The country continues to experience a significant hiring issue, and this problem has been felt in a major way in the manufacturing and construction industry. Business owners in the construction industry are struggling to find workers to fill multiple empty positions in their companies. In fact, the U.S. Chamber of Commerce unveiled a report over the summer in which 88% of construction contractors reported moderate-to-high levels of difficulty finding skilled workers. Of those contractors, nearly half (45%) reported a high level of difficulty, according to the Chamber.

Overview of Job Market

The number of job openings is not only at a record high, but soaring above previous levels. The quit rate is also at a record high, which suggests that individuals are switching jobs to pursue better offers. Wages are rising quickly in certain industries where pay tends to be relatively low and where the labor shortages are the most severe. All of these issues are occurring despite the fact that payrolls are still more than five million below its pre-pandemic level.

Why is there a Hiring Issue?

A variety of factors are keeping individuals out of work despite the strength of demand for labor countrywide, including the following.

1. The pandemic remains a big factor.
   The number of people testing positive for COVID-19 is still high, and one positive test can push someone into quarantine and out of the labor market. Further, an unknown number of people are suffering from long-term COVID-19 symptoms that make it difficult for them to go back to work. It is more difficult for individuals who have been unemployed for a long time to find a job opportunity.
2. The nation’s older workforce is aiming for earlier retirements versus returning to work.
   It is believed that a significant number of older workers who lost their jobs because of the pandemic are choosing to retire. Stock market gains and the 20% jump in U.S. home prices over the last year have boosted household balance sheets to the point that retirement is a more attractive option than going back to work and may seem more affordable.
3. Faster structural changes are leaving some behind.
   The pandemic spurred quicker structural changes for companies that have left some people out of work or forced to seek new employment. The accelerated shift to e-commerce, increasing popularity to a hybrid working schedule, and potentially faster automation and nearshoring are some examples of these changes. All may lead to higher involuntary unemployment which requires reskilling to fill, or frictional unemployment as workers move from one role to the next.

Despite these factors, rapid job growth is expected over the next year, which should provide relief to some of the country’s labor issues. Enhanced unemployment benefits have ended, and some people will be forced back to work as their savings runs out. Most schools have reopened throughout the country, which has allowed more parents of young children to go back to work.

Tips for Business Owners

The Chamber’s report uncovered some other troubling statistics regarding the construction industry. Nearly 60% of contractors reported a challenge in meeting project schedule requirements while more than one third reported turning down work due to skilled labor shortages. These troubling findings paint a clear picture of just how significant these hiring issues have become for some business owners in the construction industry. For business owners struggling to hire, there are several steps worth considering to help their business in the short and long term.

1. The appropriate response to a company’s hiring woes could be found from current employees.
   Consider re-examining what current 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 current employees may be the ones that can confirm that.
2. Review the company’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 the 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.
3. Consider training the existing workforce.
   These hiring issues may reveal education and a skills gap among existing employees. An increased investment in employees might allow the business to overcome hiring problems by upskilling workers and boosting firm productivity.

Today’s worker shortages can’t be explained by one simple reason. But 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.