There was a widespread assumption that after the peak of the COVID-19 pandemic, employment rates would pick up quickly and return to their pre-pandemic levels. However, something strange has happened along the way to “normal”—millions of workers have opted to stay out of the workforce. In fact, while the overall unemployment rate is only 1.1% higher than before the COVID outbreak according to Fortune magazine, “across the U.S., there is at least one open job for every American seeking work” with some estimating that the US economy is short over 6 million jobs.
While the current “supply-side” shortage translates into supply chain issues and understaffed businesses, the longer term projections for labor force participation gives serious cause for concern. That’s because, according to the US Bureau of Labor Statistics (BLS), participation in the labor force is expected to continue to trend downward, from 61.7% in last year to 60.4% in 2030—a trend being fed by a declining population that reduces the number of people available to work and the retirement of the last of the Baby Boomers.
The immediate result for businesses and organizations is that both today—and over the next decade!—it will become increasingly difficult to fill open positions with qualified staff.
Talent acquisition woes are certainly not new. In fact, hi-tech companies have been experiencing them for years in their quest to hire ever-more highly-trained programmers and coders. But the challenges that sector faces will become widespread throughout the entire economy, potentially with devastating effect. As I learned from the manager of a Supercuts in Houston recently, hair stylists are impossible to find and therefore 10 of her shop’s barber chairs remain empty at all times, service to walk-in customers suffers, revenue dives, and the business teeters. This situation is not sustainable.
Given this dire outlook, the question arises—how can business owners protect themselves from the vicissitudes of worker shortages? One way: Automate. If there are tasks that machines can take over, ’employ’ them sooner rather than later. A second way: Recruit smartly. For example, why not borrow a page from the hi-tech industry’s playbook and create a “bring-a-friend and get rewarded” word of mouth recruitment campaign? Your talented employees know other talented people, and they know who they are and how to contact them. Creating an well thought out, incentivized word-of-mouth campaign can ensure that you have a pool of potential applicants to fill vacancies. And while many companies only reward an employee whose friend gets hired, it may be good policy to create a tiered rewards system such that those referring qualified applicants who don’t get hired also get a reward. This will keep the potential talent pool filled, while your competitors will be searching in vain.