# Understanding the Labor Shortage: A Beginner’s Guide to its Causes and Implications
The current job market is experiencing a labor shortage, an issue that has been ongoing for a while now. Many refer to it as a labor scarcity, but after over five decades of pay decline, it’s clear that this is a wage shortfall, which has contributed to the shortage. However, the job market is facing more structural changes than many people are aware of.
In this blog post, we’ll discuss possible explanations for the labor shortage, including reasons like wages, job satisfaction, labor market structure, childcare issues, pandemic fears, and self-employment.
## Wage Shortfall and Job Market Restructuring
Many businesses have complained that they can’t find employees to fill vacant positions, even after seven months of near-record high job resignations. Unfortunately, not everyone can get a job because of the mismatch between the mostly low-wage occupations hiring and the employees’ credentials. The issue of labor shortages and understaffing is both complex and intertwined.
Workers demanding a livable wage might generate and benefit from the labor shortage. A recent study by MIT and CNBC concluded that even a $15 minimum wage wouldn’t be enough for many households. Regardless, paying better salaries has not been as hard-hit by labor shortages and understaffing. Wages have risen as firms compete for employees, which is apparent when you compare the current salaries. Nevertheless, increases are still catching up with epidemic losses, according to economists.
## Job Satisfaction
Some employees have not only switched jobs or resigned due to the epidemic but also switched fields, indicating a broader change in job satisfaction and available opportunities. Flexibility in occupations remains in high demand, and the poll conducted on a thousand persons who “voluntarily resigned from at least two jobs since March 2020” found that 92% of them felt that life is too short to continue in a job they didn’t love.
## Labor Shortage in Leisure and Hospitality
Leisure and hospitality labor are among the hardest-hit sectors. Even if firms raise compensation, they may still have a hard time attracting employees due to factors like the need for in-person jobs at restaurants and hotels that do not appeal to Americans who have enjoyed the benefits of working remotely. Knowledge workers seek the freedom to work remotely and control their own schedules, a trend that has seen many employees opt for gig employment and self-employment.
## Childcare Concerns and Caregiving Tasks Restrictions
Working parents are abandoning the labor field due to a lack of access to childcare and additional caregiving obligations. The epidemic has forced many daycare services and jobs to close, and there has been a very slow recovery in the childcare sector. This issue is likely to negatively impact Americans who cannot access either childcare or care for an older parent.
## Pandemic Fears and Vaccination Hesitancy
The epidemic remains a significant concern for many employees, and fear of a new COVID variant may be prolonging the time that some employees take to return to work. Concerns and delay in returning to work may also be due to pandemic-related concerns that some employees have. As more employers impose vaccination mandates, some employees may also be forced to leave or remain home due to their vaccination hesitancy.
## Retirement and Immigration Impact on the Labor Force
Many employees retired during the epidemic, and most of them will not return to work. The shortage of immigrants in the labor field has also contributed to the labor shortage. Immigration restrictions worsened the labor shortfall under the Trump administration, and the strict policy reduced the net international migration pattern.
## Available Employment Does Not Equal Suitable Employment
Although many positions are vacant, they may not be suitable for job hunters, with many job hunters applying incessantly and being ghosted. Mismatched skills, location, and salary expectations have been a persistent issue affecting many job hunters.
## Increased Self-Employment
Employers are struggling to locate staff due to workers opting to work for themselves. The Census Bureau reported a record number of company applications in the first nine months of 2021 compared to other years. Consequently, there was a surge in unincorporated self-employed employees in the US in July 2021, surpassing the 2008 financial crisis levels.
The job market is undergoing substantial changes that have contributed to the current labor shortage. Companies should approach this issue with tact and use the opportunities available to attract and keep both a skilled and motivated workforce. As the job market continues to evolve, businesses that understand the factors and changes affecting the workforce will fare better than those that don’t.