Labor Shortage Persists in Supply Chain Operations

Labor Shortage Persists in Supply Chain Operations

The labor shortage is still alive and well in supply chain operations and every warehouse manager and supply chain manager can tell you that finding long-term, reliable workers to fill critical jobs is one of the toughest challenges they face today. The U.S. Chamber of Commerce recently released the data that tells the story. While the shortage had been building up until the start of the pandemic, 2020 is what really hurt businesses when it came to finding employees. At the height of the pandemic, 120,000 businesses closed, and 30 million American workers registered as unemployed. While the job openings have come back strong, unemployment has steadily declined.

Labor Shortage Statistics

According to the report, in 2022, employers added 4.5 million jobs. Good news for workers, but bad news for employers who can’t find the employees to fill them. Much of this comes down to “the great resignation” and just an overall low participation rate. If the labor force stood where it was in 2020, an additional 2.2 million more Americans would be available for work.

To understand how we got here, you must look at several factors contributing to the shortage. For starters, of those who lost their jobs in the pandemic, only two-thirds are actively looking for a new job. Remote work also plays a role: about half of Americans who could work remotely during the pandemic want to remain so and are not willing to take a job that requires them to be on-site. This can be particularly painful for distribution centers, which count on in-person workers to complete manual labor.

Then there are the lucky 26 percent of workers who say they don’t need to return to a job (the great resignation pool). Nearly one in five have changed their livelihood, 17 percent have retired, 19 percent have transitioned to homemaking, and 14 percent now work part-time instead of full-time. Government aid created during the pandemic also plays a part post-pandemic, as nearly a quarter of all workers say that aid has incentivized them to not need work.

When it comes to the younger generations and the 25- to 34-year-old age group, there’s a good deal of “personal growth” seeking versus job seeking. Some 36 percent of this population report they’re focused on acquiring new skills, education, and training before re-entering the job market.

Add in early retirements and “normal” age retirements of a large baby boomer generation, and you’ve got an ugly forecast on the horizon when it comes to labor replenishment. Despite what politicians call an immigrant crisis, there’s also the fact that net international migration to the United States only added 247,000 people to the population between 2020 and 2021. This is a drop of 76 percent compared to immigrant population increases back in 2015 and 2016.

The jobs are out there; the people are not. Companies must increasingly turn to technology to make up the labor shortage gap, and supply chain management consultants can help steer that ship.