The country is experiencing a significant hiring issue, and this problem has been felt in a major way by businesses in Maryland.
Several factors are keeping individuals out of work despite the clear demand for labor countrywide:
The pandemic remains a huge factor. The number of people testing positive for COVID-19 still remains high, and an unknown number of people are suffering long-term COVID-19 symptoms that make it difficult to go back to work.
The country’s older workforce has targeted earlier retirements versus going back to work. Stock market gains and the 20 percent jump in U.S. home prices over the last year have boosted household balance sheets to the point that retirement is a more attractive and more affordable option to the older population.
Quicker structural changes are leaving some in the dust. The accelerated shift to e-commerce, hybrid working schedules, and potentially faster automation and nearshoring are some examples of these changes that have left some people out of work. All lead to higher involuntary unemployment, which requires reskilling to fill, or frictional unemployment as workers move from one role to the next.
Despite all these factors, we expect rapid job growth over the next year which should relieve some of the country’s labor shortages. Enhanced unemployment benefits have ended, and some people will be forced back to work as their savings runs out.
For owners of businesses that are struggling to hire, there are several items worth consideration that will help them in both the short and long term.
- Look to your current employees for answers to your hiring woes. Consider re-examining what your workers (and stakeholders) want. The question of filling vacancies may be about more than just pay and benefits. Flexible working and greater training opportunities might be the missing ingredients, and your employees may be the ones that can give you this insight.
- Review your organization’s capital mix. If labor is scarce and the economics speak against higher wages and tighter margins, consider doing this. Increased automation and nearshoring could make sense for your firm, alongside employing fewer, but higher-skilled workers. The world is becoming more digital. Lockdown measures during the pandemic have forced many companies to fundamentally change the way they buy and sell goods and services, in turn accelerating the pace of digital adoption. Perhaps this shift is an option for your company?
- Consider training your company’s existing workforce. Change your outlook on worker shortages from a negative to a positive. These hiring issues may reveal education and a skills gap among existing employees. An increased investment in your people might allow your business to overcome hiring problems by upskilling workers and boosting firm productivity. In periods of accelerated economic change, it makes sense for a company to focus training on longer-term trends that will impact performance and profitability. Greater digitalization, increased scrutiny of environmental and social factors, and an increase in worker appetite for “portfolio careers” all suggest the returns on employee training and development could be rising for companies.
Today’s worker shortages can’t be explained by one simple reason. Similarly, there isn’t one universal or sustainable answer to fix a complex problem such as this. By taking the time to figure out the particular reasons why organizations are facing labor shortages and work on a variety of potential solutions, business owners gain the best opportunity to bring in the right workers, to fill the right jobs at the perfect time.
Bart Gibson is a financial adviser with UBS Wealth Management USA. He can be reached at firstname.lastname@example.org.
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