The country is experiencing a significant hiring issue, and this problem has been felt in a major way by businesses in Virginia.
Over the past several months, businesses looking to hire new workers have been struggling to do so. The number of job openings nationally is not only at a record high, but also soaring high above previous levels. Quit rates are at a record high, which suggests that individuals are switching jobs to pursue better offers. Wages are rising quickly in specific industries where pay tends to be relatively low and where the labor shortages are the most severe. All of these issues are occurring despite the fact that payrolls are still more than $5 million below pre-pandemic levels.
Several factors are keeping individuals out of work despite the clear demand for labor countrywide:
- The pandemic remains a huge factor. The number of people testing positive for COVID-19 still remains high, and one positive test can push several people into quarantine and out of the labor market. Furthermore, an unknown number of people are suffering long-term COVID-19 symptoms that make it difficult to return to work. As has always been the case, it is more difficult for individuals who have been unemployed for a long time to find and secure job opportunities.
- The country’s older workforce has targeted earlier retirement versus going back to work. It’s believed that a prominent number of older workers who lost their jobs because of the pandemic are choosing to retire. Stock market gains and the 20 percent jump in US home prices over the last year have boosted household balance sheets to the point that retirement is a more attractive and more affordable option.
- Quicker structural changes are leaving some in the dust. The pandemic spurred quicker structural changes for companies that have left some people out of work or were forced to seek new employment elsewhere. The accelerated shift to e-commerce, increasing popularity to a hybrid working schedule and potentially faster automation are some examples of these changes.
Despite these factors, we expect rapid job growth over the next year. This should relieve some of the country’s labor shortages. Enhanced unemployment benefits have ended, and some people will be forced back to work as their savings run out. Most schools have reopened throughout the country, allowing more parents of young children to return to work.
For owners of businesses that are struggling to hire, there are several considerations that will help in the short and longer term.
- Look to your current employees for answers to your hiring woes. Consider re-examining what your workers (and stakeholders) want. The question of filling vacancies may be about more than just pay and benefits. Flexible working and greater training opportunities might be the missing ingredients, and your employees may be the ones who can confirm that for you.
- Review your organization’s capital mix. If labor is scarce and the economics speak against higher wages and tighter margins, consider doing this. Increased automation and nearshoring could make sense for your firm, alongside employing fewer but higher-skilled workers. The world is becoming more digital. Lockdown measures during the pandemic have forced many companies to fundamentally change the way they buy and sell goods and services, in turn accelerating the pace of digital adoption. Perhaps this shift is an option for your company.
- Consider training your company’s existing workforce. Change your outlook on worker shortages from a negative to a positive. These hiring issues may reveal education and a skills gap among existing employees. An increased investment in your people might allow your business to overcome hiring problems by upskilling workers and boosting firm productivity. In periods of accelerated economic change, it makes sense for a company to focus training on longer-term trends that will impact performance and profitability. Greater digitalization, increased scrutiny of environmental and social factors and an increase in worker appetite for “portfolio careers” suggest the returns on employee training, and development could be rising for companies.
Today’s worker shortages can’t be explained by one simple reason. Similarly, there isn’t one universal or sustainable answer to fix a complex problem such as this. But by taking the time to figure out the particular reasons why organizations are facing labor shortages and work on a variety of potential solutions, business owners gain the best opportunity to bring in the right workers to fill the right jobs at the perfect time.