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3 min read

Strategies for Competing for Talent in America’s Labor Crisis

Early in 2021, Emsi Burning Glass published a paper called the Demographic Drought. This article outlines the key demographic and economic drivers behind the current labor crisis. It is important to know those drivers as diagnosis drives treatment options.

A Brief History of How We Arrived Here

Although we have spent a full generation talking about what impacts would happen when baby boomers retired and left the labor force, the truth is, we simply did not understand the effect that their tremendous ability to build wealth would have. This boomer effect can be stated in 4 points:

  1. Boomers were a very large labor force not only because of high birth rates, but because women entered in earnest and almost doubled our supply of talent starting in the early 1970s.
  2. Boomers were driven, educated, and passionate about upskilling because they had to do those things in order to compete for job openings with so many workers in the labor force.
  3. These driven people, especially couples who worked for 30-40 years, accumulated enormous household wealth, wealth that they want to enjoy. We see this in the data that shows that they are retiring earlier and showing no interest in returning to work. The average boomer will retire with $1.2M in savings.
  4. Boomers encouraged their children to go to college and the data shows that those children, largely millennials, have less interest in moving out of the home, have lower labor force participation, and are choosing part time work over full-time work. Additionally, they will inherit trillions making them the richest generation in history.

Further crippling our labor force are two other long running issues, opioid addiction and its related deaths amongst prime age men, and the rapid decline in immigration.

Altogether, for the first time in its history, the US has very little lower skilled labor supply, and an enormous amount of service and manufacturing jobs that need filled. Because of declining birth rates, we know that these labor shortages will be with us, quite possibly for forever for all levels of jobs.

Employers across the country are feeling unheard of levels of pain and everyone wants to know, what can be done?

How to Fight the Labor Shortage Battle

Let’s get one important item out of the way. We do not now and do not expect to see any significant increases to the U.S. labor force outside of the 3-4M people that we expect to eventually come back from Covid related shutdown and relief package side effects. That number is well short of the 10M we need to fill all our job openings. So, what can you do? Let’s break these up into two groups.

The Short term:

  1. For unskilled labor, reduce job posting requirements to the key interpersonal traits you must have, and absolute minimum physical skills needed. Cast the widest front-end net possible and sort it out on the back end.
  2. Pursue talent, don’t expect it to find you.
  3. Learn how to sell your job. Sure, you are passionate about your company and industry, now figure out how to transfer that excitement to the people you are pursuing. Think college sports coaches who are competing for recruits and must sell the full package of their school.
  4. Stay competitive with wages but work to find non-wage incentives that resonate.
  5. Flexibility is the new name of the game. If you cannot flex the workplace setting, try flexing or rotating the responsibilities of the job itself.
  6. Promote your great people quickly. Do not wait for someone to poach your ambitious and driven talent and try to counter, show your appreciation before anyone else can.

The Long Game:

  1. The key to a long-term employment strategy starts with making sure you are set up to capture the right data. Before you start an initiative, establish your base line measurements from which you will measure the effectiveness of any strategy you put into place.
  2. Explore partnerships to land “hidden” talent pools (ex-prisoners, people with spotty employment backgrounds, people with disabilities, caregivers, etc...) that are often not fully utilized. However, focus on one but no more than two of these groups to prevent wasting resources. Measure what works, what doesn’t, perfect it and grow.
  3. Elevate labor force planning to the boardroom level. As companies explore sales goals, product goals, and other initiatives, they must have conversations around how they are utilizing labor and how they could more effectively do so in the future. How can you cut your dependency on labor? Would robotics/AI be a more worthwhile investment?

No matter what strategies companies employ, they must start, with intention, towards implementing them. Our labor force issues may only intensify, so a deliberate and consistent conversation around labor force planning is a must to survive going forward.

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