Can unemployment cause labor shortages?
What comes next #1
|Yoni Rechtman||May 6|
As I’m sure you all are, I’ve been thinking a lot about “what comes next.” Or at least I’ve been trying to as I deal with the distraction and existential dread brought on by every sunrise and push alert.
One idea in particular that I’ve been noodling on has been how surging unemployment today might lead to structural labor shortages tomorrow.
The US is facing unprecedented levels of unemployment and even with extended UI, people are going to be hurting for work. That will create tons of interest in sharing/gig economy work just like after the last recession even if many of the mainstays (rideshare especially) are seeing their businesses crash and burn. Across the board, this is a great time to be hiring - even in highly skilled professions, the power dynamics have completely reversed overnight.
But that’s just today. Further out, the picture seems murkier.
The median age of the American worker is 42 years old. 37 million working Americans are at or near retirement age. (BLS) Even a temporary loss of income will likely push some of them out of the workforce altogether and into retirement, if for no other reason than the fact that unemployment last much longer for older workers. Still more will probably have to find work in other fields without being able to go back into their original profession. Over a 40% of tax preparers, commercial drivers, appraisers, HVAC mechanics, engineers, opticians, CFAs, funeral managers, construction managers (just to name a few categories) are approaching or above retirement age. (BLS)
Most of these categories (in total there are 46 such categories employing over 6 million people) are either skilled labor that is difficult to quickly train (bookkeepers and opticians, e.g.) or family-run businesses where a younger generation evidently did not want to take over (funeral homes and farms, e.g.). As some portion of the older workers are pushed out from or semi-voluntarily exit the workforce/their field, the supply shortages could prove very persistent. There’s not some new crop of precision instrument and equipment repairers just ready to turn on overnight.
Even if the overall labor force participation rate for older people goes up as retirement savings get decimated (it happened in 2008), that won’t be unevenly distributed by profession. So whether it’s opting for an early retirement or needing to find work elsewhere (the bookkeeper becoming a warehouse worker to make ends meet), these fields may get seriously hallowed out.
If certain professions exit the labor force in droves, we might return to some form of full employment but productivity will be constrained by the undersupply of whole categories of workers.
Every category that suffers from this kind labor force participation decline should present opportunities for 1) automation and tooling to help the reduced supply become productive enough to meet demand and 2) supply-side aggregation as the extant supply becomes a more highly sought-after commodity. If it’s departure of older workers causing these shortages, that theoretically means the remaining (younger) workers will be more open to using new technology and services…
So I guess this is a request for startups for a vertical labor marketplace for morticians?