying the shortage in workers right now is that a large number of workers have been let go from their jobs, and the vast majority of these aren’t interested in coming back to work anytime soon.
In fact, half (49 percent) of Americans who became unemployed during the pandemic say they are not actively or not very actively looking for work; less than a third (32 percent) report that they are strongly active in their job search.
Unemployment benefits are deterring many from returning to work
In response to the COVID-19 pandemic, Congress passed a series of relief bills that provided recipients of state unemployed benefits an additional $600 in weekly benefits. This additional $600 per week in addition to what they were already receiving from the state was later reduced to $300 and is set to end on September 6, 2021.
This has led to one in six unemployed Americans who are not currently looking for work (16 percent) say the amount of money they are receiving from unemployment benefits and other government programs makes it “not worth” pursuing a job. The Chamber of Commerce estimates that it equates to around 2.8 million, of the current 9.3 million unemployed people in America, who will remain on the sidelines this year.
Childcare, lack of skills and additional barriers to reentry
Numerous other factors are also contributing to unemployed American’s decision not to return to work, include childcare demands, the skills gap and continued concerns about the COVID-19 pandemic.
Other factors that are deterring US workers from returning back to work not mentioned in the US Chamber of Commerce study include:
- Pent up customer demand as the US moved out of the pandemic means companies will need to dip into the labour market to meet growing customer demand.
- Employee loyalty has been high during the pandemic, with employees holding on to their jobs to see how the situation plays out. It’s expected that there will be a surge in people looking to either retire or move on to new opportunities as we move into the post-pandemic world.
- Pandemic restrictions meant projects were put on hold for many businesses. With projects now resuming, organizations are going to need to access the labour market to bolster their workforce to complete those projects.
How to position your organization above its competitors in the hunt for workers
With the above in mind, what can your organization do to put itself above its competitors when it comes to meeting workforce targets? We’ve listed a few tips here.
✔️ Offer a competitive salary: With your business fighting against its competitors from a small pool of workers, it’s likely you're going to have to increase the amount you pay your workers. Increasing your pay is an investment into the quality of your workforce and, in turn, your company’s future growth.
✔️ Make sure you optimize your contingent workforce: The non-traditional workforce gives you a great way to source and access both skilled and unskilled workers to meet your workforce needs. Just make sure you are using a vendor management system (VMS) to properly optimize how you manage your staffing agencies. This will ensure you have complete visibility and control over workforce spend and quality.
✔️ Offer a flexible work environment: In such a competitive environment, pay is no longer enough. Workers re-entering the workforce want to know they’ll have a good work-life balance when they start working again. To help offset this worry, offer flexible scheduling and give some sort of control back to your workers.
Are you interested in learning more about the US worker shortage, or simply want to learn how using a VMS can help you better manage your staffing agencies and optimize your contingent workforce? Get in touch with Conexis VMS today.
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