Bill Conerly

Help Wanted signs found on a quarter-mile stretch of road in Tigard, OR.

The labor market is tight right now, and this is the biggest challenge business leaders face today. And I’ve got bad news for you: It’s not going to get better anytime soon.

I’m not just looking at statistics. As I go around the country speaking about the economy and labor markets, I’m also listening to business leaders as well as managers of non-profits and government agencies. They are telling me that hiring is hard and turnover is high. In later articles, I’ll explain the proven techniques for better retention and recruiting. Here, I focus on an important point: This is a problem you’ll be living with for years.

The short-term cause has been economic growth, with net job growth averaging 170,000 positions per month. But that headline report adds new jobs and subtracts quits, layoffs, retirements and other separations. The gross rate at which people are quitting is now three million people per month, twice what it was in the recession. And companies are trying to hire, both to replace quits and retirements and also the expand. Six million open positions show up in the official reports, and businesses would certainly hire even more if people were available. But this recent economic growth is not the whole story. The tight job market will continue for a decade or more.

In the coming years, our working age population will grow more slowly than it has decades past. Part of the issue is total population growth. Because of declining migration to the United States from other countries, our total population growth rate is the lowest it has been a since 1937.

But that’s only part of the problem. The baby boomers are starting to retire, but it’s a little later than many people realize. The birth rate was high throughout the 1960s and early seventies, with the peak in 1957. As I record this video in 2017, the median baby boomer is 60 years old. The boomer generation has begun to retire, but there are millions more retirements coming in the next 10 years. Even if your company does not have lots of boomers retiring, you will be competing for new hires with companies that are really desperate.

Dr. Bill Conerly based on Census Bureau data

Change in Population Ages 25-64

The next bulge in the population was the millennials, who are the children of the baby boomers. The median millennial was born in 1990. Most of the millennials have already entered their working years. The people next in line to enter the traditional working years are a smaller generation. As a result, our country will have a very small growth of its working age population.

But wait; there’s more bad news. Many people of working age are neither working nor looking for work. A generation ago, most men between 25 and 55 years old were either employed or actively looking for work. Today we have millions of men who are idle and not looking for work. (We economists call this a low labor force participation rate.) People talk about these guys living in their parents basements and playing video games. Census Bureau research shows that there’s a lot of truth to this. The nonworking men of working age seem to have found a way to get by without working, or maybe they’re working under the table. I think that many of them had trouble finding a job during the recession, figured out a way to get by without a job, and then they’ll go through life that way. The bottom line for business leaders: these people are not available when you need to hire.

This concludes today’s bad news. It is possible to improve employee retention and recruiting, even of millennials. I’ll write about that in the future.