US Labor Shortage Is Less Than in 2020, but What About 2025?

December 9, 2024 TruthUSA

Too many job openings and not enough takers: that was a major bottom line for U.S. business in 2024, and the outlook for the coming year is uncertain at best.

And as the economy heads into the new year, the ongoing U.S. labor shortages will not only continue to hamper wealth and resources to some degree but also could soon lead to an overhaul of entire workforce systems that have been in place for years.

“The U.S. has lost millions of workers,” Stephanie Ferguson Melhorn, senior director of workforce and international labor policy with the U.S. Chamber of Commerce in Washington, told The Epoch Times. “If every unemployed person in the country found a job, we would still have hundreds of thousands of open jobs.”

She cited, for example, that in June 2024, the labor force participation rate for prime working-age individuals, defined as those between the ages of 25 and 54, was 83.7 percent, marking a 20-year high.

Yet total labor force participation does not match what it was before the pandemic: As of now, the U.S. workforce has 7.7 million job openings but only 7.1 million unemployed workers.

“And this shortage is impacting all industries in nearly every state,” Melhorn said.

Sectors encompassing health and education services, and professional and business services, consistently exhibit the highest number of job openings.

For every four jobs occupied in the financial services sector, six remain vacant.

And as of September 2024, the three hardest-hit industries by quit rates were the leisure and hospitality industry (3.5 percent), wholesale/retail trade (2.2 percent), and professional/business services (2.1 percent).

Although the percentages might not sound like much, the hard numbers show something akin to an unwanted, backward game of musical chairs.

Consider that for every 100 open jobs in the United States in July 2024, there were only 85 workers.

The only states with more available workers than job openings were California, Illinois, Michigan, Nevada, New Jersey, New York, Rhode Island, Texas, and Washington. The other 41 were struggling in varying degrees from severe to most severe.

Arizona, for example, had 199,000 available jobs and 141,617 unemployed workers. To put it another way, the Grand Canyon State had 71 available workers for every 100 open jobs.

West Virginia, Wisconsin, Georgia, Florida, and even Alaska all had 53–59 workers for every 100 openings.

And these were some of the more fortunate states struggling to fill all the job openings.

Alabama, Maryland, Nebraska, Vermont, and both North Dakota and South Dakota had ratios of 30–39 per 100—with New Hampshire rounding out last place with a count of 28 to 100.

While ground lost in the pandemic’s three critical years has still not been made up, Melhorn said the trend to quit or resign has slowed considerably since 2023.

“Ideally, that trend continues in 2025,” she said. “However, there are many factors that could make climbing out of a worker shortage unfeasible for the foreseeable future, including an aging workforce, ongoing skills gap, and insufficient visa caps.”

If so, it is also likely to mean altering a long-held workforce system. The model used to be that younger workers entered the workforce in their early 20s, stayed until retirement or so, and were then replaced by the next cycle of younger workers. Now the model is shifting, with many seniors staying longer in the workforce, partly because of the lack of enough younger people to permanently replace them.

This shift, coupled with ongoing inflation, supply-chain issues, and the looming threat of a January port strike on both the East Coast and Gulf Coast, is expected to solve at least part of the labor shortage and high turnover rates.

“The U.S. Bureau of Labor Statistics specifically projects that between 2022 and 2032, the number of people in the labor force over the age of 55 will increase by 2.7 million, or 7.1 percent,” Joseph Von Nessen, research economist with the University of South Carolina’s Darla Moore School of Business in Columbia, South Carolina, told The Epoch Times.

“By contrast, the number of people in the traditional ‘prime working age group’ of 25–54 is only expected to increase by 5.2 percent over the same time period. Thus, older Americans will become a bigger part of the U.S. workforce.”

Other efforts could include a shift to four-day workweeks, more employee health benefits across the small-business landscape, better parental access to childcare for working parents, more flexible work conditions where possible, and maybe even a return to incentives that resurrect a long-dead workforce quality known as loyalty.

And if the 2024 U.S. elections end up delivering on voter expectations, the next four years of the U.S. economy might at least be better than the past four, Melhorn indicated.

“It’s too early to make definitive projections on how any policies enacted by the new Congress and administration will impact the labor shortage,” she said.

“But the U.S. Chamber will continue to advocate for policies that make it easier for employers to find and retain talent, and stands ready to work with newly elected officials on these issues.”

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