Labor Shortages are a Decade in the Making
As the U.S. economy shifted into a full reopening earlier this year, it did not take long for reports of staffing shortages to quickly fill the airwaves. From construction and supply chain logistics to food services and Uber drivers, it is hard to find an industry that is not competing for talent. However, just because the water is now boiling over the pot, it doesn’t mean the stove was not burning for quite some time.
According to the National Federation of Independent Business monthly economic trends survey, small businesses have increasingly reported challenges finding qualified labor over the decade leading up to the pandemic. Coming out of the Great Recession, hiring firms were in a position of competitive strength as there was an oversupply of qualified workers relative to hiring demand. In 2010, just 24% of small businesses reported receiving few or no qualified applicants for available job openings. Fast forward to late-2019, and this percent share of firms reporting a skilled labor shortage was up above 54%. Through September, the share is up near 60% and continues pressing new all-time highs.
While current shortages are often framed in a COVID-context, the role of structural trends should not be ignored. Cyclical and pandemic-era policy forces are, of course, at play, including the impact of extended unemployment benefits. At the same time, these data suggest that the skills of workers have not evolved as quickly as business models and the demands of employers— a diverging trend that has only accelerated over the past year and a half.