[Editor’s Note: This three-part series will take an in-depth look at the worker shortage facing the print industry. This first article will cover the many statistics and facts that illustrate why there is a labor shortage and what we can expect in the future. Part 2 (coming in FLEXO Magazine’s July issue) will look at various ways of solving your immediate employment needs. Part 3 (coming in FLEXO’s September issue) will look at various training options available and what it takes to create your own on-the-job training program. We will also discuss what the industry can do to improve its own visibility.]
Have you had to hire a new employee recently? More than likely, you have faced various struggles in finding a qualified candidate. The fact is you are not alone; there is a worker shortage prevalent all over America affecting more than just the print industry.
Manufacturing and the skilled trades in general including construction, HVAC, electrical, welding and nursing, just to name a few, are all negatively impacted by this worker shortage. This shortage impedes the hunt for not only skilled employees but also entry-level applicants.
Many factors are contributing to this shortage, and the harsh reality is over the next 10 years, it is going to become even more difficult to find workers. JPMorgan Chase stated in February 2017 there were 5.6 million unfilled jobs in the US and went on to predict the number of unfilled jobs will skyrocket to 16 million by 2024. There are numerous studies indicating the labor shortage has started to directly slow job growth, as the demand for labor is greater than the supply.
Growing Retirement, Decreasing Birthrate
One of the many factors contributing to the labor shortage is affectionately referred to as the Silver Tsunami, a metaphor for the aging population. When the second World War ended in 1945, the number of babies born skyrocketed and the resulting population spike is referred to as the Baby Boom. Now those baby boomers are starting to retire, thus a larger-than-normal percentage of the working population is permanently exiting the workforce. Based on data from the US Census Bureau, 2020 will be the first time in the history of the world that individuals over the age of 65 outnumber those under the age of 5. Furthermore, by 2020 more than 25 percent of the US workforce will be above the age of 55, a staggering increase from 14 percent in 2002. Statistics show that 10 percent of the workforce is beginning to retire annually.
The Bureau of Labor and Statistics also found 40 percent of all businesses are going to lose 20 percent of their workforce due to retirement in the next five years. Simply put: More individuals are leaving the workforce than entering it, leaving many unfilled job openings, and the resulting struggle to fill them. The numbers show that for every two individuals leaving the workforce because of retirement, there is only one entering it. This is not a recipe for success to maintain economic growth.
US BirthratesFigure 1
Data courtesy of US Census Bureau
The current birth rate in the US is at its lowest rate in almost 100 years. Consequently, fewer people are available to hire. The height of the Baby Boom was in 1957, and the birth rate was 112.7 births per 1,000 women between the ages of 15 and 44. In 2011, the birthrate was 63.2 births per 1,000 women—approximately half that of the Baby Boom. Figure 1 shows the birth rate decrease and sustained lower levels compared to the height of the Baby Boom.
Changes in US Population Pyramid
Data courtesy of United Nations Department of Economic and Social Affairs
The significant decrease in the birthrate has major implications for the structure of our population. Advancements in medicine have also allowed our population to live longer. According to data from the United Nations Department of Economic and Social Affairs, seen in Figure 2, over the next 30 years the base of our population pyramid will continue to shrink; subsequently, there will be fewer individuals available to enter the workforce.
An Expanding Economy
In conjunction with the shifting population pyramid, the US economy is expanding at record levels, creating an increasing number of job openings for the decreasing number of workers available. We are currently in the longest period of economic growth in US history. Every day, new jobs are created because of the economic growth in conjunction with the increasing number of job openings generated by the large number of Baby Boomers retiring (what’s also known as the Silver Tsunami). In December of 2018, the economic expansion alone was responsible for the creation of 312,000 new jobs.
Unemployment RatesFigure 3
Data courtesy of US Bureau of Labor and Statistics
On top of that, we have the lowest unemployment since 2000 and then the late 1960s before that. Our current unemployment rate is under 4 percent and by all accounts that is considered full employment. In other words, anyone who wants to work is working. Figure 3 shows the unemployment rates from 1948 to 2018; you can clearly see the unemployment rate is at record lows.
Working Pool Dropouts & Low Wages
To top it all off, there is a staggering number of working pool dropouts. According to various sources, more than 10 million low-income men between the ages of 25 and 54 are missing from the workforce. This is almost exclusively “blue collar” individuals representing 20 percent of the total workforce with a high school diploma or less. Most of this group is not included when calculating the unemployment statistics because they have not been looking for work. Many of them were laid off during the economic downturn in 2008 and never returned to the workforce. Various factors have caused them not to return, including offshoring of jobs, automation that decreases the number of low-skill jobs, and a significant increase in incarcerations and felony convictions disproportionately affecting low-income segments of the population. Approximately 8 percent of the population has a felony conviction and many employers will not hire felons.
Relative Wages of Manufacturing Workers to All Workers
Pay in Manufacturing Relative to Overall Average (Production Workers)Figure 4
Data courtesy of US Census Bureau, Current Population Survey
Another contributing factor in the difficulty of finding a qualified candidate is the low wages offered by the manufacturing sector. According to the US Census Bureau, wages for manufacturing workers declined by 4.4 percent from 2003 to 2013—almost three times faster than all other workers as a whole. This indicates that people are passing up manufacturing jobs because they get paid more in other sectors. Figure 4 compares real wages of manufacturing to those of all other workers and you can observe a distinct difference.
Reactive Versus Proactive
Furthermore, how many printing companies are actively recruiting their next generation of press operators? Sadly, not many. The majority of US industries—flexographic printing included—are not proactively preparing for the future by recruiting and/or training their workforce. All too often, training is treated as an expense, not a long-term investment. Many companies fear that after they train their employees, they will lose them to their competition, so they avoid training altogether. There is also a significant lack of exposure to career opportunities in our industry.