Employee Shortage: Why It’s Happening

To overcome labor shortages, recruit (and retain) top talent:

What is the Employee Shortage Crisis?

An employee shortage crisis occurs when there are more open positions than individuals available or willing to fill them—in turn, there’s a high demand for workers. An employee shortage may also be referred to as a labor shortage or a worker shortage.

In April 2019, the US celebrated the lowest unemployment in nearly 50 years. A year later, the US economy lost 20.5 million workers in one month, sending the unemployment rate to 14.8% – the worst since the Great Depression.

Our study surveyed approximately 1,200 Americans to uncover employment trends sweeping the country. Restaurants, retail stores, and hotels are unable to operate at full capacity. Global supply chain disruptions resulted in out-of-stock items and sparse shelves.

Source: NPR.org

In America, people are classified as unemployed if they don’t have a job – and they’ve actively been looking for work in the last 4 weeks. There are many other people who are unemployed but aren’t available to work, such as people who are retired, in school, are unable to work due to an illness, for example.

Since the 1990s, fewer than 1 in 10 people that aren’t in the labor force have reported that they’re looking for a job. So, why is there an employee shortage? And what can employers do about it? 

How Is the Worker Shortage Impacting Different Industries?

Truck Driver Shortage

The worker shortage has created a need for truck drivers, with about 100,000 open positions in the UK. This has resulted in big supply chain issues such as frequently sparse supermarket shelves and restaurants without ingredients.

Small Businesses Struggling to Hire in the US

In August 2021, nearly 50% of small business owners said they had job openings they couldn’t fill – the most on record. Some business owners are increasing compensation to try to attract workers. These costs are being passed on to customers by raising prices for products and services.

Restaurants Unable to Fill Positions

62% of restaurant operators say there’s an employee shortage to support its existing customer demand, according to a National Restaurant Association survey.

Why Is There an Employee Shortage?

Unemployment Benefits and Workplace Priority

Some believe that the unemployed do not want to work because they’ve been making adequate money on unemployment benefits.

Under the Federal Pandemic Unemployment Compensation (FPUC), out-of-work Americans collected extra payments of initially $600, then $300 to recover lost wages – these benefits expired in September 2021.

JPMorgan Chase says the 26 states that cut off the benefits early didn’t gain any stronger job growth than the other states. Another report showed that only 6% of unemployment recipients will be motivated to go back to work when unemployment benefits end.

Employees that had to work from home realized they didn’t need to deal with long commutes to do their job – or many other jobs for that matter.

Older workers saw the benefits of retiring early to spend more time doing what they enjoyed, such as spending time with family.

Budding entrepreneurs, with more free time than before, had an opportunity to invest in their desire to start a business of their own.

Opportunity to Ask for More

Due to the demand for workers, job seekers have found themselves in a position where they can ask for more – be it salary, benefits, or flexible work. It’s becoming common practice for job-seekers to ask about wages before the first interview, or even cancel one altogether when they receive a new invite from a more preferred organization.

The childcare industry has struggled for a long time to find, hire, and retain employees, largely due to low wages and a lack of competitive benefits. The Bureau of Labor Statistics showed that the US childcare workforce is down 15% from pre-pandemic to mid-2021.

The Department of Labor reported in June 2021 that there were 1.8 million job openings in professional and business services but only half as many people whose most recent job was in that sector.

VidCruiter Asked Americans: Are You Working? If Not, Why?

We decided to conduct our own research to see if there was anything else we could uncover about the shortage of employees. We surveyed nearly 1,200 Americans about their employment status and asked the unemployed population if they were looking for work.

What Is the Employment Status of Our Respondents?

46% of respondents were in full-time or part-time employment. 36% are looking for work but are currently unemployed. 13% of respondents are not employed and not looking for work, and the last 5% are either retired or are unable to work for a particular reason.

Why Are Unemployed Americans Not Looking for Work?

We asked the 13% that are unemployed, ‘why’? Turns out, many of them have taken some time and figured out an alternative plan for themselves.

Many are going back to school, working for their own business, or earning a living from another method besides employment. We asked the 23% who aren’t looking for work who responded “other” for more details. A whopping 43% of respondents said they were preoccupied with children.

One respondent says, “I am staying home with my 15-month-old son because we can no longer afford daycare” while another says “I have 3 young kids. I really, really want to go back to work, but financially it doesn’t make sense. Daycare would cost more than what I would make.”

Why Are Unemployed Americans Not Looking for Work?

We explored whether there were any differences between women and men choosing not to work. What did we find?

Tips for Employers to Tackle Employee Shortage for Recruitment

The labor shortage we’re experiencing is real. Here are some of the top ways you can address the employee shortage crisis, encourage quality hires, and retain current employees:

Pay a Competitive Wage

Due to the demand for workers, applicants and employees currently have more bargaining power than ever before. They can negotiate better wages, or leave their current role for a higher-paying position.

America’s biggest employers have promised to increase their minimum wages, including Amazon, McDonald’s, Walmart, and Chipotle—paving the way for other companies to follow suit. Some are going a step further to impress job seekers by offering to pay for workers’ tuition and textbooks.

Get Creative With Recruitment

Organizations need to get creative and go beyond the regular recruitment methods and candidate experience. Instead of simply recruiting through usual websites and platforms, promote job ads on social media, consider advertising through traditional print ads, or even try an original way to recruit:

Here are some creative ways other companies have sourced talent:

• McDonald’s teamed up with Snapchat and invited job-seekers to “try on” the uniform and send in a 10-second video application (or ’Snaplication’, if you will).
• Marriott has a "Marriott Careers” Instagram account where they post about their employees’ experiences and successes, along with frequent Instagram-worthy job postings and stories.
• Lowes Canada used a virtual recruitment event during the midst of the pandemic to allow 1000s of job-seekers to quickly and easily locate their nearest store and complete a pre-recorded video interview.

Garner Support From Current Employees

In our digital age, job-seekers can (and will) research your brand before applying for a position, especially while there are many positions available.

Ask your current employees to share their experiences, perhaps during stay interviews. Frame it as a way for employees to provide their feedback and help shape company initiatives and attract talent similar to themselves.

Companies may shy away from asking employees to share feedback, but all feedback should be embraced as a learning experience. Address negative feedback with a proactive response and amplify the positive comments with a thank you message.

Show Off Organizational Culture With Job Descriptions

Play often lack positives for the candidates – requirements can be unnecessarily high and there’s little description of what the applicant can get out of choosing to work for a company.

Automate Unnecessary Tasks

Make sure you’re only asking employees to do work that’s necessary, not extra tasks that could use simple technology to complete. Organizations can automate components of stock-checking, customer service, marketing, and recruiting. Options exist that don’t require a huge investment but could improve working conditions for your current and potential employees.

Champion Flexibility

Emphasize a flexible schedule and the freedom to work from home if possible. Use tools that allow employees to work occasionally on the move with instant messaging, video conferencing, and other mobile-compatible products.

Pre-recorded video interviewing and allowing candidates to use interview scheduling software to select the time—and even the type of interview—that works best for them could help to showcase the importance of flexibility within your workplace. Women with child-care responsibilities are 32% less likely to leave their job if they have access to remote work.

Improve Your Mental Health Related Benefits

Offer competitive benefits if you can. In January 2021, 41% of adults reported feeling symptoms of depression or anxiety, up considerably from two years prior which indicated just 11% of adults experienced anxiety or depression.

Candidates can get a good idea of how important mental wellbeing is in the workplace—evidence is available in reviews from past employees, awards on your website, or benefits listed in your job description.

Advocate for a positive work-life balance by offering mental-health days and organizing social events. You can support employees’ mental wellness during the workday with activities such as meditation, stretching, and breathing exercises.

Considering the scale of the issue, a fix isn’t simple. Luckily, in many ways, this is an opportunity, instead of a crisis. There are steps that businesses can take to improve their chances of hiring top candidates—by employing emotional intelligence and listening attentively to what they want.