It’s no surprise that a recurrent headline during the pandemic has centered around record levels of unemployment due to layoffs that started early on in the crisis and have continued throughout. And yet, paradoxically, many companies are facing significant challenges in recruiting talent. Part of the reason lies in mismatches of supply and demand. In many cases, the skill sets of those who have been laid off don’t match the workforce needs of industries that are facing shortages, or there are geographic mismatches – where one region has a high number of job openings, but unemployed people are concentrated in other areas.1

However, other dynamics have been exacerbated by the pandemic. For example, trends show older workers deciding to opt for early retirement and parents (more likely mothers) needing to stay home to take care of children unable to attend in-person school.2

A shortage of workers in specific industries is not new. However, in addition to the variables brought by the pandemic, a confluence of specific macro-economic trends is resulting in grim growth rates in the general labor force. Even before the pandemic, the labor market has been affected by several dynamics, including:

  • Slowing growth of the working-age population coupled with large-scale retirement of the baby boomer generation;
  • A growing trend of young adults enrolling at higher rates in four-year colleges or universities instead of trade or vocational schools;

A reduction in working 16- to 24-year-olds.3 These factors combine to make blue-collar industries particularly hard hit by the shortage, as baby boomers and 16- to 24-year-olds perform a number of these types of jobs. As a result of the shortage, blue-collar industries have seen rapid wage growth, which has also encouraged job-hopping. In the current environment, wage growth is slowing for highly educated white-collar workers.4 Indeed, due to the skyrocketing costs of higher education, vocational training and technical schools could quickly become a more attractive option to young high school graduates.5

In addition to blue-collar industries, worker shortages are being felt in some key professions such as nursing, aviation, and education. The trends leading to these shortages are similar across industries – an aging working population close to retirement, exacerbated by the effects of the pandemic.6 Nursing and pilot shortages have long been predicted as a looming crisis – the stress and trauma of the pandemic only serve to accelerate the departure of those that may seek to leave the profession.

Combatting workforce shortages is not a one-time fix. Workforce planning practices should be incorporated annually – just as budgeting and strategic planning are.

Key considerations include:

  • Competency modeling to identify critical skills and abilities and how well the workforce meets the organization’s competency needs;
  • Career pathing and succession planning;
  • Developing and maintaining a recruiting pipeline that includes educational and/or vocational institutions;7
  • Ensuring that your benefits offerings create value for your workforce and provide flexibility. As an example, a younger, educated workforce may find value in support for student loan repayment, whereas others may find long-term care options to be more enticing.

Companies may also want to look into expanding operations by considering a broader geographic footprint – to establish a presence in locations where there is a substantial workforce presence that likely have the competencies you’re looking for.

In addition, incorporating the use of a contingent workforce into your overall workforce strategy can drive many benefits, including:

  • Improve business agility and flexibility – allow companies to scale their workforce up or down expeditiously without the need to take on or shed fixed costs.
  • Providing access to specific skills on an as-needed basis – allowing you to fill critical gaps and/or increase the likelihood of successfully completing key initiatives.
  • Broaden the talent pool and reduce the risk of a poor cultural fit by allowing you to leverage a ‘try before you commit’ strategy to recruiting. No surprise in the ‘gig economy,’ contingent work holds greater appeal for millennials and the younger generations, who tend to prioritize greater flexibility and control over choosing their projects.8
  • Improve Diversity & Inclusion (D&I).

Deployed thoughtfully, a contingent labor program can save companies money, but more importantly, it can help you reach your workforce goals.9

About the Author:

Stephanie Scarola, Principal Consultant

Leveraging her 20 years of experience in finance, operations, and financial services, along with ERA’s team of category experts, Stephanie works closely with clients in the higher education sector to identify and implement cost savings opportunities in a wide range of areas.


Sources: (1) Wisconsin Public Radio. December 9, 2020. Rachael Vasquez. “Business Group Says Some Industries Still Dealing With Worker Shortage”(2) Forbes. Feb 19, 2021. Bill Conerly. “The Labor Market Is Tight Despite High Unemployment”(3) (4) HR Daily Advisor. Mar 6, 2020. “Blue-Collar Industries See Increase in Talent Shortages” (5) Machinery Lubrication. Caitlin Schudalla. “How to Address the Skilled Worker Shortage” (6) The New York Times. Feb 25 2021. Theresa Brown. “Covid-19 Is ‘Probably Going to End My Career”(7) Machinery Lubrication. Caitlin Schudalla. “How to Address the Skilled Worker Shortage” (8) The Jabian Journal. Jeff Birch and Amir Poonsakvarasan. “Maximizing the Value of Your Contingent Workforce”(9) The Jabian Journal. Jeff Birch and Amir Poonsakvarasan. “Maximizing the Value of Your Contingent Workforce”