Ask any CEO what their biggest barrier to growth is and they'll point to a "lack of qualified workers."
It's not a lack of customers, a lack of funding or a lack of ideas. It's a lack of people who can take an idea and deliver it to customers.
This shortage of talent is such an old term. Sadly, it's been used so much over the last two decades that it's lost the impact it once had. Even worse, politicians have changed the narrative from a negative to a positive.
Instead of a "shortage of talent", they talk about "a strong economy and record unemployment rates." While this keeps America happy, it puts us further down that path of an economic correction at the expense of business owners.
A low unemployment rate doesn't mean that there is a one-for-one ratio of talent to jobs. In the US labor market, the reality is that there are tens of thousands of jobs that remain unfilled because there aren't enough qualified workers.
The economy is good right now because everyone has a job and they're spending money. But the lack of talent in certain segments of the labor market could cause a major slow down. If you look at IT, Transportation, Hospitality, Healthcare and Manufacturing industries, they're all reporting extreme shortages of talent, rising wage and benefit costs and increasing turnover.
The net impact is that companies suffer.
- Rising wages used to attract and retain talent cuts into margins and can only be solved by cutting costs, raising prices or both.
- Increasing turnover caused by employees taking advantage of a candidate-driven market hurts productivity and increases turnover costs.
- Lack of workers forces employers to pay more overtime hours, which again, gets passed on to the customer.
- Companies are losing business because they can't bid on projects due to a shortage of talent. This is often called "opportunity cost".
While everything seems fine to the public because the news outlets preach a "keep spending" narrative, people who run businesses or talent acquisition functions see the train barreling down the track out of control. It's been happening for years and there's really no way to stop it. It needs to self-correct on its own and it has to happen in a big way. There must be a major meltown.
Unfortunately, we will reach a tipping point in which wages are too high and businesses can't afford to stay open. We will reach a tipping point in which major parts of hospitals will turn away patients. And we'll reach a time when products can't be shipped because there are no drivers (or autonomous vehicles) to deliver them.
It's already happening today, but it's not loud enough.
So instead of US leaders bragging about job creation and low unemployment as a measure of economic success, they should be highlighting the skills gap and worker shortages.
But that wouldn't be politically convenient, would it?