The Why Behind the Worker Shortage

It’s not just the $300 federal unemployment bonus that are keeping workers out of the workforce. 

If you have turned on the news in the last few weeks, you have undoubtedly heard about the shortage of workers to fill open jobs. Companies are pleading with the public to try to fill their open positions. Businesses who serve the public from amusement parks to local restaurants are making difficult choices about when they can be open with their current staffing levels. Society wants (and one could argue, needs) these companies to thrive especially coming out of the last 18 months. That said, I don’t think many are really looking at the “WHY” behind the labor shortage. Let’s take a look at a few of the potential limiters we see in the current environment:

Re-Opening Means Competition:

The Labor Department reported that there were 9.3 million job openings in April. Employers only filled about 1 in 15 new positions. With all of these open positions, basic supply and demand tells us candidates have the advantage. Candidates are asking for and expecting more out of companies and job offers. The expectation doesn’t stop with increased pay. Things like remote work & casual dress code are almost standard operating procedure at this point. Companies who chose not to compete in the “soft” portion of the new work environment will dramatically limit their available candidate pool.

Headwinds from Federal Unemployment Bonus:

The $300 federal jobless bonus has been talked about as a direct competition to American businesses but until now, there really was no quantitative data to support the claim. We now know, hires in April were lower in many industries than they were in December when the $300 federal jobless bonus was not available (and COVID restrictions were greater in December). Many States are ending the federal jobless bonus earlier than the scheduled end date in the fall. While this may be a blow to unemployed residents of those states, many economists believe this will help the labor market greatly. Ohio, for reference, will end the $300 federal jobless bonus on June 26th.

Stimulus, stock market recovery and raising home prices are making Americans feel good about their financial situation:

There is no secret that the housing market has been on fire. As such, Americans who own homes are probably feeling pretty good about their debt to value relationship. Interest rates are at record lows so the cost of the debt is next to nothing compared with decades ago. The stock market has recovered and set new records since March of 2020 so American’s retirement plans are generally strong. Stimulus payments have helped Americans have spending money in their bank accounts. While inflation is a bit of a headwind for families, overall, the positive gains since March outweigh the additional costs.  

Child Tax Credit Payments:

On June 15th, many parents will receive monthly checks from the Government. The amounts will be based on the number and age of the children they have. The maximum is $300 per month per child. On top of the monthly payments, the child tax credit was raised from $2,000 to $3,000 per child ($3600 for children 5 years old and younger). Many experts speculate that the additional money will not be used for child care but will be another reason working parents do not re-enter the labor force.  

So what’s the Why? Maybe all of these things. Maybe there is still a fear of catching COVID while at work? Maybe there is social anxiety to see people again? For each person, it’s a different reason. Businesses should customize a strategy to attract talent but also keep in mind they need to retain their existing talent. Many companies are holding cash and willing to pay to get great talent.

Aquarius is a Cincinnati Home Grown staffing partner to some of the largest companies in the region. Founded in 2006, Aquarius has active pipelines in IT, Accounting, Operations, Finance, Marketing, Engineering, Clerical, Human Resources, Transportation, Administrative, Customer Service, and Beyond. Being client driven, Aquarius prides itself on its flexibility to consistently deliver value to its clients. We feel it's our ability to deliver value that makes us a partner not just a vendor. Aquarius has the bandwidth to support Direct Hire, Contract-To-Hire, Non Time Defined Contract or Special Projects.