The Surprising Reasons Behind the Shortage of Skilled Labor

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What’s causing the shortage of skilled labor in the U.S.? What are some possible solutions?

As the overall labor shortage begins to ease in the U.S., there’s still a chronic shortage of skilled labor. In the long term, efforts to resolve the shortage focus on educating young people about the trades to clear up misconceptions and increase interest.

Keep reading to learn what’s causing the shortage of skilled labor and some proposed solutions.

Shortage of Skilled Labor a Major Concern

While some sources report that the overall labor shortage is over or soon will be, there’s still a chronic shortage of skilled labor in some sectors, especially in trades including machinists, welders, carpenters, pipe fitters, and electricians. This is a huge problem for U.S. manufacturing and construction companies. In this article, we’ll examine what caused the overall labor shortage, the surprising reasons behind the skilled labor shortage, and some of the possible solutions.

In the Past: What Caused the Overall Labor Shortage?

Long-term changes brought about by the pandemic resulted in early retirements by millions and a change in attitude towards work in general. This outcome might have reflected, in part, a generational shift: Millennials report valuing time away from work more than Gen Xers and baby boomers, who prioritize financial stability.

Generational or not, many workers seem to be seeking work that’s not so draining and that offers more personal independence: The most commonly cited reason for leaving a job is burnout, and the most commonly cited reason for accepting a new position is the ability to work remotely or to set one’s own schedule.

Temporary (But Long-Term) Shifts:

In addition to the two above factors, there were many other reasons that employers were having trouble filling jobs despite record numbers of unemployed. Even as the overall labor shortage eases, it’s important to consider the below factors as we face a chronic shortage of skilled labor:

Location mismatches: Many workers moved during the pandemic and are no longer concentrated in urban areas where jobs are available. In addition, many jobs moved to less-accessible areas—for example, warehouses employ lots of people but are often in remote, hard-to-reach areas, especially for those who rely on public transportation.

Skills mismatches: This predates the pandemic but has been accelerated by it. For years, there have been plenty of people with experience in construction, real estate, and manufacturing, but fewer in high-growth industries like education and health care. The pandemic has widened these gaps: People who have lost jobs in areas like event planning aren’t a match for positions like truck driving, in high demand as of late. Further, as the digitization of, well, everything has grown, demand has risen in industries requiring specialized technological training, but education hasn’t kept pace.

Childcare issues: Daycare centers have struggled to stay open as their low-paid workers have sought out higher wages in other industries. A lack of childcare ripples through an economy. When child care is expensive and hard to find, workers (usually women) need to stay home instead of return to work. This is a major reason women have been dropping out of the workforce at higher rates than men.

Currently: What’s Causing the Skilled Labor Shortage?

Most analysts attribute the shortage of skilled labor to generational differences: Fewer people from the younger generations see the trades as a viable or desirable career, so as the older generations retire, the supply of skilled workers diminishes. Surveys have identified several reasons young people aren’t interested in pursuing skilled trades.

Wage Concerns

For one thing, young people expect skilled labor jobs to pay low wages. This expectation is arguably incorrect. On average, trade workers earn about $48k per year. To put that in perspective, retail service workers earn about $29k, administrative office workers $38k, medical professionals $75k, engineers $80k, and the overall average for all workers is $46k.

Stability Concerns

Many young people also believe that skilled labor jobs are insecure because workers are rapidly being replaced by machines. This is also arguably untrue. For many trade positions in the construction and maintenance sectors, automation is impractical. The U.S. Bureau of Labor expects demand for skilled labor in these sectors to increase by about half a million jobs over the next decade.

Lack of Exposure

Surveys also indicate that many young people never seriously consider skilled-trade work because they don’t know what the job would really be like, or have misconceptions about what it would be like. This, in turn, seems to be because many young people don’t have parents, friends, or other role models who work in the trades. Without exposure to people who do skilled labor, it’s hard for them to picture themselves doing it, and easy for them to develop misconceptions about it.

Disrupted Immigration

Some sources argue that a shortage of work visas for immigrant workers is making the skilled labor shortage worse. During the COVID lockdowns, the U.S. government stopped processing work visas, cutting off the supply of immigrant workers. Now they are processing visas again, but they have a backlog of around two million to process, so the supply of foreign labor is still constricted.

However, others contend that skilled trade workers are largely excluded by the United States’ current work visa program, implying that the shortage of visas would only impact other sectors of the labor force.

Looking Ahead: How to Resolve the Shortage

Given that younger generations seem to be moving away from skilled labor due to misconceptions, the obvious long-term solution to the shortage is to clear up their misconceptions by giving them more exposure to the trades in high school or earlier. Some argue that, with rising college tuition costs and limited job prospects for people with BA degrees, trade programs are already becoming more attractive to students.

Short-Term Solutions

In the meantime, companies are doing several things to cope with the shortage of skilled labor. Manufacturing companies can invest in new equipment and increased automation to maximize the output of their workforce.