“We’re hiring.” Sound familiar?
If you’ve had those words echoing around your workplace for a while, you’re not alone.
Many small businesses have been feeling the effects of a shrinking pool of qualified job applicants.
What’s causing the labor shortage?
Which industries are impacted most?
What does it mean for the economy?
Scroll down to find out!
What is a labor shortage?
The definition of a labor shortage is the real or perceived lack of skilled and qualified workers to meet the demand for employment within a given industry, economy, country, etc. There are a number of terms that have the same meaning, including:
- Skilled worker shortage
- Shortage of qualified workers
- Insufficiency in the labor force
- and so on
In plain language, a labor shortage means there aren’t enough people to fill job openings. Why is there a labor shortage in 2019? We get to that next.
Why is there a shortage of skilled workers?
There’s no single reason why there’s a US labor shortage in 2019. Several factors have converged and caused this widespread issue, which makes it all the more difficult to contend against.
Here are the top 2 reasons why there’s a labor shortage:
- An aging workforce
- Pressure to attend college
1. An aging workforce
Baby-boomers are the generation of people born between the years 1946 and 1964, and they’ve been aging out of the workforce at an alarming rate. The U.S. Census Bureau reports that by the year 2030 all baby boomers will be over 65 years old, and that will mean that 20% of Americans will be retirement age. Other research shows that Baby Boomers currently make up roughly 25% of the U.S. labor force, compared to 33% Generation Xers and 35% Millennials. Those numbers are going to grow in difference as time goes on, but that’s not the only issue.
The careers that will suffer as a result of aging workforces include construction, manufacturing, auto repair, among many others. A few short decades ago, high school curriculums included many more ‘shop’ classes. Those shop classes ranged from woodworking to automobile repair, to plumbing, and more. Nowadays those classes have been transitioned out and replaced with courses focused more on science, technology, engineering, and mathematics (or STEM). Which brings us to the second reason.
2. Pressure to attend college
It isn’t only the social pressure of going to college that’s contributing to the skilled labor shortage – since many of those positions left unfilled do also require a degree.
Another part of the issue of attending college is that younger generations are increasingly interested in studying subjects that are unrelated to those industries that are suffering most from the labor shortage epidemic. Research by NSHSS shows that Generation Z’s main interest is in pursuing STEM-related fields, a trend that’s been evident among survey respondents since 2008.
When you remove so many experienced laborers from so many industries, while the next generations are simultaneously leaning further away from those same industries, the question of “how bad is the shortage” starts to become clearer – and more concerning.
Have a glance at some of the most alarming labor shortage statistics of 2019.
Labor shortage statistics 2019: Which industries need more workers?
According to a quarterly report by the National Federation of Independent Business, 27% of small business owners report that their single biggest concern is finding and hiring qualified staff. More specifically, 42% of construction businesses report labor shortage as their biggest problem. And as for construction and transportation firms, 35% of them also reported that their most pressing issue is the lack of skilled workers.
27% of small #business owners report that their single biggest concern is finding and hiring qualified staff - what does that mean for the economy at large? Click To Tweet
Results of that NFIB report also found that nearly 60% of manufacturing firms and almost 70% of construction firms received either few or no qualified applicants for their skilled-position openings.
Clearly skilled labor shortage is a real concern among many different industries. Is it justified or are people raising the alarm for no good reason?
How bad is the labor shortage?
The manufacturing industry faces an estimated shortage of 2.4 million workers over the next decade. That means roughly 53% of manufacturing positions are projected to go unfilled between now and 2028.
Trucking companies are also having a tough time filling positions, particularly truck drivers. The American Trucking Association found that, in 2018, driver shortages reached an all-time high of more than 60,000 positions left unfilled. That shortage is expected to reduce by the end of 2019, but if the status quo remains then the trucking industry is expected to see that shortage grow to more than 160,000 (still eclipsed by the projected shortage of manufacturing workers).
Lastly, data gathered by the U.S. Chamber of Commerce finds that 54% of construction businesses report difficulty in finding skilled workers, and 70% of firms say that labor shortages are creating challenges to meeting scheduling requirements.
Additionally, according to the Associated General Contractors of America, roughly 81% of construction firms believe it’ll either continue to be hard or become even harder to find skilled workers over the next year.
How is this affecting the economy?
Data from Statista shows that, in 2018, the percent added to the United States’ Gross Domestic Product by industry was:
- 11.4% from the manufacturing industry
- 4.1% from the construction industry
- 3.2% from the transportation industry
There were only three industries that ranked higher than manufacturing, and all three ranked in among the 11 biggest industries. Clearly, if these industries were to continue taking hits and slowly production, it could mean serious consequences for the economy at large.
What does the future hold? Will skilled workers return in 2020?
Only time will tell, but chances are – one way or another – industries facing labor shortages will come up with solutions. Those solutions may include raising the price of labor (paying more for the job), a stronger dependence on advanced technology to replace human brains and hands, or it could mean outsourcing for labor.
Whatever the case may be, it’s unlikely that the entire manufacturing, construction, or transportation industry will disappear for eternity simply because of the US labor shortage in 2019. As a business owner in one of those industries, the current lack of skilled labor will certainly still pose its risks. It won’t always be the answer, but sometimes additional business financing such as a business line of credit can help you overcome those hurdles.
Of course, the type of business will affect the kind of industry loans a business needs, as well as the specific circumstances that business finds itself in. Be sure to weigh your options carefully in order to choose the right funding solution for your business.
Applying for business funding through Become means speed and efficiency so that you can place your focus where it belongs: growing your business. The LendingScore™ Dashboard will also save you stress by guiding you on which factors you need to work on in order to improve your funding odds. Within a few hours, you could be funded and on your way to clearing the hurdles put in your way by the labor shortage.
We hope that by now you’ve got a firmer grasp on what the big deal is about the labor shortage. This may have come as news to you, but it’s definitely a concern shared among many small business owners. That’s why we encourage you to spread this info around so that other owners like yourself can benefit from these labor shortage statistics!