The Biggest Future Employment Crisis: A Lack of Workers

​The pool of available workers may be the most pressing concern about the future of the U.S. labor market, experts agree, based on newly released federal government data.

The labor force participation rate is projected to continue to trend down, declining from 61.7 percent in 2020 to 60.4 percent in 2030, with retiring Baby Boomers and a declining population rate reducing the number of people available to work, according to a new analysis from the Bureau of Labor Statistics (BLS). The youngest Boomers will reach traditional retirement age by 2030.

"This is a tough picture, looking forward," said Ron Hetrick, senior labor economist at labor market analytics firm Emsi Burning Glass in Moscow, Idaho. "People who think that once the pandemic subsides things will get better forget that in February 2020 we had the lowest unemployment rate in history. Since then, we have lost many more Baby Boomers and haven't really added new labor market entrants."

Hetrick said that for the next several years, as the last of the Boomers retire, it's hard to see how the labor force will be replaced and jobs will be filled. "We will have to get better at utilizing the labor we have," he said.

George Kelly, senior vice president at Milwaukee-based recruiting and staffing firm ManpowerGroup, said thinking differently about traditional work practices and shifting to more flexible workforce models will be one way to help redress declining labor force participation. "The 9-to-5, eight-hour shift is designed for a way of working that many would argue is outdated," he said. "We don't have to operate that way."

Pandemic Recovery Will Fuel Some Growth

The BLS found that the U.S. will add 11.9 million jobs through 2030, but that projection reflects the recovery from the 2020 recession and an abnormally low base-year employment for 2020 associated with the COVID-19 pandemic.

Total employment is projected to increase about 7.8 percent by 2030, to 165.4 million jobs, equating to just over 1 million new jobs each year, about half the annual gain in the past decade.

"It's about 100,000 new jobs per month," Hetrick said. "That's a reasonable number, but I don't see where those jobs are being filled. The BLS is forecasting 11.9 million new jobs but only 8.9 million new entrants to the labor force. And a lower labor force participation rate that keeps declining. So who will fill these jobs?"

Most employment gains through 2030 are expected to occur in the service sectors, which are projected to reach about 134.1 million jobs in 2030. This increase represents just over 95 percent of all jobs added from 2020 to 2030.

Employment in leisure and hospitality is projected to grow the fastest within the service sector, largely driven by recovery from the pandemic. Restaurant cooks are among the fastest-growing occupations, for example, due to substantial employment losses in 2020.

"Leisure and hospitality will bounce back, but they will continue to struggle with the talent shortage," Kelly said. "During the initial stages of the pandemic, when that sector was hit the hardest, a number of those displaced workers were diverted into new careers, like call centers and logistics, and many are going to stay in those roles."

Hetrick added that eventually some of the 1.5 million job openings in restaurants and hospitality will be filled, but "to think that what is happening now isn't a systemic long-term problem for the sector is naïve."

About one-third of the jobs created, or 3.9 million, will be in low-wage work that pays less than $32,000 a year, exposing another troubling gap in the labor market, Hetrick said. "We have 6.5 to 7 million job openings for roles that don't require a college degree but only 2.8 million unemployed people without a college degree. Where will the explosion of lower-skilled labor come from?"

Health Care Woes

Health care and social assistance are projected to add the most jobs—about 3.3 million—between 2020 and 2030. Factors expected to contribute to the increase include rising demand for the care of an aging population, longer life expectancies, and continued growth in the number of patients with chronic conditions.

Several of the fastest-growing health care occupations—including nurse practitioners, physical therapist assistants and physician assistants—are projected to see strong demand as team-based models are increasingly used to deliver health care services.

"Health care roles remain in top demand across the country," Kelly said. "Another lens to consider is the growth in all the associated roles that support health care, like insurance, and also the emergence of technology roles in health care and social assistance."

A recent study conducted by Mercer shows major health care labor shortages projected by 2026.

"The U.S. is losing health care professionals to burnout and at a rate faster than expected; a significant portion of physicians plan to retire, and there will be a sharp increase in demand for mental health professionals and low-wage health care workers in the near term," said John Derse, health care industry leader at Mercer.  

Mercer's research shows more than 6.5 million workers employed in critical, lower-wage, occupations like medical assistants and home health aides will permanently leave the field soon, just as the need for these workers is surely to grow. In addition, Mercer forecasts a significant shortage of nurses in over half of U.S. states and a 10 percent increase in demand for mental health workers by 2026.

"While hospitals and health care systems cannot control what's happening in the external labor market, effective workforce planning and managing internal workforces can help mitigate their exposure to these risks," Derse said. "Workforce strategies that will position an employer for long-term success should focus on transforming care models, rethinking compensation and benefits, and introducing more flexibility into staffing, development and rewards."

Shrinking Occupations

Changes ushered in by the pandemic, such as the explosion of remote work, will expand demand for jobs in information technology services and other knowledge worker categories.

On the other hand, retailers are projected to lose 586,800 jobs through 2030, the most of any sector. "Most of the loss will be in the customer-facing side of retail, while logistics, driving and the virtual customer service side is growing," Kelly said. "The gender impact will be felt, as most of the disappearing jobs in retail are held by women."

More than half of the industries projected to have the most rapid declines in the U.S. are in manufacturing, due to global competition and the adoption of productivity-enhancing technologies, such as robotics. Increased automation is also expected to result in declining employment for professional roles, such as office and administrative support occupations.

"Forecasters need to shift focus from the numbers of jobs lost to the types of jobs and skills that will be required going forward," Kelly said. "For example, in manufacturing, there may be fewer jobs in the future, but we know that there are lots of new roles emerging, with different skill sets, such as advanced manufacturing. The challenge will be identifying which skills will be critical to the emerging jobs."