Business owners are mistakenly believing that there is a pool of workers waiting on the sidelines for something magical to happen to convince them to rejoin the workforce—that pool doesn't exist.
Recently, I was sharing a cab with a client on my way to speak at a conference. He turned to me and said that he was interested to hear what I had to say about the state of the U.S. labor market.
When I asked him what specifically he was hoping to hear in my talk, he said, “Well, I'm hoping you're going to tell us where the workers went and when they're going to come back. When are they going to get off the sofa and back to work? We're dying out here and people just don't seem to want to work anymore."
If only I had a dollar for every time someone asked me this exact same question: Where did all the workers go, and when are they going to come back? The truth: Everyone is back to work. They've been back to work for a long time.
The problem is there just aren't as many of them as there used to be. And when I explain this to people like my client, they seem surprised. And that, in turn, surprises me—because these labor trends have been on the horizon for a long time. Business owners have been ignoring the reality that there aren't enough workers for all the jobs out there.
In fact, as of August, there were 6.4 million unemployed persons in the U.S. labor market, according to the U.S. Bureau of Labor Statistics, while the most recent Job Openings and Labor Turnover Summary from the BLS shows there are 8.8 million job openings.
And what's worse is that we don't anticipate this changing anytime soon. In fact, this has become my personal and professional mission, it seems—to travel the country speaking to business leaders, making them aware of what they should already know: There simply aren't enough workers to satisfy all of the promises companies have made to their customers, let alone to support their growth projections.
And here's why:
1) Millions of missing workers. Since the COVID-19 pandemic, we have lost approximately 8 million workers from the workplace. There are a number of places those workers went, such as:
2) An aging workforce. Let's face it—just like you and me, the U.S. is getting older. The nation's median age is 39 years old, according to the U.S. Census Bureau, and we're aging faster than at any other time in our history.
The youngest of the baby boomers will reach 65 by 2030, and the U.S. population 65 and older reached 56 million—or nearly 17% of the population—in 2020, according to the census. As these workers age and retire, the number of Generation Z and following alpha generation workers are not sizeable enough to replace exiting baby boomers.
3) Lower birth rate. The current U.S. birth rate is among the lowest it has ever been historically and is projected to decrease over the rest of the century, according to Pew Trusts. We're simply not giving birth to enough future workers to replace the workers who currently are and will retire. Unlike their older counterparts, millennials are putting off marriage and childbirth until later in life and are having fewer children than at any time in our history.
4) Decreased immigration and refugee resettlement. So, if U.S. birth rates aren't high enough to provide enough future workers, the strategy historically used by other industrialized nations facing a similar aging workforce and low birth rate is to increase immigration. However, the U.S. has done the opposite. Net immigration level peaked at 1.2 million in 2016 and then declined every year since, only just rising back in 2022, according to the U.S. Census Bureau.
5) Employment projections. The U.S. economy is projected to add 4.7 million more jobs from 2022 to 2032, according to the BLS. But we're already millions of workers short. And this shortage is anticipated to persist for the foreseeable future. Because of this, the unemployment rate is stuck below 4.2%—currently at 3.8%, according to the most recent data—which is what economists say is full employment.
The numbers are kind of scary. This is definitely something business leaders should be staying up at night thinking about—or at least having some conversations with their best and brightest internal and external advisors about. Yet, I get the sense that business owners mistakenly believe that there is a pool of workers waiting to be convinced to rejoin the workforce. That pool doesn't exist. Everyone is working. This is just the new normal.
If this comes as a surprise to you, you're not alone. And it's not too late. What's required is simply a mindset shift and a utilization of the tools business leaders already have at their disposal, such as investing in retention and employee engagement initiatives; implementing technology and outsourced or offshore labor alternatives; upskilling their existing workers; and investing in soft-skill training for their managers and supervisors who are the front line preventing employee turnover and attrition.
The good news is most of these initiatives cost little to no money to implement and to do well. All it takes is dedication and commitment to do one and only one thing: to value employees for the increasingly rare asset that they are.
Claudia St. John is president of Affinity HR Group, Inc. Affinity HR is the endorsed HR partner of Big “I" Hires, the Independent Insurance Agents of Virginia, Big I New York, and Big I New Jersey. Reach out to Affinity HR Group via email or 877-660-6400 with your HR and hiring needs.