Just How Big of a Problem Is the United States’ Labor Shortage?

If it seems to take longer to get an appointment to fix your car than it used to, or the wait times for a plumber, electrician or other skilled tradesperson to do your home repairs seem to have gotten longer, it’s not your imagination. The United States is experiencing a shortage of skilled labor, a problem so acute that it has become a crisis.

There’s also a shortage of unskilled labor. I have lived in California for 20+ years and can remember that finding someone to clean gutters, paint a fence or help with landscaping tasks was as easy as driving to the local Home Depot parking lot to recruit as many workers as I needed. No more. Whether it’s due to stricter immigration policies or an increased need for laborers in the agricultural sector, the worker pool has dwindled to a fraction of what it was.

The lack of unskilled workers is probably partially due to evolving immigration policies. In the years 2015 and 2016, the U.S. Census Bureau reported 1,049,000 immigrants, but by 2020 and 2021, that number had decreased to 247,000 — a 76-percent drop. The thinking behind those policies might be that fewer migrants means more work opportunities for citizens, but so far, working-age Americans don’t seem to have made much of a dent in the shortfall.

There may be other reasons why the number of unskilled laborers is flagging, but when it comes to skilled workers, the reasons are many. Some of them go back just a few years, while others have roots in the last century.

The Extent of the Problem

In July 2024, U.S. Chamber of Commerce data showed 8.2 million job openings in the U.S. and only 7.2 million unemployed workers. To quote from the Chamber of Commerce report: “If every unemployed person in the country found a job, we would still have millions of open jobs.”

A labor shortage is good news for workers because it forces up wages. Still, employers can’t always pay them, or they are just unwilling to, especially if the shortage is temporary, as it was during the COVID-19 pandemic. Economist Adam Ozimek, who owns a small business, said in an interview: “When the labor shortages go away, then you’re stuck with a higher nominal wage than you would need.”

The result is that businesses go understaffed, prices rise and consumers pay more for goods and services. But is the current labor shortage a temporary byproduct of the pandemic, or are longer-term factors involved that call for a societal course change?

Factors Contributing to the Skilled Labor Shortage

As the population ages and more workers retire, there is a shortage of young workers available to take their places. The pandemic accelerated the retirement rate as part of a phenomenon now known as the Great Resignation.

After the pandemic, some two-thirds of workers who lost their jobs during the lockdown are somewhat or not very active in searching for a new job. According to a survey conducted by the Chamber of Commerce in 2022, at the time:

• Half of the respondents were not willing to accept jobs that don’t offer the opportunity for remote work.
• Nearly one in five either retired, became homemakers or transitioned to part-time work.
• Younger people (aged 25 to 34 years old) reported prioritizing personal growth over working. Some 36 percent of them were seeking new skills through training and education before attempting a return to the job market.

NOTE: To that last point, people need training because they didn’t get it in their school years. Since the 1960s, young people have been pushed to pursue college degrees that would land them more lucrative white-collar jobs. Education in the trades was stigmatized, high schools phased out trade programs, and blue-collar jobs developed a negative image. This process accelerated in the 1990s and 2000s.

Preparing Young People for the Labor Market

In a recent opinion piece for the Washington Post, writer Heather Long envisions an apprenticeship renaissance that could provide three million job opportunities in the next five years and notes that she believes the momentum for this to happen is already there. The U.S. government began funding apprenticeship programs at the end of the Obama administration and today invests $244 million in them.

At present, the U.S. lags behind other countries in the number of programs it offers. Only 0.4 percent of the U.S. workforce is involved in apprenticeships, compared to two percent in Britain and France. In Germany and Switzerland, half or more of young people are involved in apprenticeship programs.

Apprenticeships extend beyond the construction trades, with manufacturing, tech and finance firms also offering programs. Apprenticeships and trade schools qualify young workers for good-paying jobs with pensions and instill a sense of purpose. Not only that, “earn-while-you-learn” apprenticeship programs provide a living wage now, not merely the promise of one in the future.

Perhaps most importantly, as Anne-Marie Kovacs points out in Forbes, the skills young people acquire in apprenticeship programs and trade schools are not only necessary but also resistant to automation, outsourcing and AI. That’s a big plus today, and it’s bound to be an even bigger plus going forward.

Sources

• The Washington Post: How can more young people live the American dream? There’s a simple answer; August 2024.
• The Atlantic: The Coming Labor Shortage Is Not Good News; July 2024.
• U.S. Chamber of Commerce: Understanding America’s Labor Shortage; July 2024.
• Forbes: The Crisis Under The Hood: America’s Skilled Labor Shortage; June 2024.