The United States raises alarm about a significant labor shortage as older individuals continue to leave the workforce, with insufficient numbers of younger people entering to replace them, unless there is an increase in immigration.
The U.S. Chamber of Commerce issued its small business update on Wednesday, painting an optimistic portrait of the economy while acknowledging that labor shortages will probably persist for the long term.
The reason, explains the Chamber’s chief policy officer, Neil Bradley, is because of demographics: many baby boomers are exiting the workforce without enough younger people entering to replenish the turnover and meet the labor demand.
“Anyone who tells you that this labor shortage, that we’re moving through it and it’s going to be over, is ignoring what is happening with the demographics of our country,” Bradley said during the address. “And this is going to be with us for a while.”Some have coined the phenomenon of the silver tsunami, a reference to the tidal wave of older workers who are retiring.
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Section the Labor Shortage will affect
Mercer predicts that there could be a gap of 3.2 million jobs in the U.S. healthcare industry in the next five years, while Deloitte predicts there’ll be 2.1 million manufacturing jobs to fill by 2030. One study from Korn Ferry, a Los Angeles-based consulting firm, forecasts that talent shortages could surpass 85 million people globally by 2030.
The Conference Board also thinks the labor shortages will be severe, especially in industries such as construction and maintenance. To meet demand in this year alone, the construction industry aims to draw in about 500,000 more workers beyond its normal hiring cadence, according to a projection from the Associated Builders and Contractors, a trade association. Small businesses bore the brunt of labor shortages over the past few years. Though the problem has significantly improved since 2020, it hasn’t vanished altogether. Data from the Bureau of Labor Statistics shows that the labor force participation rate is at 62.5 percent, down from 67.2 percent in 2001, and forecasts predict that the participation rate will sink further.
The solution to the Labour Shortage
While not a new strategy, turning to immigrant workers is one solution that can help alleviate labor shortages. “We need more people coming here legally, who are able to work coming the right way,” Bradley said.
To stick out in the competition for workers, Bradley advises that founders “leverage their natural benefits.” Part of the draw of working at a small business, he adds, is increased flexibility compared to something stuffier, like a corporation.
Entrepreneurs are also increasingly turning to automation to help them meet demand in positions that they cannot fill. “[T]his push to use technology to maybe offset what used to be done with human hands is going to be a really important aspect,” Bradley said. Artificial intelligence “is going to save small businesses: it is going to make them more efficient, more productive, it’s going to help them grow [and] it’s going to help them meet demand.”
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