U.S. Chamber economist says workforce shortage will likely last decades
Photo | Courtesy of State House News Service
Panelists at a Greater Boston Chamber of Commerce panel
The workforce shortage that has left employers across sectors scrambling to keep operations running in recent years isn't likely to let up "any time, in the rest of anybody's lifetime," one of the nation's leading economists said Thursday.
"We're going to have a persistent worker shortage for the foreseeable future," said Curtis Dubay, chief economist at the U.S. Chamber of Commerce, said at a Greater Boston Business Chamber event at WBUR City Space.
Some employers have been waiting for more workers to become available, he said, but it's time to start shifting to a new strategy of accepting the wide gap between the number of jobs that businesses want to fill and the workers available to fill them.
The labor supply shortage is largely caused by the mass retirement of Baby Boomers, Dubay said.
"Succeeding generations after the Baby Boomer generation just weren't big enough," he said.
There are currently about 3.5 million more job openings than workers available in the country.
Acknowledging that there is not a quick solution to the workforce supply issue will be important for Boston businesses as they navigate the labor market, Greater Boston Business Chamber Jim Rooney CEO said.
"Identifying the labor issues and the worker shortage problem was not unexpected, I think what was eye opening was what Curtis said about it being a longer term problem," Rooney said. "In our minds, it's a period of time to get through, but given the trends that are driving it and how powerful they are, it's going to be much longer term."
About 10,000 Baby Boomers turn 65, and are eligible for retirement, every day, according to the U.S. Census. By 2030, every member of this large generation will be over retirement age.
With fewer people to fill the roles that the older generation is stepping down from, Dubay said the U.S. will need to rely more on immigrants, as increasing birth rates is "not something you can fix with public policy."
Rooney called Boston a "city driven by immigrants" and agreed with Dubay's calls for federal immigration reform.
"Our immigration policies are way behind, we're not embracing -- particularly in this region -- what has sustained the economy of Boston, really for 400 years," Rooney said. "About a third of the workforce in our hospitals are foreign born. I'm not talking about cafeteria workers, cleaners. I'm talking about medical professionals, performing surgery in the operating room and treating patients."
While employers have lamented difficulties running businesses without adequate staff, Dubay said Tuesday that workers have benefited.
The economy has continued to grow over the past few years, despite economists' frequent predictions that a recession is around the corner.
"Consumers keep spending. That's what's driving growth -- they continue to spend. They shouldn't be able to keep spending at such a rate. But the point is, they can keep spending because if they want a job, or if they want to spend and need a job, they can have one," Dubay said.
Wages are also growing as employers try to retain workers, which also encourages more spending.
With more opportunities and security for members of the workforce, Dubay said that even as projections show a slowing economy in 2024, "I don't think it really matters that much" if there is a recession.
The U.S. experienced a recession in the first half of 2022, when there were two consecutive quarters of negative economic growth, he said. The economist argued that "no one remembers" the dip.
"The reason no one remembers that is because during that period, jobs expanded, spending increased, income grew and manufacturing output increased," Dubay said. "The point is, did it really matter? If all those things that would affect people's daily lives, if they're growing and increasing, then did we have a recession if no one feels any pain? Does it really matter if it's a recession or not?"
Dubay called this a "tree falls in the woods recession," saying that even if the economy slows in 2024 there likely won't be mass layoffs as workers are too valuable to employers in the current landscape.
One of the panelists at Thursday's event, Yasmine King of semiconductor manufacturer Analog Devices, said her company's number one challenge is the workforce shortage.
The semiconductor industry is growing at an exponential rate in the U.S.
"We're estimating that by 2030 the industry will need another 115,000 jobs in the U.S., and with our current graduation rates of advanced degrees and technical training programs, we won't be able to fill half. So that's a significant problem, and that's just semiconductors," King said.
Higher education institutions have been experiencing, and continue to prepare for, decreased levels of enrollment.
"That's going to be a particular challenge for all higher ed, but with Boston being so concentrated, it will be a particular challenge here," Dubay said.
With a shrinking workforce that may not re-inflate any time soon, Rooney said on Thursday that Boston and Massachusetts need to shift their strategy to attracting the best talent to move to the area, and retain those who already live here.
"It's a national issue that is going to have some duration, which means that we're in competition for talent with other regions all over the country, and they're competing with us," Rooney said. "This is a national competition for talent... we need to understand what levers we have to pull to make it attractive to young people to stay here. I think we know what the answer is, where we need to lean into -- its housing prices and costs."
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