Here’s Why Businesses in the United States are Finding it Hard to Hire Workers

Why is a Sudden Shortage of Workers Being Manifested

Of late, a trend which is upsetting business owners in the United States is the “labor shortage”, making it hard to hire workers.

Though The Great Resignation is now history, both small and large businesses face an acute “crunch” to fill available positions and are increasingly relying on part timers as well as relaxing the requirements for open roles to widen the pool of applicants.

Indeed, the labor shortage is real and impacts everyone from Walmart to mom and pop stores.

While the cyclical nature of the American economy imposes such shortages and vice versa according to the boom bust cycles, what is different this time around is a “forever” labor shortage that threatens the competitiveness of the American economy.

To understand why, one has to delve into the “structural” changes underway in the United States since The Great Recession of 2008.

And, to propose how to alleviate this from harming the economy, one has to address the longer-term trends causing the “imbalance” in the demand supply aspects of the labor market.

Retiring Boomers and the Long-term Structural Changes

First, we will start off with the “retiring” Baby Boomers. This generation consists of those who were born around the time of the Second World War and after that, when a triumphant US became the global leader, ushering in a period of prosperity.

The large numbers of this Age Cohort, provided the American economy with a “ready and steady” pool of talent, which drove wages down and at the same time the “boom” due to these “boomers” sustained economic growth, thereby making everyone wealthy.

Once the Boomers started retiring, there were “gaps” in the supply of talent, as well as the “vacancies” at all levels of America Inc. which thrust the Gen Xers and the Millennials into managerial and leadership positions.

In turn, this created more demand for workers down the hierarchy, which could not be filled as quickly as the employers wanted.

Once the Pandemic struck, the mass layoffs led to more structural changes, which was exacerbated by the Ukraine war.

It didn’t help that The Great Resignation happened around the same time.

To make matters worse, the Federal Reserve raised interest rates, to “cool” the “hot” inflation and the “tight” labor market, leading to more “imbalances”.

Thus, a “Perfect Storm” of converging trends is now impacting the American economy so much so that businesses are facing the “brunt” of this “crisis”.

Some Solutions Requiring Political Will to Address the Challenges

Of course, the “solution” to this labor shortage is Immigration and more women in the workforce.

Plus, increases in “minimum wage” along with paid maternity leave and daycare at workplaces can help as well.

However, these are “political” decisions that the American polity seems unable to resolve, making matters worse.

Immigration has been down since last couple of years, and is now down to a “trickle”.

The Pandemic made more women enter the workforce due to WFH ( Work from Home) and Flexi working.

However, with Back to Office mandates, this “bump” in the labor pool has disappeared. Paid maternity leave is a political “hot potato” as is raising the Minimum Wage.

So, in effect, some of the solutions here are political and cultural in nature, now morphing into long-term structural challenges.

The earlier these are addressed, the better it is for the American economy.

Nothing is Certain in the Economy and ao, America Inc Can Breathe Easy

While the problems discussed so far seem insurmountable, one thing’s for sure and that is there is no certainty anymore. Trends can change due to Innovation, Improvisation, and Invention.

For instance, productivity enhancing technologies can let businesses cope with labor shortages.

Next, businesses may figure out ways to Do More with Less, and automation might replace entire job categories altogether.

Taken together, these 3Is can ensure that America Inc doesn’t feel the lack of workers to the extent that is being trumpeted

Next, the economy might worsen, and the Millennials might realize the importance of “material” gains, thereby driving them back to work and take up jobs.

A liberal polity might encourage more immigrants. Beyond that, the women might workaround the personal professional challenges and balance the work-life aspect.

The Emerging Digital Age Might Very Well Upend These Structural Changes

On the other hand, we might very well be in the throes of a profound “shift” in the way Work is defined and in the “sunset” of The Industrial Age and the “birthing” of The Digital Age.

The latter would require us to make radical changes in the way we order our personal and professional lives.

For instance, 9 to 5 workdays have oriented everything from School timings to Public transport to Grocery and Restaurant working hours.

With 24/7 working and Anytime, Anywhere work, the “paradigm shift” needed can overturn all the assumptions of labor shortages and instead, make us all Producers and Consumers at the same time. The term coined by the futurist, Alvin Toffler, is Prosumer.

In such a scenario, all of us would be part of an economy that resembles a Gig kind of working arrangement rather than a full-time day job.


So, here we are, at the Crossroads of an “epic” transformation in the way the traditional compact between owners and workers plays out.

While the present situation looks dicey for both, there are political and economic solutions, which if implemented can ease the worries of both.

To conclude, it remains to be seen as to what the present labor shortage would spur the Stakeholders to do, and how that would impact the economy.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.

Human Resource Management