Jun 01, 2021 - 8:30am

The America Works Report: Quantifying the Nation's Workforce Crisis

We hear every day from our member companies—of every size and industry, across nearly every state—that they’re facing unprecedented challenges trying to find workers to fill jobs.

But just how widespread is this problem? Which states and which sectors have been hit the hardest? And how do we begin to address this national economic crisis and put more Americans back to work?

That’s what we set out to discover. By analyzing more than two decades worth of federal jobs and employment data and conducting surveys of top industry association economists and local and state chamber of commerce leaders across the country, we examined the current state of the American workforce and the monumental challenges employers are facing across the country.

Here’s what we learned.

Executive Summary and Key Findings

The most critical and widespread challenge facing businesses right now is the inability to hire the qualified workers they need. When businesses do not have enough employees, they are forced to turn down jobs, reduce hours, scale down their operations, and in the worst cases, permanently close. The latest data and surveys reveal a national economic crisis that is getting steadily worse.

  • There were 8.1 million vacant job openings in the United States—a record high—in March 2021, the latest month for which data is available. That’s up more than 600,000 from February.
  • There are approximately half as many available workers for every open job (1.4 available workers/opening) across the country as there have been on average over the past 20 years (2.8 historical average)—and the ratio continues to fall.
  • In several states and several industries, including hard-hit sectors like education and health services as well as professional and business services, there are currently fewer available workers than the total number of jobs open.
  • More than 90 percent of state and local chambers of commerce say worker shortages are holding back their economies, and more than 90 percent of industry association economists say employers in their sectors are struggling to find qualified workers for open jobs.

Macroeconomic Insights

In April, the Bureau of Labor Statistics (BLS) jobs report fell well below expectations.

Businesses only created 266,000 jobs when most analysts expected more than 1 million. Even with 9.7 million unemployed at the beginning of April, workers’ reluctance to return to work and fill open positions was one reason for the lackluster job creation. Another could be that employees know just how easy it is to get a new job – the percent voluntarily leaving their current job is now above pre-pandemic levels.

BLS also reported that there were 8.1 million job openings in the economy as of the end of March -- an all-time high. That is more than 600,000 higher than at the end of February and the fastest growth rate since July 2020. So far, in 2021, employers have added 1.4 million. Clearly, businesses are hiring – if only there were workers ready, able, and willing to fill their open positions.

The Worker Shortage Index (formerly the Worker Availability Ratio, or WAR) measures the number of available workers divided by job openings. More specifically, it compares (1) “available Workers” (persons who want a job and are available to work now) as reported in the monthly BLS Employment Situation Report household survey of individuals to (2)  employers’ job openings as reported in the BLS Job Openings and Labor Turnover Survey (JOLTS).

The national Worker Shortage Index has fallen precipitously in recent months. There are now approximately half as many available workers (1.4) for every open job across the country as there have been on average over the past 20 years (2.8 historical average).

Hardest Hit States and Sectors

While nearly all states and sectors are facing worker shortages, the data suggest that the challenge is particularly acute in several hard-hit states and industries.

In several industries, including hard-hit sectors like education and health services as well as professional and business services—there are currently fewer job seekers than the total number of jobs open.

As shown below, three industries have a index number (or WAR) below 1, meaning jobs are more prevalent than potential workers in that industry.

IndustryWorker Availability Ratio (WAR)
March 2021
Other services1.71
Leisure and hospitality1.40
Wholesale and retail trade1.27
Manufacturing1.15
Financial activities1.05
Professional and business services0.96
Educational and health services (private)0.88
Government (incl. public educ.)0.16

 

States show similar variations, with index numbers (or WARs) ranging from almost 4 to 0.57.

The circumstances are most challenging for employers in South Dakota, Nebraska, and Vermont, where the total jobs available outnumber the total available workers to fill them.

STATES WITH LOWEST WARs
StateWAR
South Dakota0.6
Nebraka0.8
Vermont0.9
Kansas1.0
Indiana1.0

 

Local Chamber and Industry Assocation Survey

In May 2021, the U.S. Chamber of Commerce surveyed state and local chambers of commerce leaders about workforce challenges in their area—and the results are striking.

Ninety percent reported “lack of available workers” as the main factor slowing the economy in their area—with two-thirds reporting it was “very difficult” for employers in their community or state to hire workers. Respondents were twice as likely to say that lack of workers is holding back the economy as they are to say that COVID is holding it back.  Less than 1% said it was easy to fill open jobs.

The U.S. Chamber also surveyed economists at some of the nation’s top trade associations to ask about the workforce challenges in their industry. Across the nation, in industries as diverse as agriculture and construction, healthcare and hospitality, manufacturing and computer software, the feedback mirrored the findings in the BLS data analysis: Not enough qualified workers to fill jobs.

76% of the respondents reported that businesses in their industries find it “difficult” (52%) or “very difficult” (24%) to hire workers right now.

When asked how businesses in their industry are doing finding workers now compared to 5 years ago, the results showed hiring is getting more difficult. An overwhelming 83% of respondents saying it was “harder” or “significantly harder” to hire.

 

While the pandemic has certainly impacted the labor market, the lack of workers to fill open jobs isn’t a new problem. In late 2019, there were more open jobs than unemployed individuals. Keeping our economy growing requires that we fill these jobs. To do so, we need to remove barriers that prevent people from entering the workforce, get individuals the skills they need for the open positions, and enact sensible immigration policy.

If business and government work together to grow our workforce, we can once again build a vibrant, prosperous nation and lead the world economy for years to come.

“The worker shortage is real—and it’s getting worse by the day.”

- U.S. Chamber of Commerce President and CEO Suzanne Clark