Since the pandemic, American companies large and small have sought to keep their staffs full. They were forced to raise wages and offer extra benefits, while workers were free to seek better conditions or to resign due to the great phenomenon. But now, layoffs are increasing day by day and job offers are decreasing. The economy is slowing as the Federal Reserve is easing at its fastest pace in decades. From some objective point of view, the balance of the labor market should tip in favor of employers.
But it is not so. It still seems incredibly difficult to fill qualified personnel. I don’t know how the workers still have power, and the sea change that has taken place in the labor market is all that they have ever been able to maintain.
The change to the diameter With the baby boom that followed World War II, businesses enjoyed an endless supply of workers. Hate your job? Well, we will replace you with one of the hundreds of employees who will be happy to take your place. The abundance of workers made them cheap and efficient.
But now that those baby boomers are giving way, companies are making it difficult. “The labor shortage we’re facing today is likely to stay that way, and maybe even get worse. It’s going to remain really difficult to attract people and get them into new jobs,” he said. Jay Denton, director of analytics. at LaborIQ, a company that provides salary analysis to employers. The United States faces a perennial labor shortage.
Today it may seem like ancient history, but the baby boom caused a great change in the American market. As the boomers came of age, the job market grew in size. The working-age population increased 18% in the 1960s, and another 19% in the following decade. Those were good times to look for work.
But the boomers, unlike their parents, did not have many children. The pill and the legalization of abortion caused fertility rates to plateau: from 3.7 children per woman in 1960 to 1.8 a decade and a half later. In a few years, the influx of women and immigrants to the active population has changed the birth rate.
But in 2000, the growing amount of female labor reached its peak. And after Donald Trump came to power, immigration plummeted. So by the time the baby boom generation began to take off, the labor force had already suffered.
Yes, COVID-19 has increased the shortage. Immigration has stalled, the baby boomer wave of retirement has begun in earnest, and millions of young people have decided to use the dead market and retire early. “All these tailwinds were pushing in the same direction, and suddenly they all stopped together. The slow demographic tidal wave is finally coming,” says Aaron Terrazas, chief economist at research website Glassdoor.
In April, the US unemployment rate fell to its lowest level since 1969, meaning few jobs are left to pay. Despite all the talk that “no one wants to work anymore”, the proportion of people between the ages of 25 and 54 with jobs is higher today than before the pandemic. and the poverty had only just begun.
The Congressional Budget Office expects the labor force to grow by only 3.6% between 2022 and 2031, an eighth of the pace of the 1970s. In the decade that follows, growth is projected even further, up to 2.9%. In other words, employers are facing decades of stagnation.
What does the lack of eternal labor imply for the workers of the future year? The bottom line is that all your work will be a struggle. First of all, they can expect higher wages: in April, median hourly wages were up 4.4% from a year earlier. Denton, a labor analyst, expects them to rise above the 2% annual rate in the decade before the pandemic.
To attract enough workers, employers are also forced to offer better benefits and working conditions. Terrazas points to “a big change in mindset” that is taking place in the transportation sector.
More and more drivers began to pull the team’s long journeys, making shorter commutes rather than being forced to endure the cream of the crop. “When labor is abundant, it is easier to apply business practices. But when labor is scarce, companies are more active in listening to what workers want,” explains Terrazas.
Another effect of the labor shortage is that in the coming years, younger workers will move faster than the older bosses have retired. Last year, according to one estimate, 29% of employees (and 40% of CEOs) were 55 or older. As veterans begin to retire, promotions will come.
“There are many opportunities for future career development,” says Denton.
But perhaps the biggest change is not what employers hire, but who they hire. Faced with shortages, societies will be forced to bring in those they have long avoided or neglected. The US Administration is easing drug screening requirements for job candidates, and more and more companies are hiring people with criminal records.
Companies are also making jobs more flexible to attract mothers with babies and people with disabilities. The demand for labor will increase due to the shortage of workers.
But the new problem with this labor shortage is this: employers are not sitting idly by. The work is done in the clinic, and the patient does not want it. “High prices lead to innovations that increase supply and ultimately lower prices. Some of these innovations will be small, and some of these innovations will be really big,” says Terrazas.
What kind of “innovations” will entrepreneurs introduce? Some will resort to a tried and tested technique: offshoring. If companies cannot find enough workers at home, they will look abroad. Denton expects many to say, “We don’t have the people to do what we do here, and we can’t find them anywhere we can.”
As I wrote last year, tech companies are already moving their software development functions offshore by hiring them in places like Latin America.
Other companies will try to eliminate the need for employees altogether. For example, unemployment and hospitality do not have access to a steady stream of disabled young workers. Restaurants began to replace waiters with other organizing systems, and hotels reduced the need for guard staff by eliminating daily room cleaning.
These are changes that companies could have easily made in the past (mobile apps, for example, have been around for over a decade), but didn’t think they were worth the investment until staff shortages hit. Now the question is: at what point will these adaptations be necessary for the next generation?
This means that there will be a shortage of labor, and there will be more long-term conflict than long-term peace. Power never changes hands without a fight. A large number of workers will benefit from the new demographic change, but the higher wages of employees, the greater the movement of employers.
“That there will always be an abundance of work is hardly a risk. It would be wrong if the straight line would always go up. But that will be the way,” says Terrazas.