A familiar sight these days is “Help Wanted” signs in the windows of businesses and restaurants. A lack of workers has led to reduced hours and services for many companies. While some struggle to hire workers, others have a tough time keeping the staff they have, as millions change jobs in what’s being called “The Great Resignation.”
WalletHub, a personal finance website, compared data from all 50 states and the District of Columbia showing the rate of job openings in both the past month and the last 12 months to see which states are struggling the most to hire workers and both Iowa and Illinois are in the Top 10. Alaska came out as the #1 state having a tough time recruiting workers, with a job opening rate of 8.4% in the past month and 9.27% over the past 12 months. Iowa comes in at #5 with an 8.7% job opening rate and 6.83% over the past year. Illinois comes in at #8 with 8.4% and 6.85%, respectively.
WalletHub talked to Lisa Jepsen, Ph.D., Professor of Economics and an Administrative Fellow for the Center for Excellence in Teaching and Learning at the University of Northern Iowa and Drew Conrad, Director of Institute for Decision-Making at the University of Northern Iowa and a member of the Board of Regents on the Iowa Workforce Development Board about the statistics.
Why do employers have difficulties in filling employment positions?
Many employers face a demographic challenge. There are far more job openings than job seekers such as unemployed individuals and new entrants into the labor force. For March 2022, the Bureau of Labor Statistics (BLS) reported that the United States had over 11.7 million job openings and just under 6.0 million unemployed individuals. In Iowa, the state where we work, the BLS reported 112,000 job openings and 55,600 unemployed individuals. Our April 2022 unemployment rate was 3.0% as compared to 3.3% for the U.S.
Iowa has traditionally had one of the highest labor force participation rates in the country. As the population ages, however, the labor force participation rate likely will decline. Since 2008, both Iowa and the United States have seen steady declines in labor force participation. As the population ages, a disproportionate share of the labor force retires. This will get worse, especially in Iowa, where one-quarter of Iowa’s workforce is age 55 or older.
Another problem is a mismatch between the skills employers want and the skills potential employees have. To help solve this problem, in 2018 our state launched “an aggressive workforce policy initiative” called the Future Ready Iowa Act. Among other incentives, the program offers college scholarships for programs that align with high-demand jobs such as nursing and engineering. This will not be a quick fix because building a workforce of people whose skills match employer needs takes time.
How can employers attract and retain employees?
Employers need to position themselves as “employers of choice” in their communities and regions. In addition to offering competitive wages and benefits, employers must create flexible work environments as employees seek a better work-life balance. A recent Harvard Business Review article referenced an international study where almost two-thirds of participants said they would “consider looking for a new job” if their employer required them to work full-time in an office.
Employers may need to think outside the box in order to retain older workers and attract new, younger workers. Some employers will need to consider recruiting non-traditional populations. Employers who better understand these populations and who can reduce the potential barriers to employment that these individuals may face will be better positioned to fill job openings.
Will this imbalance in the labor market continue to be an issue throughout all of 2022?
Solutions to this problem all take time; it will certainly be an issue in 2022 and beyond.