KANSAS CITY — Employers in the United States, particularly manufacturers, hoped the Sept. 4 ending of federal unemployment benefits available under the CARES Act would push more people back into the labor force. That did not happen, according to the Bureau of Labor Statistics’ Employment Situation Summary published on Oct. 8. Now business leaders must reckon with an issue that may be structural rather than transitory.
The Employment Situation Report showed total nonfarm payroll rose by 194,000 in September, well below estimates by market analysts. An analysis of the BLS data by the Consumer Brands Association showed the consumer packaged goods industry added 5,000 jobs in September, well below what the industry needed to keep pace with demand.
“As the COVID-19 pandemic has worn on and supply chain pressures have intensified, we have run out of slack in the system,” said Geoff Freeman, president and chief executive officer of the CBA. “The labor shortage is driving the majority of issues in the supply chain, and the paltry additions today — for CPG companies and industries they rely on — create an untenable situation for manufacturers.”
Additional data published by the BLS on Oct. 12 added context to the issue. Nearly 4.3 million US workers quit their jobs in August. The national “quit” rate increased to 2.9% of the workforce. That’s the highest percentage ever reported by the BLS Job Openings and Labor Turnover Survey.
Compounding challenges for the manufacturing community is the trucking industry added only 2,500 jobs, a number far short of what is needed to move goods.
The CPG industry has 143,000 unfilled jobs, according to the CBA, with 889,000 open roles in broader US manufacturing. CPG companies have introduced a variety of worker incentive programs, from raising wages by 7.3% for facility workers on average to helping pay for college, but still lack workers to fill positions.
The CBA is calling on government leaders to make getting more people back into the workforce a federal priority. Initiatives advocated for by the group include enhancing childcare and family support programs and launching new workforce initiatives to advance education, apprenticeships and support of skilled trades and supply chain professions in need of new talent.
While it is hoped higher wages, better benefits and progressive government programs may improve workforce participation, employers also must consider if the US labor market is undergoing a structural change. A survey of 52 economists by The Wall Street Journal found that 22 believe workforce participation will never return to its pre-pandemic levels. Others surveyed were not as pessimistic but acknowledged labor shortages may last for years.
The challenge for employers is to better understand what prospective employees want. Numerous recent surveys have been conducted to determine employee needs, and one word is most often repeated — flexibility; flexibility in where people work and even when people work.
This guidance may not be welcome to manufacturers whose operating models require employees to be in specific places for specific lengths of time. But it provides additional insight into the current situation and may help manufacturers alleviate labor woes, both for the short term and the long term.
