Report: Record US Labor Shortage ‘Looming’
TUESDAY, SEPTEMBER 24, 2024
A new data report has found that employers in the United States are soon anticipated to face the largest labor shortage the country has ever experienced.
According to a recent study from labor market data and analysis firm Lightcast, the flood of Baby Boomers’ retirement, plummeting childbirth rates and historically low labor force participation will compound to create a deficit of six million workers by 2032.
Report Findings
The new report, “The Rising Storm: Building a Future-Ready Workforce to Withstand the Looming Labor Shortage,” reveals a “perfect storm” that is expected to hit the healthcare, hospitality and service industries the hardest.
The findings are a follow-up to Lightcast’s previous “Demographic Drought” series, that reportedly first predicted the coming labor shortage and opportunities to increase the labor participation rate.
Lightcast explains that this latest version offers new insights into the labor force dynamics shaping a significant transformation in the way of work, as well as actionable strategies businesses, educators and government leaders should implement now to protect their organizations.
“This report reinforces our view that we are on the cusp of an era of unprecedented turbulence in the labor market—in the U.S. and all over the world,” said Lightcast CEO Chris Kibarian.
“To help our public and private sector clients thrive in challenging market environments, we feel it is important to first understand root causes and areas of acute shortages so we can focus our efforts on building sustainable solutions for education, training, workforce management and economic development. We are committed to successful outcomes as much as we are committed to sharing powerful labor market insights.”
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A new data report has found that employers in the United States are soon anticipated to face the largest labor shortage the country has ever experienced. |
According to the data and analysis, the workforce deficit is being driven by several key factors, including:
- The “Silver Tsunami” hitting shore: Of the five million workers who have exited the workforce since 2021, 80% were over the age of 55. Now, the average retirement age has dropped to 61, diminishing any hope that older workers might fill new gaps in the labor force;
- A rapid decline in the U.S.-born labor force: The only growth in the U.S. labor force since 2019 can be attributed to immigration, including April's record-high level of prime-age women participating in the workforce. Foreign-born workers are keeping the economy afloat;
- A major mismatch between workers and available jobs: The shrinking U.S.-born labor force is also becoming younger, more educated, and more female, but these groups aren't filling key trade, service, and healthcare roles. Immigrants are essential; one in four doctors and one in five nurses in the U.S. are foreign-born. In some states, the dependencies are much higher; and
- The decline in workforce participation of prime-age men: Men are disappearing from the labor force, driven by an uptick in issues like substance abuse and incarceration that disproportionately impact this demographic.
“Like an approaching hurricane, we felt the outer bands of this coming storm during the pandemic as the ‘Silver Tsunami’ of Boomer retirements began, immigration came to a halt, and more than five million workers left the labor force,” said Ron Hetrick, Lightcast Sr. Economist and co-author of the “Demographic Drought” series.
“But that was just a preview. Over the next five to seven years, our labor pool's growth will not match our population's. We will increasingly have more consumers than producers, driving price hikes and product shortages, if we don't take swift action.”
Lightcast’s analysis reportedly found that organizations will need four core strategies to adapt to the shifting labor market: globalization, automation, immigration and workforce development.
Additionally, the firm highlights that finding new ways to expand the talent supply, whether through seeking capable employees abroad or exploring the potential of AI in key roles, will be necessary to bridge gaps across industries. Educators and employers must also prioritize skills development and adaptability over college degrees.
“One of the factors contributing to this talent deficit is that we've de-valued service, manufacturing, construction, and other trade work while holding those requiring a college degree in higher esteem,” Hetrick said. “That’s deterred a lot of people from pursuing these careers, despite substantial improvement in wages and lucrative career opportunities in many occupations in these sectors.
“Most importantly, these are incredibly important jobs that sustain our economy, and we must shift that mentality immediately if we're ever going to have enough people to produce, build, repair, and service our vital needs.”
To overcome hiring deficits, Lightcast suggests organizations prioritize skill adjacency, upskilling and development to build a future-ready workforce, rather than filtering out talent that doesn’t meet their specific skills requirements “at face value.”
Read the full report here.
Tagged categories: Business conditions; Business management; Business matters; Business operations; Construction; Economy; Labor; Market; Market data; Market forecasts; Market research; Market trends; Workers
