According to the latest Job Openings and Labor Turnover Survey (JOLTS), there is a growing worker shortage in the U.S. that could slow employment growth this year. There is a danger that companies will eventually run out of the help they need to produce goods or sell their services. What can companies do to cope with this setback?

What is a tight labor market?

A tight labor market has more jobs than workers to fill those jobs.

JOLTS Recap

• Job openings surged by 346,000 to a seasonally adjusted 7.5 million
• Job openings rate rose from 4.5% to 4.7% in February
• March marked the 11th straight month that the number of job openings exceeded the number of job seekers
• Vacancies in the construction industry increased by 73,000 in March
• Transportation, warehousing and utilities had 87,000 openings
• Real estate, rental and leasing companies had 57,000 openings
• Federal government job openings decreased by 15,000
• The hiring rate remained a steady 3.8%.
• Workers voluntarily quitting their jobs was little changed in March at 3.4 million, keeping the quits rate at 2.3% for the 10th straight month
• Layoffs slipped in March, lowering the layoffs rate from 1.2% to 1.1%. There were fewer layoffs in the government sector but rose slightly in manufacturing and construction.

What are the impacts of a labor shortage?

There are many negative effects of a labor shortage, including:

• Hinders the progress of projects
• Creates significant safety concerns on the job site (without people skilled to work the machines, workplace safety is at high risk)
• Prevents/ challenges new business
• Decreases revenue

How are businesses coping?

Businesses have implemented a few tactics and initiatives to tackle the labor shortage, including:

• High school immersion and apprenticeships- Many manufacturers have started their own manufacturing apprenticeships that allow students to work part time at their companies and attend community or technical college on their off days. By the time these apprentices graduate, they have become industrial technicians making as much as $25- $35 an hour.
• Internal training programs- Many businesses have developed training programs for all levels of workers, aiming to develop, empower and involve employees.
• Innovation- Rethinking the traditional business model has helped manufacturing executives advance and appeal to the younger workforce.
• Automation- Think about investing in technology that can automate some of the more time-consuming administrative tasks, freeing up time for your existing workers to work on more skilled projects/duties.

Although the JOLTS report points to a tightening labor market, there are ways your business can cope. If you need help analyzing your individual situation, we can help! Contact KLR Executive Search, LLC.