Labor shortage could reduce US business after COVID

Reggie Kaji’s employment agency received a strange request last year: Could you find 200 migrant workers ready to take a bus from Texas to Detroit, where they would be put up in hotels while they worked in a factory that makes car doors for the Big Three? automotive manufacturers?

“I’ve never seen anything like it,” says Kaji, who had to tell the prospect that he couldn’t guarantee that he would find qualified people to work with such machinery. “An employee with low wages, with little education, can walk through a door and get a job.”

It is a classic story of the reduction of workers left by the pandemic. Successive reports of employment in the United States have shown a reduced workforce, with potential employees kept on the sidelines or with early retirements. Bosses are desperate for new hires to meet growing demand, raising wages and giving inflation-worried Federal Reserve officials something more to monitor.

What is less widely understood is that, in many industries, the worker shortage will likely persist for years, or even decades, after COVID-19 wears off.

The workforce is projected to grow by just 6.5 million workers through 2030, according to the Bureau of Labor Statistics. That’s less than nearly 10 million during the ten years ending in 2019, and even higher in previous decades.

A combination of slower population growth within the country and fewer migrants arriving from abroad – both exacerbated by the pandemic, but also prior to it – suggests that in periods of strong or even steady economic growth, companies may have trouble finding people for entry-level jobs.

‘We have a problem’

“Call it a crisis if you want, but it’s growing,” says William Emmons, an economist at the St. Louis Fed. “We have a problem. Where are the workers going to come from? “

Along with falling birth rates and higher death rates, trends that worsened after the financial crisis and again in the pandemic, “immigration will likely be lower and slower,” says Emmons. “This safety valve that allowed us to continue to operate an economy based on an endless supply of low-cost, low-skilled labor will probably not be viable.”

Businesses had a preview of the job contraction in late 2019 when the unemployment rate fell to 3.5%. The Fed’s regional survey in November of that year reported a worker shortage that “spanned most industries and skill levels.”

Even some giant companies capable of offering higher salaries may see looming limits.

“The foundation of the economy is work,” Elon Musk said in a video interview with The Wall Street Journal on Dec. 6, explaining why Tesla Inc. is working fast on developing robots. “There are not enough people. I can’t emphasize this enough. “