The Real Reasons Behind the Labor Shortage and How MA and RI Business Owners can Fight Back

Understanding Current Labor Shortages

Like most of the country, Massachusetts and Rhode Island have faced a tight labor market since the pandemic began to lift. Understanding the reasons behind this labor shortage will let you know how to fight back and find the workers you need to push your business forward.

In a broad sense, the labor shortage has come due to the speed of the post-COVID reopening. In Massachusetts, the unemployment rate spiked to over 17% as the shutdowns began and remained over 7% at the start of 2021. By the end of the year, it had dipped below 4%.

Rhode Island saw a similar story. The jobless rate, which reached almost 16% at the pandemic beginning, sat above 6% in January 2021. Fourteen months later, in March of 2022, it had plunged to below 4%. Meanwhile, Rhode Island employers have had trouble filling their positions, with just over 7% of the state’s total jobs remaining open.

However, these statistics don’t tell the whole story. There are more subtle factors at play — some specific to the post-COVID moment, others exerting a longer-term influence. To give you a better view of the situation, here are some of the reasons behind the labor shortage and how you, as a Massachusetts and Rhode Island business owner, can fight back:

Post-COVID Changes

Many of the challenges facing business owners in Massachusetts and Rhode Island have been caused by the aftermath of the pandemic. The COVID lockdowns put much of the economy into hibernation. The process of reawakening commercial activity has put strains on multiple aspects of running an operation — including the labor market.

The good news here is that many of these impacts will likely be temporary. However, many of the problems have already lasted longer than experts had predicted, creating doubt about how long they will endure.

The COVID restart has led to a long list of interconnected challenges for hiring. These include:

  • People Left the Workforce During the Pandemic
  • Lingering COVID Worries
  • Inflation Leads to Demands for Higher Pay
  • Childcare Issues

Long-Term Economic Trends

Not all the issues you face come from the recent struggle with COVID. Instead, some of the tightness in the labor market come from longer-term trends. As you look to weather the current economic storm, you need to prepare for the new normal that will likely come in the aftermath.

Here are a few broader trends to keep in mind:

Desire for Flexibility

During the pandemic lockdowns, many companies switched to remote working. In the wake of the crisis, a large chunk of the business community has stuck with hybrid options for its workforce. This accelerated a long-term trend towards more flexibility in employee scheduling — one you should consider as you plan your ongoing operations.

The Gig Economy and Increased Entrepreneurship

Traditional jobs have become a smaller part of the economy. Part-time, freelance, and gig work have offered an alternative for many prospective employees. Meanwhile, ambitious candidates have looked to start their small businesses. You’ll need to compete with these less-traditional options for making money.

Skills Gap

The challenges employers face in filling roles go beyond the raw number of available workers. It also relates to matching specialized skills with open positions. You might be able to find folks willing to work — but do they have the qualifications you need?

What Can You Do about the Labor Shortage?

It isn’t much you can do about the number of people in the workforce. That’s a macroeconomic issue that will work itself over time. However, given the conditions on the ground, you might need to take steps to compete in a tight labor market:

Keep your pay competitive: Stay alert to changing market conditions. Don’t overpay for workers but make sure you don’t fall behind.

Offer flexible schedules: If possible, give your workers additional autonomy over their day-to-day routine. You need to make sure that all the work gets done on time. But to the extent possible, provide some flexibility to keep up with changing market expectations.

Wider benefit offerings: Additional benefits, like subsidizing childcare, can lure people back into the workforce who are otherwise stuck at home.

Provide on-the-job training: If you’re having problems finding qualified workers, you might need to take steps to get them qualified. Find good talent and invest in training.

Make retention a priority: Keep your best workers in place with difficult hiring. Step up your retention efforts to ensure you have a few open positions as possible.

Finding the right workers in Massachusetts and Rhode Island has gotten complicated recently. However, by partnering with a top recruiter, like ABLE Associates, you increase the chances of finding the perfect candidates.

Contact ABLE today to improve your recruiting efforts.

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