Where are all the workers?
The U.S. labor market is experiencing a chronic labor shortage. At the start of the decade unemployment numbers rivaled that of the Great Depression; however, we now have a ravenous job market with a significant labor shortage. As of January 2018, approximately 6.3 million positions remained open, but unfilled – a record high.
How did this happen? What does this mean? JLL researched the structural problems that led up to the undersupply of labor and how it’s affecting commercial real estate sectors. We packaged our analysis into our Labor Shortage Report.
Highlights of the JLL Labor Shortage Report include:
- Lack of qualified workers doesn’t necessarily equal more pay in the pockets of existing workers. Workers with the best skills and experience do tend to see wages rise faster than their average counterparts; however, workers outside this elite group have fewer skills and experience, which keeps their wages from rising.
- Declining labor numbers is due to structural factors, not cyclical ones. It’s not a matter of having workers waiting on the sidelines for the right time to jump back into the market.
- There are unique differences for men and women in relation to the supply-side of job scarcity. Factors such as atrophy of existing skills and wage disparity are among the contributing factors keeping workers out of the labor force.
- Credential creep – the increase in requiring applicants have degrees – is limiting opportunities for those with less than a college education.
- Geographical mismatch between where available jobs exist and where potential labor lives also plays a role. This correlates to JLL research in the technology sector that shows Wisconsin sources the majority of the out-of-state tech workforce to Minnesota.
Fewer workers mean a smaller economy. Labor shortages result in higher vacancy rates, lower asking rents and greater concessions across markets. What’s the remedy?
- More education, particularly in technology, as well as retraining could help workers.
- Increase measures that make it easier for women to remain or reenter the labor force.
- Facilitate movement of labor between areas with lack of opportunities to areas with excess job opportunities.