As of June, there are currently 9.5 million unemployed Americans and 9.2 million open jobs in the United States. While the number of unemployed continues to rise, employers are finding it hard to hire workers for these positions. In fact, 70 percent of employers blame COVID-19, the expansion of unemployment benefits. Half of the states have reduced this benefit. If this trend continues, employers will soon have to develop creative ways to attract workers.
The lack of workers is a worldwide phenomenon. Not just in the U.S., but across the Euro Zone, the U.K., and other European countries. Economists at ING examined cyclical and fundamental factors that contributed to the labor shortages and found similarities and differences among countries’ labor markets. A population of early retirees, a low birth rate, and higher unemployment rates all contributed to the shortages.
Whether or not a wage increase will play a role in the current labor shortage is an open question. The short-term effects of voluntary attrition can range anywhere from fifteen to forty percent. It depends on the industry and skill set. Whether or not employers choose to offer a higher pay scale will depend on the percentage of opt-outs. But even if voluntary attrition is minimal, the long-term consequences could be severe. While some people may not want to consider their future, a lack of workers will only drive up the cost of living.
Many workers have taken advantage of the shortage and are now in high demand jobs. Some of them are entering industries that grew during the pandemic and have benefited. In the meantime, the transportation and warehousing industries have added over 500,000 jobs. Others are taking advantage of the tight labor market, leveraging their savings to move into more lucrative positions.