Talk about a unique problem. Even if every unemployed person seeking a job actually found one today, there would still be 5 million unfilled job openings. The law of Supply and Demand in action!
There are 11.3 million open jobs in the U.S. right now, with more than 2 million workers leaving their positions since January 2020. Surprisingly, this gap would still exist even if there was zero unemployment. With just 6 million unemployed workers in the U.S., there would still be 5 million unfilled positions if everyone had a job.
One of the most evident side effects of the labor shortage is a drop in profits for many businesses. As employers have struggled to find and retain workers, they’ve had to adopt new strategies to do so. For many, that means increasing wages and benefits, but these higher labor costs come at the expense of profit.
Average salary budgets increased by roughly 3% in 2021. Projections for 2022 suggest another 3.9% increase, marking the highest salary budget rise since 2008. With so many companies spending so much more on their labor, average revenues won’t represent the same amount of profit.
The Offsite Construction industry is also feeling the pain of the skilled labor shortage with many factories forced to pay higher wages to both keep and attract labor. They are also being forced to cancel or delay some customer orders because they simply can’t get products to the job site. Again, due to the labor shortage.
Some companies will accept lower profits and focus on maximizing revenue and reducing employee turnover. However, many others will adapt to counteract higher labor costs, which often means rising their prices. This can lead to a domino effect of price hikes, causing widespread inflation.
One raw material supplier may raise their prices to make up for higher wages. That, in turn, limits profits for a manufacturer using their materials, so they may increase their prices, too. The effect of this inflation is already painfully evident. Consumer prices rose 8.5% year-over-year in March, their highest rate since 1981.
CLICK HERE to read the entire BOSS magazine article
Related Articles:
7 Reasons Offsite Construction Can’t Make A Dent In Our Labor Shortage
Is The Offsite Industry Falling Behind On The Labor Shortage Issue?
Workers See Once-In-A-Lifetime Opportunity Amid The Labor Shortage
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder. Email at [email protected]
To learn more about the Offsite Construction Industry, visit: Offsite Builder, the Construction Magazine for Builders and Developers
