When the first nationally recognized Labor Day was celebrated in 1894, the day consisted of a street parade sending up a message of “the strength and esprit de corps of the trade and labor organizations” (in the words of the AFL).
We have come a long way since then. Today, especially in this war for talent, most employers focus on offering opportunities and benefits to attract and retain talent.
Yet, the disruption from the pandemic continues. Help wanted signs everywhere, a labor shortage stretching from unskilled workers to high-level professionals and executives.
Pundits of all types are offering commentary on this topic. Some say it’s a permanent shift only to be resolved by wage and price inflation. Others say we have a move away from work and that automation will resolve the issue.
The Economist recently published a report entitled Will the Rich World’s Worker Deficit Last? The authors estimate the current employment deficit to be 3% below the pre-pandemic level. While acknowledging demand shortages, their research shows that supply shortages are more significant. They describe three causes of the reduced supply: disruption owing to the spread of covid-19, primarily as a result of disruption to migration; the impact of welfare policy and pensions, recent research by Goldman Sachs, finds that “excess retirees” account for about a quarter of the decline in the country’s participation rate; and finally “changes to longer-term attitudes” wrought by the pandemic.
They conclude by saying that “it seems that the extent to which the worker deficit endures will depend in part on how long the disruption and the fear caused by the pandemic last. Rising wages might lure some of those who left the workforce back into jobs. But the longer the pandemic goes on, the harder it becomes for those who left to return, and the more likely it is that new habits stick.”
Time will tell. And, as always, within every challenge lies opportunity.
In the United States, we live in a world full of innovators. I am looking forward to seeing the solutions entrepreneurs come up with to address this latest labor challenge.