There Is a Labor Shortage in This Country—Here’s One Way To Fix It

By almost any measure, the level of employment in this country has recovered miraculously since the frightening days of the onset of COVID. From an impressive low of 3.5% in February of 2020, unemployment spiked to a frightening 14.8% just two months later. Nothing like that had been witnessed since the Great Depression, nearly ninety years ago.

Then in the span of seventeen months, the U. S. economy—thanks to funding from both the Federal Government and the Federal Reserve—rebounded in a dramatic fashion, more than retracing its steps, fueling strong demand and bringing unemployment down to 4.8% currently. That’s not to say that it’s been a smooth ride—far from it. There are still major disruptions in both our economy and economies around the world, affecting production, shipping and services.

The heart of the problem lies in the fact that the supply and demand for labor in the developed world is wildly out of kilter. In this country, the evidence is everywhere—“For Hire” signs pasted in the windows of small shops, the headlines in the news regarding rising wages, and recent labor strikes at Deere & Company, Kellogg (the cereal company) and other smaller companies in the health care and housing industries.

To sustain the current growth rate in the U. S. economy, we need more workers, but to paraphrase the 1968 song by Pete Seeger, “Where have all the workers gone?” That’s not a metaphorical question—it’s real and it’s not going to be resolved easily for a slew of reasons.

The recent end of the extended unemployment benefits has done little to nothing to bring people back into the workforce. The Great Resignation is here to stay, and for the Baby Boomer generation, it’s a Great Retirement phenomenon. Nearly 40% of the COVID related deaths in this country have been those who are categorized as Boomers, so it’s not surprising that 62 is the new 65. Even if fully vaccinated, why risk a breakthrough case of COVID? Why not slow down and smell the roses? The Boomers who have taken that path are not coming back into the workforce.

At the other end of the age spectrum are the Millennials (with some Gen X and Gen Z workers thrown in as well). They are the powerhouse of today’s workforce and how they view work/play dynamics cannot be disregarded. Many of them now are raising their own children and what they learned during the COVID lockdown will shape the future of employment trends in this country. Their views can be synthesized in a few concepts: Commuting is a waste of time and a waste of money. It is also an unnecessary contributor to climate change. Working from home is both more enjoyable and more efficient. Face to face time with work cohorts can be achieved with Zoom chats and social engagement can shift from the office to the neighborhood. If they are forced to return to an office job that they believe they can do from home, they will find a new position with a new employer who views the world the way they do. Smart business leaders are aware of that dynamic—and by making accommodations to their productive stay-at-home workers, they will likely realize future cost savings in the form of a reduced commercial real estate footprint.

So, what is the solution to the dearth of workers? Here are two thoughts.

Both before and through the time of COVID, there has been a marked increase in labor productivity, the result, in large measure, of capital investments that have produced significant technological improvements, which in turn have paved the way for a natural and non-inflationary increase in wages. Rising wages are a good thing in an environment of strong productivity growth. As wages increase, there will be a natural inclination over time for people to return to work.

The other solution involves immigration. With the onset of COVID eighteen months ago, the U.S. in essence closed its borders, not only to visitors, but also to students and workers, both temporary and permanent. Those temporary workers included nannies, as well as hotel, restaurant and farm workers. The situation has not improved much since last year. There are currently more than 80,000 green card applications that have gone unprocessed by the State Department.

Over the last decade, immigration to the U.S. was capped at around one million per annum, a rate that is barely one third of one percent of the country’s population. Last year was obviously significantly lower as is this year. For a country with vast uninhabited space and a population of 330 million, doubling immigration from one million to two million per annum would still be less than one percent, but it could do much to relieve the labor shortage across the country. Importantly, immigration needs to be granted not only to highly skilled workers but also to those who would fill much needed entry-level positions.

Since our inception as a country, just a few hundred years ago, immigration has been one of the bedrocks of our existence, our personality and our growth. We are a tapestry—that is one of our greatest strengths. It is true that, as a nation, we have not continuously had an open-door immigration policy, but it is also true that we have always opened the doors when we needed workers. Let’s help to resolve our current labor shortage by staying true to our great heritage and re-opening the immigration gat