We’re hiring

3 steps you can take today to fix your workforce issues

By Stephen Park

The country is experiencing a significant hiring issue and this problem has been felt in a major way in the manufacturing and construction industry. Business owners in this industry are continuing to struggle to find workers to fill multiple empty positions within their companies. In fact, the US Chamber of Commerce unveiled a report over the summer in which 88% of construction contractors reported moderate-to-high levels of difficulty finding skilled workers. Of those contractors, nearly half (45%) reported a high level of difficulty.

Over the last few months, seemingly every business looking to hire new workers has been struggling to do so. The number of job openings is not only at a record high, but soaring above previous levels. The quit rate is also at a record high, which suggests that individuals are switching jobs to pursue better offers. Wages are rising quickly in certain industries where pay tends to be relatively low and where the labor shortages are the most severe. All of these issues are occurring despite the fact that payrolls are still more than five million below its pre-pandemic level. Why is there a hiring Issue?

A variety of factors are keeping individuals out of work despite the strength of demand for labor countrywide: > Not surprisingly, the pandemic is a big factor. The number of people testing positive for COVID still is high, and one positive test can push someone into quarantine and out of the labor market. Further, an unknown number of people are suffering from long-term COVID symptoms that make it difficult for them to go back to work. As has always been the case, It is more difficult for individuals who have been unemployed for a long time to find and secure a job opportunity.

> The nation’s older workforce has targeted earlier retirements versus going back to work. It is believed that a significant number of older workers who lost their jobs because of the pandemic are choosing to retire. Stock market gains and the 20% jump in US home prices over the past year have boosted household balance sheets to the point that retirement is a more attractive option than going back to work and may seem more affordable.

> Faster structural changes are leaving some in the dust. The pandemic spurred quicker structural changes for companies that have left some people out of work or forced to seek new employment. The accelerated shift to e-commerce, increasing popularity to hybrid working schedule, and potentially faster automation and nearshoring are some examples of these changes. All may lead to higher involuntary unemployment which requires reskilling to fill, or frictional unemployment as workers move from one role to the next.

Despite these factors, we expect rapid job growth over the next year. This should provide relief to some of the country’s labor shortages. Enhanced unemployment benefits have ended, and some people will be forced back to work as their savings runs out. Most schools have reopened throughout the country, which has allowed more parents of young children to go back to work. Now that pandemic case counts have started trending down again, it should be possible to bring employment levels closer to where they were before the start of the pandemic.

Tips for business owners

The Chamber’s report uncovered some other alarming statistics from the construction

industry. Nearly 60% of contractors reported a challenge in meeting project schedule requirements while over a third reported turning down work due to skilled labor shortages. These troubling findings paint a clear picture of just how severe these hiring issues have become for some business owners in the construction industry.

For business owners that are struggling to hire, there are several items worth considering that will help their business in the short- and long-term. > The answer to your hiring woes could be found from your current employees. Consider re-examining what your workers (and stakeholders) want. The question of filling vacancies may be about more than just pay and benefits. Flexible working and greater training opportunities might be the missing ingredients, and your employees may be the ones that can confirm that for you.

> Review your company’s capital mix.

If labor is scarce and the economics speak against higher wages and tighter margins, consider doing this.

Increased automation and nearshoring could make sense for your firm, alongside employing fewer, but higher-skilled workers. The world is becoming more digital. Lockdown measures during the pandemic have forced many companies to fundamentally change the way they buy and sell goods and services, in turn accelerating the pace of digital adoption. Perhaps this shift is an option for your company?

> Consider training your existing workforce. Change your outlook on worker shortages from a negative to a positive. These hiring issues may reveal education and a skills gap among existing employees. An increased investment in your people

Now that pandemic case counts have started trending down again, it should be possible to bring employment levels closer to where they were before the start of the pandemic.

might allow your business to overcome hiring problems by upskilling workers and boosting firm productivity. In periods of accelerated economic change, it makes sense for a company to focus training on longer-term trends that will impact performance and profitability. Greater digitalization, increased scrutiny of environmental and social factors, and an increase in worker appetite for “portfolio careers” all suggest the returns on employee training and development could be rising for companies.

Today’s worker shortages cannot be explained by one simple reason. Similarly, there is not one universal or sustainable answer to fix a complex problem such as this. But by taking the time to figure out the particular reasons why organizations are facing labor shortages and work on a variety of potential solutions, business owners gain the best opportunity to bring in the right workers, to fill the right jobs at the perfect time. CCR

Stephen Park is a Senior VP – Wealth Management, Managing Director – Wealth Management, UBS Wealth Management USA. He can be reached at stephen.park@ubs.com.

EST 2010