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How the ongoing labor shortage is affecting businesses

11/16/2021

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Businesses across the nation have been experiencing ongoing labor shortages, which were met with extremely high unemployment rates during the COVID-19 pandemic. According to a 2021 report from the Congressional Research Service, unemployment rates reached a record high of 14.8%. These numbers are slowly approaching average levels and the rate currently stands at 4.6%. However, while the unemployment rate finds its way back to normal, a 2021 report from the Bureau of Labor Statistics states that there are currently 10.4 million job openings in the nation. This large number of openings continues to be an issue for businesses, as they are forced to devise new methods and processes to manage these ongoing staffing shortages.

What caused the labor shortage?
There are several reasons attributed to the ongoing shortages, and one of the main reasons is that the number of working-age people decreased in 2020. A surge in the number of Americans retiring has meant that the growth in the working-age population is not currently keeping pace with those leaving the workforce.

Other rationales for ongoing shortages include decreases in immigration, demands for better wages and working conditions, slower birthing rates, and the consequences of the national health crisis. However, despite these varied explanations, the most significant reason for businesses to keep in mind is the necessity for better working conditions and benefits. This may be the best approach to combating these issues and attracting new workers as shortages continue.

The impact on businesses
Organizations have been burdened by the consequences of these work deficits, and they are continuing to manage them to the best of their ability. Some of the ways that businesses have been resisting the ongoing labor shortage include going to offshore jobs and moving online. By utilizing different locations and newer technology, organizations are starting to cast wider nets in the workforce arena.

Moreover, remote work isn't the only way businesses have been using technology to combat these issues. There is currently a large trend in automation for businesses, wherever it is applicable. This effectively decreases the need for surplus manual labor and saves the company time and money. While this increase in online work and automation can be a great way for businesses to control workforce shortages, it's not a one-size-fits-all solution to the problem. It's significant to note that automation and remote work are simply not applicable to every industry or organization, so it's up to individual businesses to explore their potential in the digital sphere.

Another effect of labor shortages that businesses should recognize is the job-seekers market it has created. Workers have more bargaining power in the current job market than before, often demanding higher wages, better benefits and improved working conditions in general. Adhering to these requests is an effective way for companies to attract talent, but this can put a considerable strain on smaller businesses that do not have access to the same resources.

Key takeaways
While ongoing labor shortages continue to plague many businesses and industries, it's paramount for organizations to recognize that it's a job-seekers market in a high-tech world. Utilizing technology and implementing better working conditions might be an effective approach for organizations to attract and retain potential employees. However, it is most important for organizations to re-examine their own structures and choose the most beneficial course of action individually.

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