The 2021 Labor Shortage Explained & What Businesses Can Do

The COVID-19 pandemic was a worldwide crisis that resulted in many business closures, worker shortages, layoffs, and mass unemployment. At the height of COVID-19 related unemployment, an unprecedented 14.8 percent of Americans were unemployed. That number is staggering. In fact, it’s estimated that unemployment rose higher in the initial three months of the pandemic than it did within two years of the Great Recession.

However, as the pandemic began winding down, mass unemployment continued. Some Americans and government officials blamed the US labor shortage on extended unemployment benefits, but even as those benefits ended, the shortage largely continued on. As of July 2021, there are 10.9 million job openings and 8.4 million unemployed workers, according to the Bureau of Labor Statistics.


So why is there such a significant labor shortage in America now? Labor issues are never simple, but there are many prevailing reasons that workers haven’t yet returned to the workforce. Today, we’ll be taking a closer look at the labor shortage and what businesses can do to thrive and attract more workers.


Why Are There Labor Shortages Following the COVID-19 Pandemic?

Here’s a closer look at the reasons why mass unemployment may be continuing in the United States.


1. Labor Woes

Many American workers wanted better compensation and benefits for employment well before the pandemic occurred, but they had little lobbying power. Now, the tables have turned. Many unemployed Americans have expressed a desire to return to work, but that they were willing to wait for better opportunities, including:

  • Higher wages

  • More flexible schedules

  • Employee benefits

  • Remote work opportunities

  • Better work environments

2. COVID-19 Related Deaths

COVID-19 had a significant impact on the death rates in America. Another reason for the US labor shortage is the deaths related to the pandemic. In 2020, the death rate was higher in America than it had been since 1943. In fact, deaths in 2020 were elevated for nearly every age group compared to previous years.


3. Retiring Baby Boomers

Many aging baby boomers were set to retire soon or had already been eligible for retirement before the pandemic. However, estimates show that around two million more people than expected retired early during the COVID-19 pandemic. Older workers cited many reasons for opting to retire early, including age discrimination that led to more significant difficulties in finding a new job or being offered lower wages or less attractive positions compared to younger job seekers.


4. COVID-19 Fears

Another potential cause of the US labor shortage boils down to COVID-19 related fears. While vaccines and testing have become widely available, new variants continue the spread of the virus and public fear. These fears could play a role in why many Americans have chosen not to seek new employment as the pandemic has begun to wind down.


How Businesses Can Thrive During the 2021 Labor Shortage

Labor shortages are complicated topics, and this one is no different. However, we can discern some causes or the shortage, and therefore businesses can adapt to thrive and appear more attractive to job seekers.

  • Offering Better Wages and Benefits: In an era where businesses must now compete with one another for workers instead of the other way around, companies that are willing to offer better wages, benefits, and more flexible schedules may be more likely to find new hires.

  • Offering Sign-On Bonuses: Sign-on bonuses are a fantastic way to attract new hires, especially when in addition to improved employee benefits.

  • Offering Remote Work Opportunities: Remote work became commonplace at the height of the pandemic. Now that the pandemic is winding down, many employees have wondered why they cannot continue to conduct their work remotely. Early data has shown that employers save money allowing their employees to work from home due to real estate and operation costs and increased productivity. Additionally, employees save time and money by eliminating their daily commutes.

  • Providing Better Training to Workers: Labor shortages mean slim pickings, and candidates may not have all the skills that you required before. However, by providing better training to new hires, you can groom these candidates for a role you need to fill, rather than sitting on an open job posting.

The Bottom Line

The 2021 labor shortage does not appear to be ending any time soon. However, there are several ways that businesses can become more attractive to potential job seekers and increase worker retention.


Contact us today for a free consultation to learn more about training, reputation management, and social media marketing services we have to offer.

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