scorecardWhy it's not really a labor shortage, according to the author of a report that just crunched data on millions of job searches and reviews
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Why it's not really a labor shortage, according to the author of a report that just crunched data on millions of job searches and reviews

Rachel DuRose,Madison Hoff   

Why it's not really a labor shortage, according to the author of a report that just crunched data on millions of job searches and reviews
PolicyPolicy4 min read
Glassdoor senior economist Daniel Zhao authored Glassdoor's Workplace Trends for 2022 report.    Glassdoor
  • "I would say labor shortage is kind of a tricky term," Glassdoor's Daniel Zhao told Insider.
  • His new report for the jobs site found workers would come back but only with the right conditions.

Calling the employer demand and employment issues right now a labor shortage isn't quite right, Daniel Zhao says.

He should know.

Zhao is a senior economist and data scientist at Glassdoor, one of the internet's top jobs sites. He regularly comments to Insider on the monthly jobs report from the Bureau of Labor Statistics and about the state of the jobs market. And recently, he led a workplace-trends report for Glassdoor that crunched data on millions of employee reviews and job searches, and laid out what to expect in the workplace and in hiring for 2022.

A major takeaway he had is that hiring will remain difficult in 2022.

Zhao told Insider this isn't solely due to a lack of capable workers but rather the number of workers who are just choosing not to participate in the workforce for various reasons.

"I would say labor shortage is kind of a tricky term because it does imply that there aren't workers available," Zhao said when asked whether he thinks the US is facing a labor shortage. "And what we do know is that there are a significant number of workers on the sidelines who would be willing to come back to work if the conditions were right."

The trouble, he said, is that the conditions just aren't right.

Employers could turn to the people who are between 25 to 54 years old, the prime age of workers, who have left the labor force. As of November, the labor-force participation level for workers in that range was 1.1 million below the February 2020 level.

Additionally, there are more openings than unemployed workers. According to Bureau of Labor Statistics data, there were 67 unemployed workers for every 100 job openings in October.

"I think there is a difference between a labor shortage and employers finding it difficult to hire and retain," Zhao said. "They're two slightly different concepts. But the fact of the matter is that I think it will continue to be difficult for employers to hire and retain moving forward."

The pandemic is keeping people out of work

The coronavirus pandemic has resulted in remarkable trends reshaping the labor force — from the "Great American Burnout" to the "Great Reshuffle" to the "Great Resignation" to even a growing philosophy of "antiwork." Some have realized it's not worth staying in a job they don't even enjoy, and others have quit for higher-paying opportunities.

In his new workplace trends report for Glassdoor, Zhao concluded that the ongoing pandemic would contribute to another hard year for hiring, as it could keep many members of the workforce off the market in 2022 as well. Potential employees' reasons could vary from health concerns to waiting for a job that offers more benefits, he said.

"Demand for workers is actually significantly higher than what we would normally expect during an economic recovery," Zhao said. "So the recovery in some sense has been faster than we've expected, and that has pushed up the demand for workers, but the supply of workers hasn't kept up because of the pandemic."

Zhao also said it will be vital for companies to prioritize drawing in talent that voluntarily left the labor force, rather than those who were pushed out.

Other experts agree that it's going to be tough to hire for a while.

"I think there are a lot of issues keeping people from working right now, and none of them are easy fixes," David Kelly, JPMorgan Asset Management's chief global strategist, told Insider.

Increased pay isn't enough to bring workers back

Employers have tried to increase wages and offer signing bonuses, and though some have been successful, others haven't had as much luck.

"If you think about why they [workers] haven't returned, wages alone might not be enough to attract them," Zhao said.

For example, he said workers with health conditions who left their jobs due to the risk of contracting COVID-19 require safer working conditions, not just higher pay. Businesses should be creating unique solutions based on their company demographics, he added.

"If an employer realizes that they have a lot of parents at their company who have to take time off in order to take care of children because of the pandemic," Zhao said, "then offering some targeted child-care benefits might help keep those employees in the workforce and retain them at your company."

Kelly said he thinks "employers are very attuned to what it is that workers want," like wage increases, and added that the government could also help the shortage by increasing "the pace at which people get green cards because one of the things that's clearly making this shortage worse is we've seen a huge decline in immigration."

Additionally, outside of higher compensation and better conditions, employers can look for laborers who were pushed out of the workforce for nonpandemic reasons, such as a disability or formerly being incarcerated, he said.

But overall, 2022 is going to be "a slog getting workers back into the labor force because it's not just a matter of snapping your fingers and sort of convincing everybody that it's safe." Zhao said. "It's incrementally drawing in workers with higher wages or higher compensation."