Since the start of the pandemic, America has been experiencing a labor shortage like never before. With more people quitting their jobs and companies desperately searching for candidates to fill open positions, organizations need to work harder to stand out.
Here’s everything you need to know about America’s labor shortage and what you as a company can do to beat it.
First, What’s Happening with America’s Labor Shortage?
The COVID-19 pandemic disrupted our lives in many ways. One of these ways includes how people work. In 2021, over 47 million people quit their jobs, a phenomenon coined The Great Resignation. Many people did so in search of better work-life balance, remote opportunities, and fairer compensation.
While lots of workers quit their jobs, many more are being rehired. Hiring is outpacing resignations. According to a JOLTS report, despite 4.5 million workers resigning in November 2021, 6.7 million people accepted new positions that same month.
It’s also interesting to note that according to a CNN Business article, the younger generations are recovering more quickly, with labor participation recovery rates at 82.1% as opposed to 83.1% pre-pandemic. Older generations – defined as ages above 55 – are not, with recovery rates at 38.4% instead of 40.3% pre-pandemic. For many, the pandemic prompted early retirement.
These conditions mean that companies need to work harder to hire and retain qualified talent. There’s no shortage of hiring, and quit rates remain incredibly high. To keep a competitive edge, you’ll need to be intentional about your hiring. More on that later in this article.
Top 5 Industries with Labor Shortages
Here’s a breakdown of labor force shortages by industry, according to the U.S. Chamber of Commerce.
This graph represents the number of unemployed workers with experience in their given industry compared to the rate of unfilled job openings. For instance, even if every person with experience was hired in the financial activities sector, the industry could only fill 45% of their job openings.
Shown above are the top five industries with the most significant labor shortages. Professional and business services and wholesale and retail trade are being hit the hardest, followed by financial services.
More Labor Shortage Statistics: Things Are (Slowly) Starting to Look Up
According to research by Capital Economics, the labor shortage is starting to wane, but not enough for companies to get complacent. You can see the shortage was at its worst in the US in October of 2021, with rates down by 33% since then. Still, as of January 2022, shortages remain significant.
Source: Capital Economics
Practically speaking, this means that although things may be looking up, companies still need to be concerned with America’s labor shortage. They need to be proactive and stand out to attract and retain the best talent. Here’s some inspiration on how to do that.
4 Things Your Company Can Do About the Labor Shortage
Option 1: Offer Hiring Bonuses
The percentage of job postings that mention sign-on or starting bonuses increased by over 50% since the pandemic. White-collar industries are up from around 0.9% to 1.3%.
No matter what industry you’re in, starting and sign-on bonuses can help give you a competitive edge – especially in white-collar industries where the percentage of companies offering bonuses is still rather low.
Signing bonuses range from 5-25% of salary, so make sure you’re somewhere in that range. The higher the percentage, the more competitive the offer will be.
Option 2: Provide Up-Front Salary Information
To combat current labor shortages, the percentage of companies providing salary information in online job descriptions increased from around 9% to 13.5%.
Since the search for fairer compensation is a significant reason behind The Great Resignation, giving candidates an idea of the salary beforehand entices them to apply. When no salary is listed, this can be discouraging. How do candidates know that you intend to pay them more fairly than their last company?
Option 3: Allow Flexible Work
Another significant reason behind people quitting their jobs – and the subsequent labor shortage – is the search for flexible work. By flexible, we mean the option to work either some of the time or all of the time remotely.
The pandemic shed light on the fact that being in the office five days per week isn’t strictly necessary for many fields. Employees feel empowered to seek jobs that allow them to work from home at least some of the time.
Considering one study found that 74% of people quit their jobs to work somewhere with flexible work options, implementing this is a consideration you should make if you can.
Learn more about the benefits of flexible work.
Option 4: Offer On-the-Job-Training
Since April 2020, both blue- and white-collar employers began offering more on-the-job training. Rather than requiring all new hires to know how to complete all their tasks, companies realized they could reach a wider talent pool by teaching new hires some skills they needed to succeed.
You can often find extremely smart, adept candidates who just need some help figuring everything out when they first begin work. Hiring people who learn quickly won’t cost your company too many resources while also helping curb any labor shortages you’re experiencing.
America’s current labor shortages make hiring and keeping the best talent an uphill battle. However, there are some ways you can combat these labor shortages, including offering bonuses, allowing flexible work, giving on-the-job training, and more.
If you’re still concerned about finding talent right now, consider outsourcing hiring. Search firms know their industries inside and out and save your company time and resources.
Jennings Executive would love to learn about your senior hiring needs and help you choose the best candidates for the job. Learn more about us today!