Supply Chains and the Labor Shortage

A recent global survey of companies in the supply chain space found that 76% are facing labor shortages — and 37% say “high” or “extreme” levels of labor shortage. 88% said these shortages were affecting their customer service performance. 91% said heir logistics partners were being affected by labor shortages, too.

More than half identified knowledge workers as the hardest team members to find.

Wasn’t the pandemic the problem?

The pandemic was blamed not only for supply chain problems but also for the labor shortages, but that explanation is beginning to sound a little bit outdated. So what’s going on?

“A number of factors, such as strong economies, declining working age populations, arcane immigration policies and workers willing to jump industries, are putting workers in the driver’s seat,” Descartes concluded. “As a result, logistics leaders believe that the fluid labor situation going forward will put pressure on wages and increase costs.”

Population changes

Plain old population shifts may be part of the cause. The U.S. workforce — especially among skilled trades workers — was aging, and the pandemic pushed many of the older workers into retirement. It just seems like good time to stop working.

Younger people are marrying later and having fewer children, too. And immigration is slowing down. As the U.S. Chamber of Commerce points out, “If every unemployed person in the country found a job, we would still have over 2 million open jobs.”

Cultural changes

The Chamber of Commerce goes on to explain that labor participation in the U.S. was actually dropping even before the pandemic — since 2010, in fact. Since the pandemic, many people insist of remote work. Many more are prioritizing personal satisfaction over their careers, and 24% in the Chamber’s survey of people who are out of the labor market admitted that government support has been enough to keep them from getting back to work.

On the up side, more Americans are working for themselves. The pandemic emboldened many to start their own businesses. This took them out of the labor pool available for hire, even if it didn’t take them out of the labor market.

The result

The result has clearly been a severe labor shortage across many industries. Since it’s affecting supply chains even more than some other realms, it’s keeping inflation going and affecting consumers as well as employers.

Employers are now in a seller’s market, or perhaps we should say a worker’s market. Competition for skilled workers is high since the supply is down and demand has not lessened.

24 Hour Turnaround

Factory Repair services available with 24 hour turnaround.

Call (479) 422-0390 for immediate assistance

Support Request