Despite Persistent Unemployment Rates, One Economist Warns Businesses to Expect Labor Shortages
The national unemployment rate has remained stubbornly high since the recession, even though some states are reporting lower unemployment. While many argue the unemployment rate does not accurately reflect the number of Americans out of work since it doesn't include workers who have given up and left the work force, it is routinely relied on as an indicator of overall U.S. economic health.
So, with lingering high unemployment, why is Gad Levanon, the director of macroeconomic research at the Conference Board, warning of labor shortages around the corner?
Worker productivity is falling
The first factor Levanon cites is waning productivity. Studies show average worker productivity over a three-year period is shrinking. Despite increased automation and streamlining — or perhaps because of it — each worker produces less value than in years past. With worker productivity falling, businesses can expect to need more workers to maintain productivity levels.
Large numbers of experienced workers are nearing retirement
Contrast the need for more workers with the fact that, as a nation, we are on the cusp of a shrinking labor force. The baby-boom generation consists of people born between 1946 and 1964, which means they are either at or nearing retirement age. As Levanon points out, aging happens, regardless whether the U.S. economy is expanding or contracting. As Boomers retire in droves, the work force will necessarily shrink. Businesses can expect to see a smaller pool from which to find additional qualified workers or to hire replacements for retirees.
Retaining your best employees is a good hedge
Looking to the future, the best strategy for employers is likely to be two-fold: Recognizing the value of retaining your best employees and developing a sound plan for training up employees with the most potential. Following this advice can give your business both a solid foundation and an opportunity for smooth growth, while your competitors scramble around to find qualified workers.
For legal and management advice for your business, including regulatory compliance concerns, contact an experienced Bryan-College Station, Texas business law attorney. Our attorneys provide knowledge and advocacy in the challenging Texas business environment. Call the Peterson Law Group to make an appointment at 979-703-7014 or fill out our online contact form.