November 2021 Volume 3

AUTOMATION

The Incredible Vanishing Workforce? Automation to The Rescue By Jon Cocco

I walked into Chipotle last week and waited for over an hour for my Burrito Bowl. Then I went home to find our electric dog fence was broken. No problem, I called the local electric fence company and asked for a repair technician to stop by. Well, just like my burrito, they told me I had to wait - - until February to fix it - - because they have no workers. Unfortunately, Cooper (my 100 lb. Bernese Mountain Dog) would be long gone by that point on a path to neighborhood freedom. So, where is everyone? I keep asking my friends and co-workers if we are in the Twilight Zone. Remember that episode where the guy is suddenly all alone on earth (Twilight Episode – Where is Everyone)? I am starting to think we are now living in the Twilight Zone with the incredible vanishing workforce . Let’s fast forward to where it hurts the most - employers. As a consumer, I can live without my burrito for lunch. I can even learn how to fix my electric dog fence, but as an employer I cannot live without employees. In this article, I have set out to find some answers to three questions: 1. Where are all the workers? 2. Will the workers ever come back? 3. What should we (employers) do about it? By the end of this article, I hope you will not only understand the answers to these questions but find a path forward on how to work in this new world of the vanishing workforce.

Where Are All theWorkers? U.S. employers are trying to fill more than 10 million job openings to meet current vacancies and keep up with the surging consumer demand. While these are good problems to have in an economic turnaround, it just does not make sense where these 10 million employees are. If you compare the current labor force to pre- pandemic levels, the U.S. is still missing 4.3 million workers [1] (in addition to the 6 million new positions needed). This employment gap highlights that this is not just a growth challenge, but a worker participating issue. So, the real question to ask is not ‘ Where are these workers? ’, but rather ‘ Why are these past employees not willing to participate in the workforce? ’ Digging deeper into this vanishing workforce, the federal government reported 20 million resignations between April and August this year. This is 60% more resignations than the same period a year earlier. The reasons for these resignations span from taking early retirement, going back to school, leaving the workforce to care for a family member, or just taking a break because of job burn-out. These reasons not only have short-term implications on employment but also long-term effects on the real availability of our workforce. According to a Wall Street Journal survey, 22 of 52 economists predict that workforce participation will never return to its pre-pandemic level. WillThey Ever Come Back? The sectors most at risk with the vanishing workforce are manufacturing, retail, and professional services. Lower paying jobs in manufacturing, and retail have driven many people out of the workforce because of low switching costs and government subsidies. With schools reopening, expiring unemployment benefits and, continued inflation, we should expect these workers to reenter at some point. However, we have not seen the resurgence of working participation in these segments. It begs the question of whether they will be coming back. The issue employers need to be aware of is that lower worker availability is now a systemic problembecause of the generation birth rate gap (see Figure 1). This issue is called the Great Sansdemic. The Baby Boomers – those born between 1946 and 1964 – are quickly exiting the workforce creating a void in the labor market. Gen Xers – those born between 1964 and 1980 – had a 25% lower annual birth rate than baby boomers (3.4 million versus 4.2 million). About 28.6 million Baby Boomers reported in the third quarter of

FIA MAGAZINE | NOVEMBER 2021 30