The severe labor shortage of 2022 has most of us vexed. The question I keep hearing is “Where did everyone go?” If you look deep enough (and I have), the answers present themselves. Every few days for the next little while, I’ll tackle one or two of the elements of the perfect storm that has US employers scrambling to find talent.

Answer #1: In the song “Keeping the Faith”, the great philosopher-composer Billy Joel says, “The good ol’ days weren’t all that good, and tomorrow’s not as bad as it seems.” In other words, recruiting and retention was no picnic before the pandemic.

The June 2022 US Unemployment Rate was 3.6%, which cuts into the quick of the labor force. How much lower is that than was the rate on the eve of the pandemic? None. In fact, it’s a touch higher. The unemployment rate in February of 2020 was 3.5%, and even then, employers everywhere were hoping, though not necessarily trying all that hard, to compete for a labor force marked by scarcity. So many jobs. So few workers.

This is not a new problem. To be clear, today’s workforce is smaller than it was right before the pandemic began, and that impacts a lot. But it doesn’t tell the whole story.

OK, so why DOES it seem so hard, especially for smaller employers, to find workers?

Answer #2: We laid them off. And they didn’t much appreciate that.

Part of the explanation for why smaller employers are having an especially hard time finding workers lies in the fundamental difference between the way the United States handled the pandemic-induced collapse of their businesses, compared to the UK and Europe. Calm down. I’m not America-bashing. Just looking at the facts.

It boils down to this: Americans were laid off and collected unemployment. When things got better, these workers, seeking greater security, were reluctant to return to the companies, and industries, that dumped them. Once burned, forever shy.

Yes, there was the US Paycheck Protection Program (thank goodness), and that kept the bleeding controlled to a degree. And some industries, notably airlines, were propped up in a HUGE way by the US Government. But the fact remains that many (as in many) workers were severed from the slashed payrolls and received a meager, but better-than-nothing check from the government.

The British and Europeans, on the other hand, were furloughed, in the true sense of the word, and their employers were paid enormous sums by their governments to keep workers on the payroll, even if they had little to do. As much as 75-80% of employers’ payrolls were subsidized – nationalized, if you will – by their governments. When things improved, it was easier for people to “come back”, because they’d never really left in the first place.

This isn’t a value judgment. It’s just how the respective systems are set up. But the two systems resulted in very different consequences once the crisis abated.

In the next few posts on this blog, I’ll reveal some of the other reasons we find ourselves in the current pickle.

Stay tuned.