Aug 27, 2023 - Economy

Labor shortages plague high-stakes industries

Illustration: Lindsey Bailey/Axios

Labor shortages are plaguing high-stakes sectors like law enforcement, health care and aviation.

Why it matters: Understaffing in some industries can have dire consequences for public health and safety — for example, a shortage of air traffic controllers has led to increase in near-miss airplane collisions, the New York Times recently reported.

  • At the same time, a lack of available workers in AI and manufacturing threatens to slow productivity and growth in areas where the U.S. is otherwise poised for huge leaps forward.
  • That's a problem not just for companies in those sectors, but for the broader economy.

Zoom in: Parents are feeling the labor squeeze from multiple fronts as they try to take care of their kids.

  • Schools across the country are understaffed, without enough teachers, bus drivers, or social workers.
  • The child care industry is also dealing with a shortage of available workers. Parents often either can't find care or can't afford it, which can cause them to stay on the sidelines of the labor force — making the worker shortage that much worse.

Police departments are also struggling to hire.

  • So are prisons — 21% of correctional officer positions were unstaffed in federal prisons, according to a March report. A staffing shortage throughout the Bureau of Prisons is increasing incidents of violence and leading to more health issues for prisoners.

How it works: Americans are getting older, and there are fewer younger people of working age. Add to that a tight labor market — unemployment in the U.S. is very low — and there simply aren't enough workers in the U.S. to meet demand.

  • Some of these high-stakes shortages are about wages. Government jobs, like teaching and law enforcement, typically can't raise pay high enough to compete with better-paying private sector jobs.
  • Some of them are about working conditions: Employers trying to fill in-person, high-stress roles are competing with jobs that offer more flexibility, including remote options.
  • And some of them are about skills: There are only so many people with a ton of expertise creating AI programs, for example. That's the problem in nursing, too.

What we're watching: For workers, this isn't a crisis. A tight labor market means higher pay, better benefits and more congenial employers.

  • UPS likely wouldn't have given such a generous contract to its unionized workforce with some drivers earning $170,000 a year — if not for the tight labor market.

Plenty of employers have figured out ways to adjust to this new normal — particularly in industries like retail and restaurants.

  • They've raised pay significantly, are relying more on automation (think self-checkouts gaining popularity), or cut their hours, or have made it work with some combination of those tactics.
  • But not every sector can take these steps. A lot of employers can raise wages and attract what workers are available, but the sectors facing these high-stakes shortages don't necessarily have that option.

The bottom line: Absent a surge in immigration, a surprise flood of sidelined women into the workforce, or a recession that drives down demand for employees, demographic changes mean that labor shortages will likely stick around.

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