Historically, the United States has long been a global powerhouse in innovation and economic growth, which has kept the country thriving and has set the precedent for other countries as well. Beneath the surface of its long-standing prosperity, though, lies a nagging issue. The skills shortage has been slowly but surely overwhelming the job market and creating trouble for organizations across the country. This problem has had a ripple effect on the workforce and overall competitiveness, which has made it a serious cause for concern for people across all industries. In this article, we explore the current state of the skills shortage in the United States and discuss potential solutions that can help abate this persistent issue.
Understanding the Skills Shortage
The skills shortage happens when the demand for certain skills in the labor market exceeds the supply of workers who possess those finite skills. We tend to see this most often in technology and healthcare. Though this does affect certain industries more than others, it’s managed to trickle its way into most job markets. Currently, 77% of employers are reporting that they are either unable to or are struggling to fill necessary roles.
Job Openings: Employers are struggling to find qualified candidates to fill essential positions. This can stall their productivity, cause burnout in team members who have to pick up the slack and create a general sense of pessimism in the workplace.
Wage Inflation: As competition for skilled workers intensifies, companies are often forced to offer higher salaries to attract and retain talent, driving up labor costs and putting them at risk of decreasing their bottom line.
Suffering Innovation: A lack of skilled workers can hinder innovation and technological progress, impacting the long-term competitiveness of industries.
Factors Contributing to the Skills Shortage
Several factors have contributed to the skills shortage in the United States:
Rapid Technological Advancements
The pace of technological change has outstripped the ability of workers to acquire the necessary skills to keep up. It is unlikely that we will ever experience a period in which we are able to close this gap. Recent innovations, like AI, have already made huge waves in certain industries. In some cases, it has actually replaced regular employees.
Changing Demographics
An aging workforce and the retirement of skilled workers have created a void that is difficult to fill with younger, less experienced workers. Because it takes time to build these skills in the younger employees, there is no way of speeding this up and closing the gap.
Education System Challenges
Gaps in the education system and a mismatch between the skills taught and those demanded by the job market further exacerbate the problem at hand. Higher education is lacking in the technical skills department and that is creating issues for both employees and employers.
The Current State of the U.S. Skills Shortage
According to the U.S. Bureau of Labor Statistics, we have finally seen a slight decrease in job openings as well as turnover. This is a much-needed sign of hope, as we have recently witnessed one of the greatest periods of resignation that the country has ever seen. Roughly 50 million people quit their jobs in 2022, which is an all-time record for the U.S. A couple of different factors contributed to this, many of which stemmed from the pandemic.
The Impact of COVID-19
The COVID-19 pandemic had a profound impact on the labor market in the United States. While it led to massive job losses in some sectors, it also exacerbated the skills shortage in others. Here are some of the related developments:
Accelerated Digital Transformation: The pandemic accelerated the adoption of digital technologies across industries, creating an even greater demand for workers with digital skills such as data analysis, cybersecurity, and software development.
Remote Work and Skills Adaptation: The shift to remote work highlighted the importance of digital literacy and adaptability, with many workers needing to quickly acquire new skills to remain employable.
Disruptions in Education: The pandemic disrupted education systems, affecting both K-12 and higher education. Remote learning challenges and school closures are more than likely going to have long-term consequences for the skills pipeline.
Mass Layoffs: Another pressing issue for employees was the layoffs that occurred during the heat of the pandemic. Especially for roles like recruitment and technology, the sheer amount of layoffs was massive. As the world has resumed to normalcy, many of these people are now working in new markets with a fear of returning to their previous, riskier positions.
In addition to the Covid-19 impact, many employees began experimenting with self-employment. Freelancing was one of the highly utilized markets that witnessed an explosion in the last few years. Laborers were incentivized by the ability to make their own schedule, alter their workload as they saw fit, and travel at any given time. This increased level of freedom was appealing to employees across many industries, the bulk of which are highly skilled.
Interest Rates and The Economy
Another area that has impacted the skills shortage is the current state of the economy. Interest rates are sitting at around 6%, which has taken a toll on the economy as a whole. Many experts believe that this is intentional, as a way to cool things down following the resurgence that took place in the last year. In the meantime, markets like real estate are at what feels like a standstill. Until interest rates begin to come down, we can expect to see a stalling in the economy and a leveling out when it comes to hiring.
What Is In The Works Currently?
There are a few things that industries and employers are doing currently to close the skills gap. 71% of organizations are focusing on upskilling their employees and revamping the team they do have. Another 43% are focusing on investments in the technology sector so that they can augment processes. Only 4% of those surveyed reported that they were taking no action to close the skills gap.
Industry-Specific Challenges
To truly understand the effect of the skills shortage, it’s helpful to take a look at it within each industry.
Healthcare
The healthcare industry faced unprecedented demands during the pandemic and arguably suffered the most as a result. A shortage of essential healthcare workers, including nurses and respiratory therapists, was exacerbated by the need for additional staff to manage COVID-19 cases. Some employees found themselves working shifts as long as 48 hours, which unsurprisingly resulted in burnout and turnover.
Manufacturing
The manufacturing sector also struggled with a skills shortage of their own, particularly in finding workers with advanced manufacturing and automation skills. The shut down during the pandemic created issues of its own as well, given that many ports were closed and access to off-shore materials became challenging or impossible.
Tech Industry
The technology industry continued to experience a high demand for software developers, data scientists, and cybersecurity experts, with a shortage of qualified candidates. The training for these highly technical roles is lacking, which makes these positions very challenging to fill.
Addressing the Skills Shortage
Aside from the methods mentioned above, there are countless different ways that organizations can begin taking action to close the gap and increase their operations.
The Role of Education and Training
- Investing in education: Increasing investment in education, particularly in underserved communities, is one of the best ways to prepare the workforce of the future. This includes improving access to quality K-12 education and making higher education more affordable and accessible.
- Lifelong learning: Encouraging a culture of lifelong learning can help workers continuously acquire new skills and adapt to changing job market demands. Employers can support this by offering training programs and upskilling opportunities.
- Vocational training: Vocational training programs can help bridge the skills gap by providing specialized training in high-demand fields like healthcare and technology.
Public-Private Partnerships
- Collaboration: Public-private partnerships can allow for collaboration between businesses and educational institutions, ensuring that curricula align with industry needs and that students are job-ready upon graduation. Currently, this is an area that is seriously lacking.
- Apprenticeships and/or internships: Expanding apprenticeship and internship programs can provide students with practical experience and a clear path to employment, while also allowing employers to groom future talent.
Technology
- Embracing new technology: Companies can leverage automation and technology to augment the skills of their workforce, making it possible for employees to focus on higher-value tasks.
- Reskilling initiatives: Employers should be ready to implement reskilling programs, which help existing workers transition into new roles as technology inevitably evolves.
Final Thoughts
As the U.S. workforce continues to ebb and flow, leaders will need to continue collaborating and innovating in order to find solutions to bridge the skills gap. By doing so, the nation can ensure its continued economic competitiveness in the ever-changing global landscape.
References:
https://www.cnbc.com/2023/02/01/why-2022-was-the-real-year-of-the-great-resignation.html
https://go.manpowergroup.com/talent-shortage
United States Institute for Quality (USIQ)
