Overcome The Labor Shortage In 2024 And Beyond

In this article, we address the pressing issue of the labor shortage in 2023 and offer businesses insights on how you can navigate these challenges. With historical perspectives and present-day nuances, the piece covers why and how the shortage is affecting industries, how you can attract and retain talent, and what you need to stay competitive.

Key takeaways:

  • The labor shortage stems from various factors, including generational retirements, geographical shifts, and changing employee priorities.
  • Workers today want more than just better pay, they’re also looking for intangible benefits like flexible scheduling and growth opportunities.
  • Maintaining a safe and respectable work environment is paramount in today’s job market.
  • Innovative solutions, like on-demand pay and efficient shift scheduling tools, can greatly help businesses in these challenging times.

The labor shortage—it’s something we’ve heard about a lot in the past few years, and it’s not going away. You need help. There’s opportunity for growth. There’s lots of work to be done. And there doesn’t seem to be anyone to help you.

We’ve been dealing with this labor shortage for years now, but shortages have occurred throughout history for a variety of reasons. They can happen because large numbers of generational workers periodically retire, leaving a worker and skill gap that upcoming generations eventually fill. Or demographic and geographic population shifts create localized shortages. Sometimes new types of jobs may require skills that the current pool of workers aren’t interested or qualified in yet. And seasonal businesses experience labor shortages if they depend on a workforce that has other factors (e.g. school hasn’t let out yet or foreign workers aren’t able to travel into the country). 

Before, we heard stories of businesses who were trying to spring back after the pandemic, but due to the labor shortage, had to cut hours and services instead. Now, things are a little different. The shortage is still being driven by health concerns and caregiving responsibilities, but there’s a new twist that employers are having to deal with—higher turnover as workers re-evaluate their priorities and take advantage of the labor shortage to leave for better pay and benefits

We’re going to take a look at what’s happening, and provide you with a few tips on how you can attract workers and get your business back to being fully-staffed.

Table of contents

How do we know we’re currently in a labor shortage?

A report from the U.S. Bureau of Labor Statistics shows that the unemployment rate has dropped since March 2023, reaching a low of 3.4%. More people are finding jobs, but there still aren’t enough workers to go around, with just 5.6 million unemployed workers for 9.5 million job openings in the U.S. 

That means employers are facing two challenges in one—keeping their current workers and finding new ones.

Who is impacted by the shortage?

Even moving beyond the pandemic, the industry getting most of the ink in the press in regards to a labor shortage, is the service and hospitality industry. In particular, the restaurant industry.

This doesn’t bode well for restaurants, as the U.S. Bureau of Labor Statistics says that there will be a 6% increase in demand for chefs and cooks in the coming decade. According to the Federal Reserve, other industries are feeling the pinch, too, particularly manufacturing and construction.

There are also demographic impacts, with some workers affected more than others. In April 2021, most of the job growth went to men, while women lost jobs or stopped looking for work.

Why are these workers not returning to their previous jobs?

  • Changes over the past few years means that some workers left the industry for good. Time away from work during lockdowns caused them to re-evaluate their priorities and they had enough time and support to train for a new career. 
  • Employers are impatient to hire while the workforce isn’t moving as fast to accept the jobs. This is a workers’ labor market, and some employers haven’t caught up to the fact that today’s employees want different benefits than they did before the pandemic.
  • Bottlenecks in the supply chain have caused some businesses to face the strange problem of high demand, but an inability to meet it. They aren’t hiring because the supply chain can’t meet the demand yet.
  • Some workers are caught in limbo, trying to manage child or elderly care. 

When there aren’t enough workers, businesses are forced to adjust how they operate by either over-working their current employees, or reducing their ability to serve customers. This may have negative long-term effects for workers in the long run. Businesses might adjust to operating with fewer workers, or expect too much of their current employees.

The new status quo

Today’s workers want the obvious benefits, like better pay and healthcare, but they’re also looking for intangible benefits as well. Employers who are offering flexible scheduling, on-demand pay, and other benefits that make worker’s lives easier will find they have a competitive advantage when it comes to hiring and retaining employees. There’s no going back to the way things were before the pandemic, and employers who want to win with talent need to keep the following benefits in mind. 

How to stay competitive and attract skilled shift workers

Since many of the industries affected by a labor shortage are service industries, attracting shift workers is critical to closing those gaps. There are several creative ways to attract new workers.

Offer benefits

A labor shortage means it’s a workers’ market. They can shop around for the job that offers the best benefits. Why work for a restaurant when the one down the street is a better deal?

Benefits might be anything from healthcare to paid vacation to child care assistance. You may want to offer hiring incentives, or bonuses when workers refer a friend. You know your workers best, and what would be most helpful to them. 

Or, benefits may be something less concrete, such as a flexible work schedule (which we’ll talk about in a bit). The point is to offer something that offers additional value to the employee, beyond the hourly wage.

Pay well. 

Yes, you’ll probably have to increase wages from what you used to pay. There’s been a lot of focus in recent years on the viability of the minimum wage, with many workers feeling seriously underpaid for the amount of work they do. Consider that some states have a minimum wage as low as $7.25. That’s hard to live on.

Businesses are reluctant to increase wages for many reasons. Increases in supply costs, reduced or unpredictable customer demand, and industry-specific profit margins. Restaurants are known for having tight profit margins, for example.

There’s also a competition problem.

While the restaurant industry is increasing pay, warehouse workers are also experiencing an increase in pay that far exceeds the restaurant industry. It’s difficult to attract workers when you’re competing against other industries that pay better.

Increasing pay is possible. You don’t have to go out of business doing it if you adjust elsewhere:

  • Cut your costs. You will have to watch your budget like a hawk. If you can cut a cost somewhere, do it. Whether it’s in supplies, services, or even advertising, look for what you can trim.
  • Raise your prices. When the cost of supplies goes up, your prices reflect that. The same applies when the cost of payroll increases.
  • Adjust your operating hours. It’s possible you could help your bottom line by adjusting when you’re open. If you’re struggling to find staff, you’ll probably need to do this anyway.
  • Trim the excess. In a different time, you may have offered a ton of services for customers. It’s time to rethink your core business and streamline what you offer. Too much extra costs in time and energy for management.
  • Find new revenue streams. See if you can find new revenue streams, particularly passive revenue that doesn’t require intense labor to bring it in.

Think of this as an investment. It’s an investment in your people and your business’s future growth.

Create a safe and respectable work environment 

Post-pandemic safety is still important to workers, so find ways to show them that you are trying to keep them safe. Some employees are looking for a place to work where the employer is clearly concerned with safety, such as requiring workers to be vaccinated.

Safety is also about feeling welcomed and valued, and that the work they do is contributing to something good.

The past few years have been riddled with emotional stressors, chaos, unease, and fear. Not everyone handles that the same, and that’s why you’ll have to work to create a respectful work environment

What you do now, in regards to safety, is an indicator of what employees can expect down the road. Your employee handbook of the last few years is going to need some revisiting.

Offer career growth opportunities

We all want a little hope.

Shift workers were forced to take time off of work for part of a year, giving them time to evaluate their work, their life, and what they want. A lot of people have career growth opportunities on their minds, and focusing on this at your workplace can be an excellent tool for attracting new employees.

Think of it as part of your benefits, the idea of offering career growth opportunities. Paid training, industry certification, conferences, a clear path to promotion, regular raises—anything that shows where someone starts isn’t where they will stay forever until they get bored and move on. 

Not every business can offer the same growth opportunities, but there is always something you can do to show your employees you don’t think of them as cogs in the wheel. Even if it’s as simple as letting them rotate through tasks and duties so they get a feel for different types of work, it helps break up the monotony of what otherwise might seem like a “dead end” job.

Make the job application process easy 

Lower the barrier to entry, and make it easy for candidates to find and apply for jobs. 

This means providing clear information on the job, duties, and pay so they can easily see what is on offer. Don’t make candidates dig for information or require them to get far into the process before they can find that out.

Find new candidate pools by creating internships or apprenticeships that are attractive to a different set of potential employees.

Offer flexible scheduling and work environment

Getting your shift scheduling right is critical. Wages alone aren’t enough, because there’s a quality of life issue on the table.

Workers re-entering the workforce have gotten a taste of work-life balance, and they aren’t going to give it up. They want more flexibility from their work, and one of the best ways to do that is offering flexible scheduling.

Using a shift scheduling tool like When I Work is a good way to make that happen. It makes it simple for you to create open shifts, letting workers request shifts that fit their schedule and swap shifts with each other. By making shifts flexible and giving some control to your employees, you let employees have control over their life while you get the shift coverage you need.

Emerging from a pandemic into a changed work world with a potential labor shortage is not at all easy. 

Start by doing all you can to keep your current employees and implement strategies to retain new workers once you’ve hired them. Reset your way of doing business with an eye towards increased benefits and wages. And then, because you’re already dealing with enough, start using a shift scheduling tool that both empowers your employees and reduces your management load.

The importance of flexible scheduling for hourly workers

Shift work and hourly employment often come with inconsistent schedules, which can be a challenge for many workers. Flexible scheduling allows employees to balance their work with other commitments, such as family, education, or even second jobs.

Benefits of offering flexible scheduling

  • Employee retention: Workers are more likely to stay with an employer that offers scheduling flexibility, reducing turnover costs.
  • Enhanced productivity: A rested and content workforce often results in improved performance and reduced absenteeism.
  • Broader talent pool: By offering flexible shifts, employers can attract a wider range of candidates, including students, caregivers, or those with other jobs.

Actionable steps you can take today

  • Survey employees: Understand your workforce’s scheduling preferences and constraints.
  • Implement a shift swap system: Allow employees to exchange shifts with their peers, giving them more control over their schedules.
  • Use scheduling software: Invest in software that can accommodate employee preferences while ensuring business needs are met.
  • Regularly review scheduling practices: Periodically reassess schedules to ensure they align with both employee needs and business demands.

Upskilling and training opportunities for hourly employees

While hourly employees often occupy entry-level positions, they harbor aspirations for growth and advancement. By providing them with training and upskilling opportunities, employers can ensure a more skilled workforce while also enhancing employee satisfaction.

Benefits of upskilling hourly workers:

  • Improved service quality: Well-trained employees can provide better services, leading to increased customer satisfaction.
  • Internal promotions: By upskilling your workforce, you create a pool of potential candidates for higher positions, reducing the cost of external hiring.
  • Employee loyalty: Offering training shows employees that you’re invested in their growth, which can boost morale and loyalty.

Actionable steps:

  • Identify skill gaps: Regularly assess your operations to pinpoint areas where training might be beneficial.
  • Offer on-the-job training: Implement training sessions that employees can attend during their shifts.
  • Partner with Educational Institutions: Collaborate with local schools or online platforms to offer discounted courses for your employees.
  • Promote Continuous Learning: Foster a culture that values and rewards continuous learning and skill acquisition.

Retain employees during a labor shortage

Keeping your current employees happy and on the team is just as important as hiring new workers. Offer new benefits that they’ve never had access to before, like on-demand pay. You’ll increase employee engagement and satisfaction, as well as reducing turnover, which keeps you from having to hire new people again and again. On-demand pay, in fact, is a benefit that has been proven to increase employee loyalty—78% of workers say they are more loyal to an employer that offers it. 

A labor shortage sounds scary, but you can be proactive! Focus on the benefits that will help you keep your current staff and be attractive to new hires. Whether you decide that’s flexible scheduling, on-demand pay, and more, When I Work can help. You’ll save time building the work schedule each week, and your employees will appreciate the ability to manage their work life all in one spot. 

Sign up for your 14-day FREE trial of When I Work today to get started.

Labor shortage: FAQs

Q: What is driving the current labor shortage?

A; A combination of factors, including demographic shifts, retirees, health concerns, caregiving responsibilities, and workers re-evaluating their career paths.

Q: Which industries are most impacted by the labor shortage?

A: The service and hospitality industry, particularly restaurants, are heavily impacted. However, sectors like manufacturing and construction are also feeling the pinch.

Q: What do today’s workers want in terms of benefits?

A: Beyond the obvious pay and healthcare, workers are seeking flexible schedules, on-demand pay, opportunities for career growth, and a sense of safety and respect at the workplace.

Q: How can businesses retain their employees during these times?

A: You can offer tangible and intangible benefits, create an environment of respect and growth, and use tools that empower employees to balance work-life better.

Article Image
/Human Resources

Employee Burnout: Causes, Signs, And Strategies

Article Image
/Business Growth

9 Strategies For Decreasing Labor Costs

Article Image
/Scheduling Strategy

Rotating Shifts: A Manager’s Guide to Rotating Schedules

Article Image
/Scheduling Strategy

How to Save Time And Money With Automatic Scheduling For Employees

Article Image
/Small Business Blog

40 Employee Appreciation Ideas Your Staff Will Love

Article Image
/Human Resources

How to Write Up an Employee in 8 Easy Steps