Barron’s headline: The Labor Shortage Will Get Worse and May Last for Decades
By Megan Cassella
Updated Sept. 2, 2022 4:04 pm ET / Original Sept. 2, 2022 3:44 pm ET
In the summer of 2020, Mike Zaffaroni, the owner of Liberty Landscape Supply in Jacksonville, Fla., needed to start staffing up to fulfill a pair of contracts to plant trees around the city. At first the hiring went relatively smoothly, but as fall approached, things started to change: A growing number of candidates were failing to make it to their scheduled interviews. He would sometimes expect 10 people, but only one would show. “It’s one of the most alarming things I’ve seen in my working career,” he says.
In the two years since, Zaffaroni has raised his starting wages by nearly 40%. He expanded his benefits program, shortened his interview process, and began considering a broader pool of workers, including those with limited experience or a spotty work history. But none of it has been enough: His 112-person company still has 19 current openings and few prospects to fill them.
Now, Zaffaroni is applying for a set of visas that would allow him to hire 10 foreign temporary workers next year—a first for his 15-year-old business. “I really think that’s the only way to solve the problem in the short term,” Zaffaroni says. “Because I don’t know that we’re going to pull a whole bunch of workers back into the workforce.”
I am SO thankful we aren’t involved in the day to day hassle of owning a business! I’m happy to own, through stock purchases, companies with layers of management who somehow navigate today’s craziness.
After retirement, I thought it would be a good idea to get involved with owning a number of Great Clips hair cutting stores (franchised). It’s a very simple business. Hire stylists, charge fairly cheap prices… high volume of customers. Setting up a store would be a bit under $100k and a well located store can generate $60k-120k pre-tax profit per year. A VERY rewarding concept. My “brilliant” thought was this would provide a stable return to offset the ups and downs of the stock market.
Yeah, there were some minor customer issues, but no big deal. The BIG DEAL, which led to us selling our stores to a larger operator looking to expand in our metro area, was finding stylists and retaining stylists. There were some excellent ones, but too many were “deranged” on various levels. Drugs. Various personality disorders. Theft. Many other issues. Plus, I could see that the future would involve much higher compensation costs due to health care and general wage inflation.
Overall, it was a neutral financial experience and a very time intensive one. Glad to be out and back to less drama as a retiree.
Then came Covid. As the pandemic drove up the death rate and dragged down the birthrate, it inflamed the pre-existing demographic trends: From July 2020 to July 2021, the U.S. population grew just 0.12%, according to an analysis of U.S. Census Bureau data by demographer and Brookings Institution senior fellow William Frey—the lowest annual rate since World War I.
The virus also hit the workforce on other fronts: Kansas City Fed researchers estimate there were 2.1 million “excess” retirements during the pandemic, meaning those above the expected trend. And as more Americans have stayed home for reasons ranging from long Covid to caretaking responsibilities, the labor-force participation rate has dropped from 63.4% just before the pandemic to 62.4% in August, the Department of Labor said on Friday; the agency forecasts that the rate will slide to 60.4% by the end of this decade.
Covid exacerbated the immigration problem, too. The combination of closed borders and shutdowns at U.S. consulates overseas led to massive visa backlogs that remain today, pushing net migration to its lowest level in decades. Peri’s research found that by the end of 2021, there were roughly two million fewer working-age immigrants in the U.S. than there would have been had prepandemic trends continued, half of which would have been in highly educated science, technology, engineering, and math, or STEM, fields.