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Skilled Labor Shortage Problems? Here Are 8 Strategies for Tackling Them

By Roy Rasmussen Reviewed By Mike Lucas
By Roy Rasmussen
By Roy Rasmussen Reviewed By Mike Lucas

Today’s skilled labor shortage leaves many employers without enough workers. If you face this dilemma, here are 8 strategies you can implement to counter your staffing woes. 

Learn more about what the skilled labor shortage is, how it affects businesses and what employers can do to manage skills gaps.

What Is the Skilled Labor Shortage?

The skilled labor shortage, also known as the skills gap, refers to the difficulty recruiters experience filling positions which require specialized training beyond handling routine tasks. 

Such positions include:

  • Skilled industrial and manufacturing workers, such as machinists, steelworkers, welders and pipefitters
  • Construction workers, carpenters, plumbers and electricians
  • Skilled service workers, such as health-care workers

Shortage of workers in these fields is a long-term problem that predates the COVID-19 pandemic but has persisted through it. In September 2018, 83% of recruiters reported difficulty finding suitable candidates within the past 12 months, according to a survey of human resources professionals by the Society for Human Resource Management. 

Of those reporting difficulty, 75% felt there was a skills gap among applicants. Jobs with a shortage of workers were led by positions involving trade skills such as carpentry, plumbing, welding and machining. 

This shortage was projected to continue for the next decade, based on an analysis of U.S. Census Bureau data conducted by the American Action Forum, a nonprofit which provides information on economic, domestic and fiscal policy issues.

The Problem Persists Into the Pandemic

The pandemic has done nothing to reverse this trend. Despite rises in unemployment during the height of the pandemic, open jobs remain unfilled. 

As of January 2021, about 13.6 million U.S. job postings remained unfilled for a month on average, and jobs in some sectors were staying vacant even longer, according to a survey conducted by skilled trades staffing firm PeopleReady. This reflects the skilled labor shortage in manufacturing, construction and other industries.

There’s a big “Help Wanted” sign hanging outside a factory.

What’s Causing the Skilled Worker Shortage?

A number of factors are contributing to the skilled worker shortage. As a result, skilled workers are being lost faster than they can be replaced.

Skilled Workers Are Retiring

A leading factor contributing to the loss of skilled workers is the retirement of baby boomer employees who possessed needed skills. For example, one-fourth of the manufacturing workforce are aged 55 or older, according to the U.S. Census Bureau. As these workers retire, they’re taking not only their jobs but their knowledge with them, often not passing it on.

New Employees Aren’t Replacing Retiring Skilled Workers

This loss of older workers is aggravated by a lack of younger workers with similar skill sets to replace them. Unlike previous generations, younger employees are being steered away from manufacturing toward high-technology jobs, with classes such as shop no longer emphasized and apprenticeship programs on the decline. 

One contributing factor is the perception that skilled jobs will be replaced by robots, according to Carolyn Lee, executive director of The Manufacturing Institute, an organization that supports skilled workers. Younger workers who held manufacturing jobs before the Great Recession of 2007 to 2009 were disinclined to return to what they saw as a dead-end field.

Low Unemployment Makes It Hard to Recruit and Retain Workers

The low unemployment rate of recent years has placed an additional drain on the available talent pool for skilled labor jobs. From October 2009 until the start of the pandemic, U.S. unemployment fell steadily, reaching a low of 3.5% in February 2020, according to the Bureau of Labor Statistics. After climbing to 14.8% at the height of the pandemic, it fell to 5.9% in June of 2021. In this economic environment, workers with skilled labor backgrounds tend to have jobs already, making it more difficult for recruiters to attract them.

Compounding this, the high demand for skilled labor has pushed wages up, increasing the challenge for employers trying to compete for scarce workers. Moreover, today’s employees are more likely to switch employers than baby boomers were, so retaining skilled workers presents as much of a challenge as recruiting them. According to a  March 2021 survey by insurance company Prudential, 1 in 3 millennials are planning to switch jobs after the threat of the pandemic subsides, compared with 10% of baby boomers.

In the wake of the pandemic, workers increasingly prefer remote work to on-site work, with 87% wanting to continue working remotely at least 1 day a week after the pandemic subsides, according to the survey.

How Is the Talent Shortage Affecting Businesses?

The shortage of skilled workers presents multiple problems for employers. These include:

  • Lack of employees in a business decreases productivity, making it more difficult to meet deadlines and turn profits
  • Employers face greater challenges recruiting new skilled workers to fill open positions
  • Business owners must invest more in recruiting new workers, cutting into profits
  • Even after recruiting skilled workers, employers face the challenge of retaining them

These challenges make recruiting and retaining skilled workers a high priority for employers, especially in industries such as manufacturing and construction which are experiencing greater skills gap challenges.

A big magnet has attracted several welders wearing protective masks and gloves.

Managing a Shortage of Qualified Workers: 8 Strategies

If you’re facing a shortage of skilled workers, there are a number of strategies you can use, including: 

  1. Taking a skills inventory
  2. Leveraging untapped skill sets
  3. Upskilling current employees
  4. Focusing on increasing employee retention
  5. Improving your recruiting efficiency
  6. Partnering with educational institutions
  7. Considering remote workers
  8. Hiring independent contractors

Here are some tips on how to deploy these strategies.

1. Take a Skills Inventory

A place to begin addressing a skills gap is by taking a skills inventory. You can do this by going through your company organizational chart, identifying which positions or functions require skilled labor and reviewing which skills your current employees possess. This will help you pinpoint where your skills gap lies.

2. Leverage Untapped Skill Sets

The fastest way to recruit skilled workers is by finding them on your existing staff. A skills inventory may turn up employees with skills that aren’t being utilized in their current positions. 

Consider extending offers to these employees to expand their job description or promote them to new positions where their skills can be put to needed use.

3. Upskill Current Employees

Your skills inventory may identify some employees who don’t possess the skills you require yet, but exhibit an aptitude for acquiring them. Consider whether upskilling these employees might be an efficient way to fill your skills gap. 

Morevoer, you can upskill workers through methods such as mentorship programs, on-the-job training and investing in continuing education.

4. Focus on Increasing Employee Retention

Keeping skilled workers is more efficient and less expensive than recruiting new ones. So, make sure you’re maximizing your efforts to retain your skilled talent. Offering competitive compensation and benefits plays a key role in promoting employee retention. 

Note that you can provide an additional incentive for staying with your company by offering opportunities for career advancement. Upskilling can help support employee advancement, as can mentorship programs and performance reviews which work with employees to nurture their career development.

5. Improve Your Recruiting Efficiency

If you’re struggling to recruit the right workers, changing your recruitment strategy might help. Working with a staffing agency can increase the effectiveness of your own recruitment efforts by allowing you to tap into a broader network. 

Also, make sure you’re making the most of digital recruitment platforms such as LinkedIn which allow you to extend the range of your recruiting. Specialized platforms such as PeopleReady can help you zero in on workers in specific industries.

6. Partner With Educational Institutions

Another way to improve your recruiting efficiency is by developing partnerships with educational institutions. Note that high schools, technical colleges and universities can provide ongoing talent pools of young workers. Nurture educational partnerships by participating in job fairs, work-for-credit courses and internships.

7. Consider Remote Workers

Expanding your recruitment search to include remote workers can enable you to tap into a wider talent pool. As you conduct your skills inventory, consider whether any positions could be filled by full-time or part-time remote workers. 

This can include both positions requiring skilled labor as well as other positions where remote workers could fill in for current employees who are being reassigned to skilled labor positions.

8. Hire Independent Contractors

Another way to widen your talent pool is to consider hiring independent contractors. You don’t necessarily need to hire a new employee to fill a skilled labor position if an independent contractor is available. Independent contractors also can fill in while you’re in the process of hiring permanent recruits.

Keep Skilled-Labor Positions Filled to Keep Productivity Up

The skilled labor shortage involves a scarcity of qualified workers in skilled trades such as industrial manufacturing and construction as well as skilled services such as health care. Clearly, the roots of this problem predate the pandemic, but have persisted through it. The underlying cause centers around skilled workers retiring or changing careers faster than they can be replaced. For employers, this cuts into productivity while creating expensive recruitment and retention challenges.

Managing Skilled Labor Shortages

Employers can mitigate the effects of the skilled labor shortage by taking proactive steps. Taking a skills inventory can help you identify current employees who can be recruited or trained for skilled positions. Moreover, prioritizing employee retention can reduce the number of skilled workers leaving your company. More efficient recruitment tactics such as partnering with staffing agencies and educational institutions can make it easier to find skilled workers. Expanding your talent search to include remote workers and independent contractors can allow you to tap into additional resources.

Finding the Financing to Recruit and Retain Skilled Workers

Note that Recruiting and retaining skilled workers requires an investment. If you need working capital to help you manage your labor shortage, consider tapping into small business financing options such as loans and lines of credit. 

So, take a few minutes to fill out our free, no-obligation prequalifying application and find out which types of financing options may be available to you.

Roy Rasmussen Contributing Writer for Fast Capital 360
Roy is a respected, published author on topics including business coaching, small business management and business automation as well as an expert business plan writer and strategist.
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