The labor shortage employers are currently facing is obvious to anyone who’s recently eaten out at a restaurant or visited a retail store. Slow service, “help wanted” signs, and even businesses that are temporarily closed due to a lack of staff are increasingly common sights.
Although the labor market’s woes could be partially attributed to younger workers who aren’t willing to take on low-paying, service-sector jobs, another significant factor is the major exodus of older workers from the labor force.
Baby Boomers Moving On
In an article for Forbes, Jonathan Ponciano points to the findings of Goldman Sachs analysts that project a labor force participation rate of only 61.9% by the end of 2021—and 61.2% by the end of 2022. This puts labor rate participation at its lowest level in 45 years, he says.
“Led by Goldman’s Jan Hatzius, the analysts point out most of the 5 million people who have exited the labor force since the start of the pandemic are over the age of 55 and likely won’t ever return to work, due largely to early and natural retirements of about 1.5 million and 1 million, respectively,” Ponciano writes. “And another 1.6 million Americans are still reporting concerns about the spread of Covid-19 as their main reason for not working.”
Health and Safety Big Factors in Different Ways
While some older workers are eschewing a return to work out of concern for their own health and safety, others are put off by new health and safety requirements, such as vaccine, testing, and masking requirements. Faced with a choice between returning to what they see as a more strict work environment after spending over a year working remotely or retiring early, many are opting for the latter.
While some of the most visible signs of the labor shortage are in entry-level roles in retail and dining, these aren’t exclusively the territory of younger workers. Moreover, when older employees with seniority leave the workforce, this can have a trickle effect through the ranks, as less senior staff are promoted up to fill the gaps, leaving entry-level positions vacant.
What are you doing to monitor and minimize these labor rate losses in your organization?
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.