Businesses struggle with shortage of skilled labor, study finds

U.S. businesses are struggling with a shortage of skilled labor, but long-term solutions will take time to have an effect on the workforce, according to a report from the employment and labor law firm Littler Mendelson P.C. and the National Association of State Chambers (NASC).

The report arrives as employers say they have nearly two job openings per available worker, a rising employment cost index (ECI) driven by rising wages, and persistently high employee “quit rates,” the researchers said. The study was generated by the law firm’s government affairs arm, Littler’s Workplace Policy Institute (WPI), and is titled “Workforce: A Throttle on American Growth.”

Since the challenge is nationwide, solutions will have to span all 50 states in an effort to re-tool states’ workforce systems and educational institutions to meet modern workplace needs, the study said.

In pursuit of that goal, state chambers of commerce say that studying workforce trends has “exploded” as a critical issue within the past five years. The issue gained a rising profile as the U.S. economy rebounded from the financial crisis and Great Recession, forcing the labor market to grow tighter and tighter, the report said. As a result, the national unemployment rate fell below 5% in 2016 and below 4% by 2018. When economic activity rebounded from the covid-induced shutdown, workforce availability and skill challenges rose to peak importance and are now inhibiting company expansion and success.

In order to improve workforce quantity and quality, state chambers, industry associations, and member firms are striving to increase applicant pools short-term by reaching out to disengaged groups of adults and young people. They are also investing in long-term solutions by supporting campaigns to improve school funding, childcare, and pre-K public education, the study said.

Many state chambers also advocate for federal legislative changes in public policy, led by a need for immigration reform to expand the skilled workforce by granting more work visas and green cards to highly educated foreign workers, improving the guest worker program, building legal protections for DACA individuals, and creating a path for undocumented immigrants to obtain citizenship, the report said. Other legislative priorities include an expansion of the Federal Registered Apprenticeship program, reauthorization of the Workforce Innovation and Opportunity Act (WIOA), and improvements to career awareness programs, childcare and housing, better benefits, and a review of Occupational Safety and Health Administration (OSHA) regulations.
 
 

Littler’s Workplace Policy Institute partnered with @statechambers to release this comprehensive report analyzing the contributing factors to an increasingly tight labor market & policy reforms that can help address these workforce challenges. #WPI #emplaw https://t.co/zcvSbqse3k

— Littler Mendelson (@Littler) August 31, 2022