Labor Shortages: The Disconnect and Possible Solutions

The problem is clear: Employers are struggling to recruit workers despite high levels of unemployment. But the reasons for the hiring difficulty are harder to pin down.

Nearly 90 percent of 1,200 employers surveyed by the Society for Human Resource Management (SHRM) said they were struggling to fill open positions this summer, and 73 percent said they’re seeing a decrease in applications for those hard-to-fill positions. About half of organizations said they’re seeing an increase in the number of applicants failing to reply to a request for an interview. Businesses are having the toughest time filling hourly, entry-level and midlevel nonmanagerial positions, especially in sectors such as manufacturing, hospitality, food service and health care.

Strictly speaking, there isn’t actually a labor shortage—defined as not enough available workers to fill open jobs—because there are 9.5 million people classified as unemployed and looking for work, and 9.2 million job openings. The number of people looking for jobs even grew in June, according to the Bureau of Labor Statistics.

Still, employers report difficulty finding workers. The majority (70 percent) believe expanded COVID-19 unemployment benefits have been the primary factor making it difficult to find workers, prompting half the states to reduce or opt out of them.

“Recruiting and retention difficulties are more pronounced in blue-collar and manual services jobs,” said Gad Levanon, head of the Labor Market Institute at The Conference Board in New York City. “These workers face high infection risk, [are afraid of contracting the virus] and elevated unemployment benefits are an attractive option for workers with relatively low wages.”

Art Bilger, founder and CEO of WorkingNation, a workforce development media nonprofit in Los Angeles, said that economists are split on whether the expanded unemployment benefits are the driving reason businesses can’t find enough workers, and other factors must be considered, including continuing health concerns around the COVID-19 virus and the lack of affordable child care.

Notably, employers in the SHRM research were significantly less likely to believe their hiring difficulties are tied to child care or safety concerns.

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