Staffing Shortages Hit Some Industries Hard Amid the COVID-19 Pandemic—When Will They End?

Major American companies are struggling to find enough workers to meet rising consumer demand, despite wages increasing to levels that are forcing them to raise prices to protect their profit margins. Labor shortages have continued months after enhanced unemployment benefits expired and the Delta wave peaked. Why is there a staffing shortage?

The COVID-19 pandemic isn't only impacting global public health but also causing chaos for the economy, with supply chain issues and staffing shortages posing major challenges for small and large businesses worldwide.

Mismatches have been causing shortages and tightening opportunities for job seekers, and the newest data suggests they aren’t going away. The abilities that employers are looking for aren’t the same as those that the labor force has to offer. The right-leaning Chamber of Commerce has blamed the skills gap as a cause of the shortfall, arguing that employees should have the skills to fill open positions all over the place.

We can also attribute the labor shortage to border controls and immigration restrictions, as well as demand for higher wages and flexible working arrangements. Also, the jobs are where the employees aren’t. In 2020, a large number of individuals migrated to seasonal or remote places, resulting in job booms in areas where employees aren’t numerous.

According to the most recent labor data from the U.S., more employees are willing to quit their jobs or switch employment. The number of long-term jobless people—those who have been out of work for more than six months—fell marginally in Oct. 2021, but remained around 2.3 million. In Aug. 2021, there were 10.4 million job opportunities, while the number of individuals quitting their positions increased to 4.3 million, the highest level since Dec. 2000.

Most of the mismatches that exist today are in lower-wage work, particularly in the healthcare and food-service industries. This is mainly because these jobs are patient- and customer-facing and the employees have to deal with the COVID-19 pandemic directly. The state and local government education sector is also experiencing a shortage of workers. Some Denver-area school districts have canceled a day of classes due to staff shortages.

Amazon estimated that labor inflation would add $2 billion to its cost base in the fourth quarter of 2021, Starbucks reported rapid increases in its wage costs, and McDonald’s has called it a “challenging staffing environment.”

No one can predict when the staffing shortage will end. Bank of America economists expect it to fade by early 2022 as more people are vaccinated and expanded unemployment benefits expire. Meanwhile, Moody’s Analytics economist Dante DeAntonio anticipates that it will take until the end of 2023 to create and fill all of the positions that would have existed if the pandemic hadn't occurred. That’s when the staffing shortages should end, DeAntonio added.