Businesses Face Blue-Collar Worker Shortage

Employers in today’s jobs market are having a harder time finding blue-collar workers than white-collar staff, reversing a decades-long trend in the U.S. An analysis from The Conference Board expects the shortage to continue into 2019 and beyond, saying companies will see growing shortages in sectors that include transportation, health care support, manufacturing, agriculture, mining and construction.

“In certain instances, companies looking to attract enough blue-collar workers will have to continue increasing wages and, as a result, possibly experience diminished profits,” says Gad Levanon, lead report author and chief economist of North America at The Conference Board. “But the picture looks very different for the workers themselves. Compared to a few years ago, blue-collar workers are now much more likely to have a job they are satisfied with and experience rapid wage growth.”

The report attributes the blue-collar labor shortages to several demographic, educational and economic trends in the U.S. economy. As the U.S. population has attained more education, the group of working-age individuals with a bachelor’s degree has grown, while the number of those without one has shrunk. Moreover, members of the Baby Boom generation, a segment of the workforce that once held many blue-collar jobs, are retiring in large numbers. Adding to the challenge, since the mid-1990s millions of non-college graduates have left the labor force due to disability. And while the pool of blue-collar workers has shrunk, the demand for their services has continuously grown since the 2008 financial crisis.

The Conference Report found the tight labor market’s impact to be particularly acute in the transportation, production/manufacturing and health care support sectors. Transportation job pressures are contending with the rapid growth in online shopping and the associated demand for delivery drivers, while many workers in the sector are older and entering retirement. Between 2010 and 2018, the production/manufacturing sector offshored fewer jobs than in the previous decade and productivity growth from automation has slowed, boosting demand for new employees. Health care support jobs, such as nursing aides and home health aides, have become more and more in demand as Baby Boomers retire.

How the blue-collar shortage plays out over the next decade depends largely on three factors identified in The Conference Board’s analysis. These factors include the extent employers can further automate blue-collar jobs, how many people are brought back into the labor force and how many workers move into blue-collar jobs from other parts of the labor market.

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