At the middle of October, your view of the Pacific Ocean along the southern Calfironia coast was blooked by a record 100 cargo ships waiting to enter the Ports of Los Angeles and Long Beach to unload an estimated 800,000 containers.
When the container ships finally unload, they then will face a current scarcity of dockworkers needed to unload the containers and a persisting shortage of qualified truck drivers to transport them to inland destinations.
“At the heart of this supply chain debacle is a labor crisis that spans countless aspects of our economy and could fundamentally affect the way we live going forward,” observes Alex Cate,who is a research analyst for Colliers, the global commercial real estate services company.
“If there was ever a question about the importance of the labor market in virtually every aspect of our economy and society, the events and consequences of the pandemic have profoundly answered it.”
Cate believes some of the accepted explanation for the shortage – that extended government financial aid during the pandemic had discouraged workers from leaving unemployment behind – isn’t the real reason for the dearth of labor.
In fact, the 26 states that withdrew federal assistance prior to the national September deadline saw no significant decrease in unemployment or increase in labor participation, he notes.
“The factors influencing the labor mismatch are rooted far deeper in the fabric of our society’s transformed norms and beliefs,” Cate offers. “Fears about Covid 19 and vaccines, along with a lack of childcare, job flexibility and wage growth are threatening our economic recovery.”
Unlike previous recessions, the unemployed are waiting, watching, and negotiating in spite of increases in both job openings and wages.
One study of more than 100 metropolitan areas found that average difference between employment growth and labor force growth was 11.3% between April 2020 and July 2021. In some metro areas like Louisville and Lexington, KY, and Toledo, Ohio, labor force growth has in fact been negative.
Why does this gap matter? Cate explains that if the growth of the labor force cannot match the growth of employment needs, the economic growth we have enjoyed thus far in what has been deemed the post-pandemic will grind to a halt.
A growing difference also has driven a change in wage expectations. He says that in the warehouse and logistics sectors, low-wage workers have seen their hourly pay jump in recent months from $13 an hour to $19 an hour.
If that wasn’t steep enough of an increase, Amazon warehouse workers in some markets are now seeing $22 an hour, not to mention numerous health benefits and even college tuition programs.
Studies also have shown that as job openings and opportunities have soared, a significant number of working women have delayed their re-entry into the workforce due to concerns about childcare.
A survey found that 50% of parents view direct support for childcare as important to their decision to fully resume work. However, day care centers are facing increasingly stiff competition from companies like Amazon and Walmart who require fewer qualifications and are handing out extraordinary wages and benefits.
Today’s employee wants change and flexibility. To survive, many companies across all industries are already fiercely competing to attract and retain talent with hybrid work models, higher salaries, childcare services, and amplified benefit plans. “This labor mismatch will take a considerable amount of time to play out,” Cate observes.
“One bright spot is that this slow and methodical matching of employees to new jobs could mean a calmer labor market, as workers find themselves more suited for their roles after this waiting period. A more efficient economy could follow.”