Labor shortage isn’t going away anytime soon, so Idaho should prepare to attract workers
The labor shortage that’s affecting Idaho and the entire United States is not going away.
It’s not temporary, and it’s not going to be solved by any one thing. It’s not caused by lazy people on unemployment, and while COVID-19 accelerated the problem, the labor shortage was creeping up on us before the pandemic.
The labor shortage is systemic and, unfortunately, it’s only going to get worse.
“It’s not just a perfect storm,” Ron Hetrick, a labor economist with Emsi Burning Glass, a labor market data company with headquarters in Boston and Moscow, Idaho, said Monday. “It’s literally a hurricane, a tornado and an earthquake rolled into one.”
Hetrick was invited to speak at the Idaho legislative academy hosted this week by Idaho Business for Education. Emsi produced a paper on the topic called “Demographic Drought,” in which they coined the term “sansdemic,” meaning the labor force is without enough people.
Idaho Business for Education brought Hetrick in for the academy as a way to help inform the public about the real root causes of the labor shortage and to inform legislators as the legislative session starts this week.
“The Legislature can go down a lot of dark alleys and box canyons and sort of get lost in things that aren’t all that important to actually improving our education system or helping kids succeed or even helping our state succeed economically and otherwise,” Rod Gramer, president and CEO of Idaho Business for Education, said in a phone interview. “So what we do is we try to bring thought leaders in that can get our legislators to start thinking more strategically and more forward-looking at things that need to be addressed.”
Our current labor shortage, according to Hetrick, is caused by a combination of factors:
Baby boomers retiring from the workforce. Over the past 50 years, baby boomers have provided a massive glut of workers in the workforce, especially since women began flooding the workforce starting in the 1970s.
Well, that bill is coming due, as baby boomers, those 55 and older, are leaving the workforce after decades of accumulating wealth.
While baby boomers made up 66% of the workforce in 1997, they now make up just 41%, and that number continues to decline.
In 2020 alone, 3.2 million baby boomers decided to retire, up from 1.5 million the previous year.
Boomers aren’t being replaced. Labor force participation rates plunged among prime-age Americans for a variety of reasons, not just sitting at home collecting unemployment. An estimated 2.4 million women, for example, left the workforce in 2020. Prime-age men (24-54) had been leaving the workforce since 1980, dropping from a 94% participation rate to 89% by 2019.
“It’s not about putting unemployed people back to work,” Hetrick said. “We’re pretty much almost out of unemployed people at this point. We’ve consumed them so rapidly. The problem that we have are these people that have all dropped out of the labor force.”
Starting in 2009, after the Great Recession eliminated 4.5 million full-time construction and manufacturing jobs, many prime-age men were forced to move into part-time jobs in the restaurant and retail industries. Many of them stayed there, continuing to work 20-30 hours a week, according to “Demographic Drought.” By 2019, nearly 8 million prime-age men were working part time — by choice.
Birth rates are declining, meaning fewer young people are entering the workforce. The population of the United States is growing, but it’s growing at a slower rate than before, at just 6.6% from 2010-20, the lowest decade of growth in U.S. history, lower than the decade of the Great Depression.
Immigration has declined in recent years, removing hundreds of thousands of workers from the labor pool.
“Your population only comes from two ways: You either birth them – organic growth – or you get them through migration,” Hetrick said. “But migration has really plunged, and it’s plunged, especially since 2016, but in particular the past two years, because of the pandemic, border issues and things like that.”
Even the opioid epidemic is a cause, removing an estimated 800,000 young men from the workforce, according to research cited by Hetrick.
All of this adds up to a worker shortfall of roughly 5 million in the United States, Hetrick said.
The coronavirus pandemic has affected the problem in a number of ways, but Hetrick pointed out that the labor shortage was happening before — the pandemic just accelerated it.
Even before early 2020, there were 7 million job openings, and unemployment was at historic lows, meaning employers were already having to fight for workers.
Today, that number has grown to a record 10.6 million job openings.
The bad news is that the problem is only projected to get worse, as population is expected to decline further.
What that means is that employers will have to fight each other for employees. Employers will need to do everything they can to retain their existing employees, such as, yes, paying them more, but also providing nonwage incentives and training them to move into unfilled jobs within the company.
On a broader scope, cities, states and even countries are going to find themselves in pitched battles with other cities, states and countries to attract workers.
That means government agencies will need to enact policies that incentivize workers to either move to their area or compel current residents to jump back into the workforce.
For example, lack of affordable child care has been often cited as a reason many people have left the workforce. The state of Idaho could, for example, pass a child- and dependent-care tax credit that could be used to offset the expense of child care, providing a path for stay-at-home parents to come back to work.
Idaho Gov. Brad Little, in his state of the state address Monday, proposed cutting $600 million in taxes. How about targeting tax cuts that help Idahoans rejoin the workforce, fill unfilled jobs and bolster Idaho’s economy?
Housing affordability is another strike against Idaho, and Boise in particular.
“Workforces are moving around, and you just want to be seen as a place that is just really inviting,” Hetrick said. “People will move to a place where they can get a home and they see themselves having a life, and so having that real estate, having opportunities for people to move into is the key, and it needs to be affordable and it needs to be realistic.”
Other policies that legislators could enact to help Idaho compete for workers: fund a really strong public education system, including full-day kindergarten and pre-K programs to attract young families; reduce property taxes; and fund career-technical education programs.
Legislators should also ensure that community college and higher education are affordable; facilitate connections between employers and high school graduates through apprenticeship programs; and reduce barriers for those convicted of crimes to reenter the workforce.
Those are just a few. Hopefully, the legislators who were on the call with Hetrick were listening.
BEHIND THE STORY
MOREWhat is this column all about?
This column shares the personal opinions of Idaho Statesman opinion editor Scott McIntosh on current issues in the Treasure Valley, in Idaho and nationally. It represents one person’s opinion and is intended to spur a conversation and solicit others’ opinions. It is intended to be part of an ongoing civil discussion with the ultimate goal of providing solutions to community problems and making this a better place to live, work and play.
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