BY STEPHEN T. HOPPER, PE
LABOR PAINS: THE LABOR SHORTAGE AND HOW TO SURVIVE IT
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f your warehouse or DC needs qualified workers, and you’re having trouble finding them and getting the work done, you are not alone. Most North American businesses are wrestling with a dramatic shortage of qualified labor, and this lack of available workers is especially evident in the warehousing and distribution sector of our economy. Unfortunately, you have little control over the availability of qualified workers and over the economic and cultural conditions that influence it. You do, however, have much control over the way your business finds, uses, manages, and retains labor. To do these things effectively, you need to understand the nature of the real problem, identify what causes it, and take steps to solve it. Then you can reduce your labor requirements and find the qualified workers you need. A Failure to Participate Labor shortages in blue-collar industry sectors are really nothing new. Businesses with warehouses and DCs have been experiencing a growing shortage of qualified workers since more than a decade before the COVID-19 pandemic began. The U.S. Bureau of Labor Statistics has defined the labor force participation rate as “the percentage of the civilian, non-institutional population 16 years and older that is working or actively looking for work.” The labor force participation rate has declined steadily since 2000. (You can see an interactive graph at https://fred.stlouisfed.org/series/CIVPART.) There are several causes of this long-term decline in labor force participation. One primary cause has been the aging of the North American population. In recent years, the “baby boomer” generation has been retiring and exiting the workforce in droves, and the supply of new workers has simply been unable to keep up with the demand for them. The result is a steadily growing labor vacuum.
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To make matters worse, recent economic events worsened the labor shortage. The labor force participation rate dropped dramatically when the COVID-19 pandemic walloped the economy in early 2020. At the time of this writing, the labor force participation rate was hovering near 61.7%. Prior to the pandemic, it had not been that low since the mid-1970s. So currently, more than 38% of the US population has chosen not to actively participate in the labor force. Many of these people were employed before the pandemic began, but why did they choose not to go back to work? Labor economists have offered several main reasons. Some people have avoided working due to their fear of being infected with SARS CoV-2 by others in the workplace (and as a practical matter, most workers in warehouses and DCs cannot work remotely). Others have preferred unemployment compensation over earned wages, especially during recent periods of extended unemployment benefits and higher-than-usual weekly payments. An Imperfect Match But what about rest of the labor force? Why aren’t more of them searching for work in warehouses and DCs? The short answer is, in the warehousing and distribution sector, there is a growing mismatch between the jobs available for workers and the workers who are willing and able to do them. The demographics and physical attributes of available workers have evolved significantly in recent decades. For example, older workers who do remain on the job are working longer, but their work performance has understandably been adversely affected by age-related physical limitations, such as limited speed, stamina, dexterity, flexibility, and mobility. Older workers sometimes also have limited technical proficiency in relation to the technologies often found in modern warehouse and DC environments. Plus, more women and minorities comprise the