Unskilled Labor Shortages: The Latest Threat to U.S. Manufacturing

You’ve heard of skilled labor shortages... but did you know the U.S. manufacturing industry is currently experiencing an unskilled labor shortage?

It’s no secret that the United States has been outsourcing manufacturing jobs overseas for decades. This has, inevitably, created shortages of workers available to fulfill certain jobs. 

In fact, around 5 million manufacturing jobs have disappeared since 1998 as a result of companies cutting costs and moving labor to countries where it is more economical.

Interestingly, however, outsourcing these jobs because of cheaper labor is only one part of the problem. 

In this article, we'll explore the topic of unskilled labor shortages in more detail, and examine what is causing this widespread issue in the manufacturing industry.

The Effects of Lack of Adequate Training Programs

In an attempt to remain competitive, manufacturing companies have been trying to cut costs. Although new employees go through the training, it is nowhere near as extensive as it was the case in the past. 

Several decades ago, it was common for large manufacturing companies to have apprenticeship programs in place. It ensured that new employees acquired a great deal of knowledge about the functioning of the machines. Those training programs lasted even up to 6 years, which might seem like a long time, but after this period the worker didn't have any issues operating or fixing the machines. 

Unfortunately, as an attempt to cut costs, the apprenticeship programs were largely eliminated, and currently, only about 50,000 Americans finish apprenticeship programs each year. They go through training, but it is much shorter, and it doesn't provide the necessary skills to deal with a myriad of situations that they might have to handle in their workplace. 

The lengthy training might be costly for a company in the short-term, but the prioritization of short-term profits leads to the labor shortage. Although in some cases, it is understandable that those companies simply want to stay afloat, the lack of apprenticeship programs is now a norm, and so is the skills gap.

However, that’s the reason why businesses might struggle to find skilled workers. Even before the COVID-19 pandemic sent ripples throughout all parts of the economy, the unskilled labor shortage became a bigger threat. 

What's Causing Unskilled Labor Shortages?

The issues with finding low-skilled workers that the company owners are facing are not caused by a single factor. Instead, if we want to understand the current situation, we must consider several aspects.

Young People Choose Universities Over Learning a Trade

The costs of higher education in the United States are extremely high. Once young people graduate, they have to struggle with repaying the student loan, though the college experience by no means guarantees that they will get a good-paying job. It means that if they don't choose wisely, they'll be burdened by a student loan for a significant portion of their lives. Still, despite this bleak picture, the percentage of young Americans choosing to go to college increases. Why is that? 

It is a widespread perception that although college equals debt, the acquired skills can help you find a decent-paying job, at least compared to what can be found in the manufacturing sector. At the same time, let's not forget that apart from learning valuable knowledge, young people are attracted to universities because of the robust social life at campuses. 

In the past, the manufacturing jobs offered better-than-average salaries, which led many young people to start their first job in this sector. At the same time, they rarely required a lot of skills. Unfortunately, the situation has changed, and the salaries of manufacturing workers aren't as attractive as they were in the past. The manufacturing sector has been struggling for the past several decades, which is why the salaries are not keeping up with the national average.

The Consequences of the COVID-19 Pandemic

Even though the consequences of the COVID-19 pandemic can be observed in virtually all sectors of the economy, the manufacturing sector has been hit particularly hard. In most of the manufacturing sub-sectors, companies had to deal with the decreased demand for their products and disruption of the supply chains. 

To make things worse, people are often wary of taking job positions in factories and warehouses, as they are scared of coming into close contact with other people. On top of that, we must take the uncertainty that the job seekers are facing into the equation. In February and March of 2020, employment in the manufacturing sector decreased by almost 1.5 million jobs. Since then, it has been steadily increasing, but we are still far away from returning to the previous situation. 

Although the government aid has been helpful, it isn’t nearly enough to remedy the situation with which the companies in the manufacturing sector are struggling with. Apart from the financial problems they are facing, many businesses are experiencing difficulties finding employees - specifically unskilled workers. 

The situation is serious enough to affect the production capabilities of these manufacturers. Their revenue has dropped, but it’s not the end of their worries. Automotive suppliers, among other industries, could face penalties from their clients if they fail to fulfill contracts and provide work promised. Fulfilling these contracts, however, is not an easy task if we take into consideration the severity of labor shortages. 

How to Deal With the Unskilled Labor Shortages

To help companies meet the demand for their products, we, at Madicorp, assist with finding workers, even from distant regions of the US. The costs of temporary relocation are lower than the potential penalties, and oftentimes it is the only solution to fill all the vacant low-skilled job positions. 

Even if your company is unable to find employees from your region, it doesn’t necessarily mean that there aren’t job candidates somewhere in the country who could help your business survive those difficult times. We’ll take care of the logistics, ensuring that the workers will arrive on the job site on time and at full strength. This way, the operations can proceed without the risk of understaffing, which is currently a frequent problem in the manufacturing sector because of the COVID-19 pandemic.

What Are the Long-Term Solutions to Unskilled Labor Shortages?

However, even if we manage to deal with the current COVID-19 situation, other issues that trouble the manufacturing sector will persist. The situation is dire, as young people are increasingly less likely to choose the manufacturing sector over going to college. Even though the perception of this industry certainly doesn't make it any easier, there are ways to change the current state of affairs.

Although instituting a training program that would take several years is certainly not cheap, companies in the manufacturing sector have to understand that getting rid of the old system is what is causing the current worker shortage. Without available training programs, young people are unwilling to start working in job positions requiring little to no skills, as they don’t think that the job will allow them to grow in any way. 

Sure, job positions that don’t require many skills might help them go through tough times, but the belief in the American Dream still persists, and jobs that don’t offer any perspectives for growth are shunned by young people. 

Training involves spending resources that otherwise could be allocated to other tasks, but it is the myopia of the manufacturing sector that caused the lack of labor workers - experts have been warning us about this situation at least since the 1990s.

Apart from the low wages, the sense of lack of stability is what is driving people away from the manufacturing sector. It is not without good reason, as in recent decades, we have witnessed thousands of companies, primarily located in the Midwest, disappear, which had a terrible effect on the communities, especially in regions where most people worked manufacturing jobs. 

High school students are reluctant to choose this path as they are wary that the trend will continue, and their training and work experience will be for naught. Unfortunately, we cannot argue that it won't happen, as automation and offshoring won't stop having an effect on the American economy any time soon. 

However, not all manufacturing industries are in an equally precarious position. Informing people that a job in a factory can offer security should be the top priority; putting a stop to the offshoring would be an even better idea if we want to deal with the shortage of skilled workers, but it is unlikely to happen. 

There is no deficiency of issues with which the manufacturing sector is struggling, but to deal with the unfulfilled demand for unskilled workers, businesses have to focus more on the long term effects of their decisions. Otherwise, the low wages and the lack of security will scare them away.