U.S. employers are on the brink of facing an unprecedented labor shortage, according to new research by Lightcast, a global labor market data and analytics provider. The report highlights that a combination of Baby Boomer retirements, declining birth rates, and low labor force participation will result in a shortfall of 6 million workers by 2032.
The study, titled “The Rising Storm: Building a Future-Ready Workforce to Withstand the Looming Labor Shortage,” forecasts significant impacts on the healthcare, hospitality, and service sectors. It urges both government and business leaders to take immediate action to address this workforce deficit.
This report is part of Lightcast’s ongoing “Demographic Drought” series that initially identified the impending labor shortage and explored ways to boost labor participation rates. The latest analysis provides fresh insights into evolving labor force dynamics and suggests strategies for businesses, educators, and government officials.
Several factors are contributing to the anticipated workforce gap:
1. The "Silver Tsunami": Since 2021, 80% of the 5 million workers who left the workforce were over age 55. The average retirement age has now decreased to 61.
2. Decline in U.S.-born labor force: Immigration is currently sustaining workforce growth since 2019, with foreign-born workers playing a crucial role in key sectors like healthcare.
3. Mismatch between available jobs and workers: Although the domestic labor force is becoming younger and more educated, there remains a need for immigrants in essential roles.
4. Decrease in prime-age male workforce participation: Issues such as substance abuse and incarceration have led to fewer men participating in the workforce.
Ron Hetrick, Lightcast senior economist and co-author of the “Demographic Drought” series stated: “Like an approaching hurricane, we felt the outer bands of this coming storm during the pandemic as the ‘Silver Tsunami’ of Boomer retirements began... But that was just a preview."
Hetrick emphasized that without prompt measures, there will be more consumers than producers over time leading to price hikes and product shortages.
Lightcast proposes four main strategies for organizations to adjust to these changes: globalization, automation, immigration, and workforce development. This includes exploring international talent pools or incorporating AI technologies into operations.
Additionally, Hetrick highlighted that valuing trade work equally with college-degree-required positions could alleviate some talent deficits. He noted that many lucrative opportunities exist within trades but have been overlooked due to societal preferences for degree-based careers.
To address hiring challenges effectively, Lightcast advises focusing on skill adjacency and upskilling rather than strictly adhering to specific skill requirements during recruitment processes.
