Impact of Labor Shortage on Employers and the Role of Third-Party Service Providers
The COVID-19 pandemic has rippled through the economy and impacted the labor market in a big way. With millions of Americans leaving their previous jobs behind, this has created the lowest labor force participation rate in a long time.
This, coupled with lengthy shut-downs at factories around the world, has led to a significant disruption in the supply chain. Even though businesses are suffering acutely from the labor shortage, third-party service providers like Unistar Purchasing Solutions provide a glimmer of hope on a dark horizon.
Labor Shortage Statistics
Employers are desperately seeking more workers to meet the labor shortage as the number of job openings continues to grow drastically. However, the number of available workers continues to drop. Let’s take a look at things from an economic standpoint.
According to the Bureau of Labor Statistics, job vacancies amounted to a whopping 9.3 million in April 2021. The actual number may be much higher. Although this is astounding, the fact that there are still worker shortages many months later is even more disturbing.
While the United States has managed to curb the spread of COVID-19 economic experts anticipated that this would send a larger number of people back into the workforce. However, this wasn’t the case.
The effects of this labor shortage have rippled through employers and begun to affect consumers as well, in the form of limited capacity in restaurants and business places, delayed orders, and shortages of products.
Moreover, the labor shortage has also led to a sudden increase in the average hourly wage for private workers in 2021, which jumped by $0.20 in April, $0.13 in May, and $0.10 in June. Plus, the reservation wage for non-degree workers also jumped by 26% within a year.
What’s even more alarming is that voluntary resignations grew drastically in June 2021. Voluntary resignations previously sat at 164,000 a month. In that month, it increased six-fold to 942,000. This explains why companies across the U.S. are facing difficulties in finding competent workers to fill in vacant positions and maintaining their existing workforce.
Unfortunate Measures that Businesses Have to Take
Naturally, when there is an insufficient number of workers and employees, businesses are finding it all the more difficult to cater to their customers, and both parties are suffering in one way or the other. Let’s have a look at some of the actions that businesses have been forced to take due to the labor shortage.
1. Temporary or Permanent Closure
Due to the lack of workers available to run a business smoothly, many retail operations had no other option but to close their doors to the public, either temporarily or for good. Not only did this affect the financial health of the owners and people associated with the businesses, but it also dealt a severe blow to the economy.
2. Higher Wages and Perks for New Hires
The obvious solution to combat the labor shortage would be to raise wages to compel people to apply to open positions. However, not all companies can take that route because of the fear of receiving increased demands from their existing employees, putting a strain on their finances. Therefore, most businesses have chosen to offer people other benefits and perks for applying, such as free meals, flexible working hours, shopping credits, etc.
3. Reduced Business Hours
Another tactic that businesses have been forced to employ is the reduction in business hours. When restaurants or stores are understaffed, it is impossible for these businesses to stay open for their usual hours. Therefore, most stores and outlets close down much earlier, and this means that customers will also have a shorter window for dining, shopping, leisure, and entertainment.
4. Business Downsizing
Many businesses have decided to close off departments and parts of their companies, which means that now they can cater to a much smaller customer base than before. Not only does this cause inconvenience for the customers, but it also hurts sales. However, there is no end in sight to the labor shortage problem and businesses need to make such moves now to adjust to the ongoing shortage.
How Third-Party Service Providers like Unistar Can Help
The labor shortage is a growing issue, and experts are calling it “The Great Resignation.” There are several steps that businesses have to take in order to ease the burden, including cutting costs on supplies and minimizing shortages to keep sales up. To do this, it is important to have a reliable supplier like Unistar that can save you time and money.
Unistar provides a variety of purchasing and supply solutions that not only provide you with quality products but also helps you reduce costs. We can help you navigate around the problem of labor shortages and resigning workers by being that constant voice and role you can rely on. We all have learned how do to more with less and having the ability to rely on a trusted partner – like Unistar – can make all the difference. Business continuity can be the saving grace to make it out of this unique situation we all find ourselves in today. If you are running a business that has been adversely affected by a deficit in manpower, and don’t know who to turn to, visit our website to learn more about Unistar Purchasing Solutions.