How Employers are Combatting Labor Shortages

If the 2020 US economy had a single defining story, it was labor shortages. Competition for talent is fierce, and employers are changing the way they hire to meet their demand for scarce workers. A new report from Emsi Burning Glass in partnership with the The Conference Board, How Employers Combat Labor Shortages, explores employer struggles and strategies. The report documents where labor shortages are most concentrated, and the differing incentives employers have started offering to different occupational groups.

Both labor shortages and increased incentives are concentrated in blue collar jobs

Like almost every other part of the economy, blue collar jobs saw a significant jump in quit rates around September 2021. In fact, blue collar jobs are where the lion’s share of labor shortages are located. The re-opening of large swathes of the economy meant sudden and strong increases in demand for labor in those industries. For example, between January and July 2021, employment in the Leisure and Hospitality industry increased by 16%. In the Personal Services industry it increased by 8%. For comparison, during the same time period, employment in all other industries increased by only 1.6%

Unsurprisingly, blue collar workers are reaping the biggest benefits from pandemic labor shortages. After April of 2020, offers of starting bonuses began increasing at a much steeper rate in noncollege occupations than college occupations. Currently, between 5% and 6% of postings in noncollege occupations offer bonuses, compared to just over 1% for college occupations. 

The same thing is happening for wages. While the share of postings that specify salary is going up across the board, the trend is most pronounced for noncollege occupations. Over 14% of postings for noncollege occupations included salary as of October 2021. For college occupations, it’s around 11%.

Employers are lowering barriers to entry for jobs

In a tight labor market, fewer and fewer employers can afford to set exacting educational standards. While in previous years, employers might have been able to pick and choose from a pool of college graduates to fill a barista position, that’s no longer the case. Educational requirements for blue collar jobs have declined sharply over the past few years, hitting their nadir in April 2021.

Offers of on-the-job training have also increased–again, mostly for noncollege occupations. In april 2021, nearly 3% of postings for blue collar jobs offered on the job training. Meanwhile, postings offering training for college occupations stayed relatively steady below 1%.

Employers are hiring remote workers for white collar jobs

So far, most of the changes to posting behavior have been concentrated in non-college occupations. But there is one notable way that employers have changed their posting strategy specifically for college occupations. Firms are becoming more amenable to remote work, which facilitates access to a wider talent pool for the occupations that allow off-site labor. For example, since April of 2020, West Coast tech companies have steadily increased their posts in other parts of the country. For business and financial occupations, nearly half of all postings advertise jobs in other states. 

You can read the report’s complete findings and analysis here.