Insights on Labor Shortages
- “There’s a record number of open positions in the transportation, warehousing, and utilities category, up about 30% from the pre-pandemic average” (Barrons).
- “There’s always turnover, but I don’t think I’ve ever seen it as bad with not being able to find anybody. We normally have a bigger pool to refill those positions.” Mark Freshour, operations manager for Greeneville Oil & Petroleum.
In the manufacturing industry, there are more open positions than at any point since at least the 1990s.
The operations manager of an oil and gas plant said: “It seems like every day we have people coming in for applications, and then they don’t show back up for the drug test. Sometimes they get completely hired and we tell them, ‘We’re looking forward to seeing you for your first day,’ but when that day rolls around, they don’t show up,” (Greenville Sun).
With the summer solstice less than 10 days away, vacation plans are also contributing to the stress felt by employers:
“[We] need hundreds of temporary workers, so the jobs are there. But the applicants are not, even with the offer of a good wage. With summer here, permanent workers will be looking for time off on vacation so the plant will need to do something to attract applicants” (GM Flint Manufacturing Complex, ABC 12).
We’ll address that as “something to attract applicants” later but if you already get the idea, click here to skip to the light at the end of the assembly line.
6 Challenges Created by the Labor Shortage
Beyond quickly approaching vacation plans, stressed employers must also overcome the following challenges brought on by labor shortages in the manufacturing, transportation, and construction industries:
1. Pressure to increase wages
In the construction industry, wages continued to increase steadily through the pandemic into March 2021. This is due to both the labor shortage and the massive demand in the housing market.
“From this point in 2011 onward, coinciding with the general economic recovery following the Great Recession and subsequent growth in construction job openings cited earlier, the average hourly earnings for residential construction employees grew steadily. Even the pandemic didn’t seem to significantly affect that growth, as hour earnings increased from $21.81 (July 2011) to $31.78 in March 2021. This amounts to around a 2.3 percent raise per year, after accounting for inflation.” (NMHC)
In manufacturing and other industries that need workers with specialized skills, the labor shortage is especially demanding: “Manufacturing businesses need workers with specialized skills…it’s these industries where the pressure is beginning to build on employers to raise wages” (Barrons).
2. Reduced productivity and quality
Shortage of labor means existing employees are stretched to the limit. They’re working overtime, they’re taking on tasks beyond their expertise, and they’re doing it all under tight time constraints–the perfect storm for reduced productivity increased errors, and reduced quality:
“In the computer and electronic products industry, manufacturers complained about poor supplier performance, adding that demand is high, and we are struggling to find employees to help us keep up. Similar complaints were echoed across other industries. Food, beverage, and tobacco products manufacturers said ‘delays at the port continue to strain inventory levels'” (Reuters).
3. Employee burnout
As the pandemic raged on, we heard a lot about healthcare worker burnout. Doctors and nurses worked long, emotionally draining hours, exposing themselves to a dangerous new virus every day.
We didn’t hear as much about workers in other essential industries. Truckers and delivery drivers, for example, served an integral role in keeping us fed, entertained, masked, and alive. They traveled long hours while pitstops remained closed. A year later, they’re burnt out like many others in industries that saw labor supply drop while demand and workloads spiked.
Burnout can result in cognitive effects that can be predicted before they reach devastating lows. Companies utilize the AlertMeter® cognitive impairment test to identify struggling workers and foster a positive safety culture by starting timely and meaningful conversations.
4. Increased worker turnover
A study by Pew Research revealed that the pandemic led many workers to reconsider their line of work. Traumatized by the past year, many employees have a heightened sensitivity to future health and safety risks in the workplace. They’re hesitant to return to a place where a mildly sniffling coworker could be unknowingly harboring a pathogen powerful enough to leave another’s entire household bedridden.
Even as these fears slowly subside, burnout and the ensuing decline of workplace morale are likely to keep employee turnover rates high unless businesses take serious steps to incentivize employment and get more hands on deck.
5. Increased safety risks
It’s inevitable that labor shortages, skill shortages, stressed and fatigued workers, and pressing deadlines will present increased safety risks. When workers are overworked, they’re more likely to take shortcuts. When supervisors are sparse, safety procedures are more likely to be forgotten. A mentality of willful blindness envelops the workplace as productivity demands slowly outstrip safety objectives. (Click here to read more about balancing safety and productivity demands.)
But it’s not just willful blindness. It’s actual blindness. Fatigued workers suffer from reduced self-awareness, very similar to the impairment caused by alcohol. (Read more about fatigue, alcohol, and cognitive impairment here.) They may say they’re fine and feel fine, but as the overtime hours drag on, you can reasonably suspect that they’re not. Fatigue has contributed to catastrophic oversights (Challenger Explosion), massively destructive delays in reaction time (Exxon Valdez incident), and of course, the complete collapse of alertness into microsleeps and occasionally full sleep. Read about some of them here.
6. Increased absenteeism
As if labor shortages weren’t bad enough, missing existing employees from work can be the final nail in the coffin for struggling businesses. With the increase of family responsibilities, mental health problems, and other personal priorities getting in the way, absenteeism in the workplace has become another big problem this year. Read more about combatting absenteeism here.
“Worker absenteeism and short-term shutdowns because of shortages of parts and workers continued to limit manufacturing’s growth potential.” (The Institute for Supply Management (ISM) survey).
If businesses don’t overcome these challenges, they can quickly culminate in crippling costs, dwindling profits, and damaged reputations, all-powerful enough to end an otherwise valuable business.
So, what steps are these industries taking to stay in business?
3 Critical Initiatives to Combat Labor Shortages
According to a recent report by the Manufacturing Institute, “More than 77% [of small and medium-sized businesses] are making technological investments at their businesses to achieve cost efficiencies in the production process, with 73.4% doing so to improve their operational performance.”
A second initiative is enhanced workplace safety measures and requirements, cited by 83% of businesses in the report.
The new workplace cannabis testing precedent set by Amazon is quickly turning into a third initiative being adopted by businesses struggling with labor shortages. After all, this option can instantly widen applicant pools and bring in skilled labor. The trick is to do it before all businesses catch on and competition levels out.
What if you could get on board with all three of these initiatives with a single investment that costs less than a pack of toilet paper per employee?
The AlertMeter® is an innovative workplace safety app that offers businesses an alternative approach to pre-employment and random cannabis drug testing. A non-invasive 60-second cognitive impairment test, AlertMeter® is used both in conjunction with drug tests and as a replacement of them (depending on company location, industry, company regulations, etc.). In either use case, safety, productivity, and employee morale all spiked while costs and accidents dropped.
In the wake of Amazon’s cannabis testing policy changes, cognitive impairment tests are flying off the shelves. To maximize hiring potential and enjoy a competitive advantage, businesses need to start utilizing this alternative before it becomes standard procedure across safety-sensitive industries.
Don’t miss out on more workers while your competition reels them in. Schedule a demo to get AlertMeter® today.
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