The COVID-19 pandemic has caused significant disruption to the U.S. workforce, leading many to refer to it as the “Great Resignation.” More than 50 million workers will leave their jobs in 2022, up from 47.8 million in 2021. This trend will gradually subside in 2023, with 30.5 million people leaving the workforce as of August.
If you look closely at what has happened to the workforce, it would be best to describe it as a “major makeover.” Although turnover remains high, recruitment continues to outpace it as many workers move on to other jobs for better work-life balance, flexibility, higher compensation, or a stronger company culture. ing.
The U.S. Chamber of Commerce closely monitors job openings, labor force participation, and turnover trends affecting industries across the country. Read on to explore an analysis of the industries most affected by these trends.
The state of American business in 2024
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For a comprehensive overview of the status of our employees, please visit the America Works Data Center. A detailed analysis of how the labor shortage is impacting the country can be found here and a state-by-state breakdown tracking the labor shortage can be found here. Data is available here.
Food service and hospitality companies struggle to retain employees
Fully in-person, traditionally lower-paying jobs were more difficult to retain employees even before the pandemic. For example, the leisure and hospitality industry has the highest turnover rate of all industries, with the lodging and food services subsector of this industry consistently recording turnover rates of over 4.5% since July 2021. I am.
Hiring rates continue to outpace turnover rates across all industries. Turning again to leisure and hospitality, the industry lost 837,000 workers in September 2023, but 1.1 million people were employed in the industry in the same month. In fact, since November 2020, leisure and hospitality has had the highest hiring rate of all industries, ranging from 6% to nearly 19%. This employment rate remains significantly higher than the national average, which was 3.7% as of September 2023.
Looking at labor shortages across industries, the education and health services sector, and the professional and business services sector consistently have the highest number of openings. It is worth noting that professional and business services span a wide range of occupations, including legal services, scientific research, but also roles such as landscape workers, cleaners, and waste disposal workers.
Meanwhile, in industries with more stability and higher salaries, such as finance and manufacturing, the number of people leaving jobs is decreasing.
Learn more about labor participation
The latest employment report from the Bureau of Labor Statistics shows thousands of people are joining the workforce, and that's a good thing. However, for various reasons, labor force participation rates are still not in line with pre-pandemic levels.
Labor force participation rates at February 2020 levels would add an additional 2.2 million people to the workforce, and this shortfall is impacting every industry in nearly every state. Even if all the unemployed filled open jobs within their industries, there would still be millions of open jobs, highlighting widespread labor shortages.
To further understand changes in the workforce, it is important to look at labor participation across different industries. As of September 2023, there is a labor shortage in all industries, including marginally employed workers, except non-durable goods manufacturing, wholesale and retail trade, construction, and transportation and public utilities.
Even if all unemployed workers with experience in the financial activities and professional and business services sectors were hired, only 42% and 44% of existing vacancies in these industries would be filled, respectively.
The manufacturing industry faced a major setback overall, losing about 1.4 million jobs during the pandemic. Since then, the industry has made great strides towards recovery and made a concerted effort to fight recruitment. Although the durable goods manufacturing industry has shown a significant recovery compared to the non-durable goods manufacturing industry, gaps still remain, with a total of 616,000 job openings in the manufacturing industry still unfilled as of August 2023. There is.
On the contrary, the construction industry is facing a labor surplus. The number of unemployed people with experience in this industry exceeds the number of job openings, with an average of 367,000 job openings per month in 2023, and an average of 49 job seekers with experience in this field per month. reach millions.
A surplus of labor does not mean that all positions will be filled, because workers are not necessarily located in the geographic areas where open positions are available. It also doesn't mean the industry will have all the workers it needs in the future.
Currently, there are job openings in every industry, and each industry is actively recruiting new employees. Hiring rates vary widely by industry, with certain industries hiring more new employees more quickly than others.
Consider the mining and logging industry, which is relatively small in terms of employment. From January to September 2023, the industry employed the least number of people, totaling 234,000. This is in sharp contrast to the leisure and hospitality sector, and the professional and business services sector. During the same period, each of these industries employed approximately 10 million workers.
Unemployment exists to varying degrees within the labor shortage.
In the United States, a healthy unemployment rate typically falls within the 3% to 5% range. As of September 2023, the national average unemployment rate is 3.8%. In this situation, 6.4 million people are unemployed. This group includes individuals with varying degrees of experience across a wide range of industries.
Industries with lower-than-average unemployment rates have fewer experienced candidates to choose from when filling job openings. This situation has led to increased competition for companies in these industries for limited talent.
Despite employees' desire for flexibility, the prevalence of remote work has declined sharply since 2021. This year, only a quarter of all employees are working remotely part of the time. While this is small compared to pandemic highs, it is well above pre-pandemic norms and indicates that some remote work will take hold in the coming years.
Certain industries and professions cannot function without face-to-face work. The industries most likely to work in-person are hospitality, food service, transportation, and retail, where nearly 80% of staff work entirely on-site. Alternatively, in industries with less physical labor or more customer service work, such as the information and financial industries, where fewer than 30% of his staff are fully resident, he is more likely to work remotely.
The U.S. Chamber of Commerce is proud to lead the business community in identifying actions employers can take to remain competitive in attracting and retaining talent. Companies can improve their workforce by expanding access to childcare services, offering innovative benefits, participating in second-chance recruitment, and providing upskilling and on-the-job reskilling opportunities for new and existing staff. By removing barriers to entry, we can increase employment opportunities.
Labor market challenges facing businesses are expected to continue for decades to come as our nation's workforce ages and employers create new jobs. Here's what the latest data says about the future workforce and what businesses need to know.
Learn how the U.S. Chamber of Commerce is driving solutions through the America Works Initiative. For more information about the America Works Initiative, contact Stephanie Ferguson at firstname.lastname@example.org.
About the author
Stephanie Ferguson is Director of Global Employment Policy and Special Initiatives. Her research on labor shortages has been cited in the Wall Street Journal, the Washington Post, and the Associated Press.
Makinizi Hoover is the Strategic Advocacy Manager at the U.S. Chamber of Commerce. Her work includes the development and project management of comprehensive data centers that serve as valuable resources for policymakers, businesses, and the general public.