Labor Shortages Push Businesses Toward Automation, Operational Changes

Ongoing labor shortages are causing more businesses to adopt automation and outsourcing to replace human efforts. A survey of 1,250 business owners found that just 13 percent said that labor issues have not affected their business. Three out of four have considered or invested in automation solutions while 71 percent said that they had considered or invested in freelance or offshore labor.

Most business owners also expect these shortages to have lasting effects. Of those who turned to automation, 55 percent expect the shift to permanently cut back labor. However, 73 percent believe the labor shortage will lessen as a result of unemployment benefits ending.

Of those surveyed, 16 percent work in the tech field—including consulting, information services and software; nine percent are in the business sector—including advertising, marketing and finance; eight percent are in manufacturing and construction; and five percent are in retail, hospitality and food service.

Business operations have also been forced to change due to hiring issues. The survey found that, in addition to freelance, offshore and automation alternatives, 72 percent say they have had to pivot their offerings as a result of the labor shortage. Examples listed include decreasing open hours or selling more niche products like subscription boxes. Also, 71 percent also say that they have implemented upskilling or reskilling training programs to better help current employees fulfill jobs that business owners would have otherwise hired someone to do.

To address why employees are leaving their jobs, most business owners surveyed are willing to compromise. Digital.com found that 75 percent would be willing to pay higher wages to attract new workers and 76 percent said they would also be willing to increase benefits for new employees. Regarding the issue of a $15/hour minimum wage, the results were more mixed, as 59 percent of respondents said they thought that $15/hour is a fair minimum wage, while 22 percent maintain that it is too high.

As most states are ending their unemployment benefits by September (and many have ended them already), some workers who walked off the job may feel pressure to return to the labor force without the extra income, though recent surveys have indicated this may not be the case. However, business owners remain optimistic about this deadline as 73 percent stated they believe the labor shortage will lessen as a result of unemployment benefits coming to an end.

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