Article

U.S Companies are Facing a Blue-Collar Scarcity


What is the current scarcity trend and could it affect your industry?

 

Since the beginning of 2018 an interesting trend has started to show: for the first time in 20 years, according to the U.S Bureau of Labor Statistics, the job opening numbers have exceeded the unemployment rate. In fact, this trend persists into 2019 and the gap between the two widened by a surplus of almost 1.8 million jobs.

 

The Conference Board, a non-partisan group of experts based in New York, identified that the largest scarcity of workforce appears in the blue-collar sector that does not require a college degree. Specifically, industries like transportation, health care support, manufacturing, agricultural, mining and construction are all having a hard time finding employees.

 What is even worse is that the Conference Board predicts this scarcity might continue to the end of 2020. This lack of appropriate employees will bring a loss of potential growth to these industries and, in a longer horizon, might hurt the U.S economy’s growing momentum.

 

What are the catalyst for this shortage in blue-collar workers?

 

The reasons for scarcity in blue-collar workers is not complex, yet it stems from multiple dimensions. It is the converging result from recent change in demographics, education, and economic development trends.

 Recent growth in U.S domestic manufacturing, pushed by President Donald Trump is to be attributed to the rise in blue-collar workers needed with an average growth of 22,000 jobs per month in 2018 according to the U.S Bureau of Labor Statistics.

As the baby boomer generation reaches the age of retirement, there is no succeeding population that is comparable with the baby boomers in terms of numbers and the willingness to take blue-collar jobs. One attributing reason for younger people to favor fewer blue-collar jobs is the increased availability of access to a higher education. According to Census Bureau, in 2017, 37% of people aged 25-34 have completed their bachelor’s degree compared to 4.6% in 1940. 


What could this scarcity in workforce cause to my business in the long run?

 

For all industries, this scarcity in blue-collar workers might ultimately slow your rate of growth and profitability. When your human workforce becomes a lagging indicator for optimal capacity utilization, the overall performance of the whole business will be affected.

 This shortage in the blue-collar work force will drive up worker wages due to supply and demand causing a heavy burden for business owners. The wage of blue-collar workers has only increased over the years by 1.8% when considering inflation. However, if the scarcity persists, the wage will be driven higher and higher. Hence, it is important to consider the potential risk of this scarcity as early as possible to prevent future rising operational costs to your business.

 A shortage in workers correlates with stretching your current workforce capabilities thin. To divert a loss in available manpower, businesses will be forced to have their personnel work longer hours and more days which can cause a flurry of issues. With consequences ranging from lower morale due to over exhaustion, loss of quality control in your competency and increased overtime costs, this blue-collar scarcity can cause rebounding effects. Not only will it drive up your costs, but the quality you provide to your customer. Your customer is the key driving force of your company’s success no matter the industry, so why would you put that at risk?

 

How Seraph can help your blue-collar crisis and who we are.

 

  • Invest more in automation integration. Many blue-collar jobs have the potential to become automated in the next decade. Food preparation, manufacturing, cleaning and maintenance occupations are particularly likely to be automated and, to some extent, already have been.
  • Reduce education requirements and optimize processes.Amid tightening labor markets, many companies are expanding the supply of talent by lowering education requirements during recruitment and providing basic internal training, as well as optimizing their current processes to allow an easier transition into their position.
  • Find locations with greater availability of blue-collar labor.In some occupations, most notably manufacturing, employers have more discretion about where to locate operations and can thus shift some of the work to areas with increased availability of blue-collar labor.

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 About Seraph: 

Seraph’s team of operational managers and senior consultants intercede on our client’s’ behalf to fix a crisis that is putting the business at immediate risk; turnaround a situation that is damaging the bottom line; or to restructure to improve the balance sheet. Seraph has successfully delivered projects in the following regions: The Americas, Europe, China, and India. Seraph's Industry Expertise Includes: Aerospace, Automotive, Energy Infrastructure, Healthcare and Medical Devices. Through our other operating companies we are constantly looking for distressed situations where we can put our expertise and capital to work in order to create value.


04 October 2019