Column: The real reason things are not as they should be

Jim Roher
Posted 7/12/22

The airlines are canceling thousands of flights, all four military branches are missing their recruiting goals badly, store shelves have lots of out of stocks, restaurants are operating on shortened hours and good luck getting anyone in a call center to answer the phone.  

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Column: The real reason things are not as they should be

Posted

The airlines are canceling thousands of flights, all four military branches are missing their recruiting goals badly, store shelves have lots of out of stocks, restaurants are operating on shortened hours and good luck getting anyone in a call center to answer the phone.  

The airline situation is particularly upsetting because we taxpayers shelled out 50 billion dollars to the airlines to ensure they remained viable during and after the pandemic. I remember wondering at the time if we should merely loan them the money to be repaid as we did with the automotive industry when it was in dire need of help. Both the Trump and Biden administrations favored the handouts, and there were strings. Layoffs were to be avoided, most routes were to be serviced and the money couldn’t be used for dividends, executive pay or stock buybacks. So, why are the airlines so short of pilots and flight attendants that they are leaving passengers stranded? 

All these inconvenient things are happening because America has a serious labor shortage. Like the airlines, we should have seen it coming. It is true that the pandemic caused millions to rethink their futures. Financial success in the market and strong growth in the value of their homes allowed many workers to reconsider their employment. Some accelerated retirement plans, some rejected their lousy job and some decided to take their time getting back to work as the pandemic cools. 

My research has uncovered four root causes to the labor shortage. The largest is the huge number of baby boomers retiring. It has been estimated that 10,000 boomers retire every day. Actual counts are 26 million in 2019 and 29 million in 2020. The figures for 2021 are not public yet, but even at 20 million, that’s 75 million workers. Our workforce is estimated to be 158 million, so that’s a loss of 47% within three years. This is not surprising as baby-boomers range in age from 58 to 75. 

Now add that between 2016 and 2020 we dramatically reduced the pool of new workers from national non-tourist visas, new arrivals, and refugees from 2.7 million in 2016 to 1.3 million in 2020. Additionally, green cards were reduced during the same period by 418 thousand and non-immigrant visas 11.2 million according to the CATO Institute. All in all, legal immigration was reduced 63%.

Ronald Reagan said it this way: “It is lady liberty that gives us our place in the world. It is the great lifeforce of new Americans that guarantees that America’s triumph shall continue unsurpassed into the next century and beyond. Other countries may seek to compete with us, but in one vital area, as a beacon of freedom and opportunity that draws the people of the world, no country on earth comes close. This quality is vital to our future as a nation. If we ever closed the door to new Americans, our leadership in the world would soon be lost.”

The third reason for our labor shortage is our slowing population growth. The growth projected over the next several years is one half of one percent per year. This will not cover the projected annual job growth rate. Our job growth projections are around 100,000 while the workforce growth is projected at about 80,000. So, without some unexpected population growth, we will have a tight hiring market for several years. 

The final cause of our labor shortage involves our traditional employment practices. Offering a low starting wage, a week of vacation after a year, a 40-hour fixed schedule and a starter healthcare plan for which the employee pays half will not cut the mustard. Younger workers know they are in demand so they will expect salaries that they can live on, a generous vacation and healthcare coverage that protects them and schedule flexibility. They must wrestle with high housing costs, childcare, healthcare that gives them peace of mind, and they want time to have a life outside work. We must figure out how to reduce our overpriced healthcare costs. Flexible schedules are possible in most employment situations, but employers must change their thinking on this subject. We can’t afford to have young workers sitting on the sidelines. 

If we recognize that the numbers don’t add up, I believe we will come up with innovative solutions. That is what we have always done. 

Jim Rohrer of Evergreen is a business consultant and author of the books “Improve Your Bottom Line … Develop MVPs Today” and “Never Lose Your Job … Become a More Valuable Player.” Jim’s belief is that common sense is becoming less common. More about Jim at www.theloyaltypartners.com.

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