Since the recession (2007-2009), we have experienced the longest boom in American History resulting in part from a labor surplus. But growth and expansion are hitting a wall as unemployment reaches an all-time low (3.7%) and is projected to drop even lower by Q2 2019 (3.2%). As a result U.S. job openings topped 7.136m, also a record.
"An increasing labor shortage may soon be one of the greatest risks to continued economic expansion." - Chris Rupkey, Economist, MUFG Union Bank
Q3 job openings outnumbered workers in eight out of twelve major industries. In health care there are now two openings for every available provider. Federal Government openings rose by 42k, a 61% increase.
Many in the recruiting industry will recall the "heady" days of 2006-2007, before the recession, when the talent shortage was intense and employers with money won. In the pharmacy space the winner was Walmart. At the time, Walmart was paying as much as 20-25% above market to eliminate pharmacist vacancies. It is worth noting that some of their competitors are no longer in business.
"Now corporations are diving uncharacteristically deep into the labor pool to fill vacancies." - Meagan Day, Jacobin
Recently a Minnesota non-profit that helps the formerly incarcerated re-enter the workforce is experiencing unprecedented interest – "employers are really knocking on the door in a way we haven't seen."
Right at Home, LLC, a homecare company related: "You can no longer place an ad in the newspaper and just wait. You have to look in different labor pools."
Peter Cappelli highlighted absurdly high standards with this story:
One of my favorites is a job ad for a cotton candy machine operator – if you've ever seen cotton candy made, it is not rocket science – where the requirement for applicants was demonstrating prior success operating a cotton candy machine. To test whether the standards were too high, a Philadelphia area human resource executive applied anonymously for a job at his own company. "I didn't make it through the screening process," he writes
A note to the Feds – We often see unnecessary requirements in Federal Task Orders. For instance, requiring a chiropractic assistant to be certified (most are not) or requiring five years ER experience for an ER nurse in northwestern Minnesota where the nursing shortage is so severe that few nurses specialize.
When there is a severe worker shortage, requirements have to be relaxed in order to hire.
We make a point that the victory in the talent wars go to the swift, but in this climate even more so. Right at Home, LLC (mentioned above) said it was "losing candidates to employers who could hire faster. As a result, they had to speed up hiring and training."
In this environment job postings and job boards will be much less effective. When the shortage becomes severe, your only hope will be to recruit from competitors and to convince potential employees that you have the best opportunity. Recruiting firms are really sales organizations and that is what you need now. There will be fewer active candidates, so you will need to be contacting the people you want directly.
In this environment he who has the gold literally makes up the rules. During severe workforce shortages employers will either raise wages or suffer vacancies. "If employers cannot get the workers they need," wrote Dean Baker, "then they raise the wages they offer to pull workers away from other employers."
Ensure your workforce strategy is talent-war proof.
