While the supply of blue-collarworkers has dropped, the demand for such labor has risen,particularly as eCommerce continues to grow substantially.

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While unemployment rates are still historically low,some industries are struggling more than others to find workers.Which part of the labor market is taking the hardesthit? Blue-collar workers, according to The ConferenceBoard's report, "US Labor Shortages-Challenges and Solutions."

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"In a span of 10 years, the U.S. economy moved from having theweakest labor market since the Great Depression to one of thetightest in history," the authors write. "The result is a labormarket with critical shortages, especially for blue-collar andmanual services employers who are experiencing much tighter labormarkets than employers of highly educated white-collar workers–theexact opposite of prevailing trends in recent decades."

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Related: High salaries, no student debt driving appeal ofblue-collar jobs

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The Conference Board surveyed more than 200 human resourceexecutives and found that 85 percent of companies in "mostlyblue-collar industries" reported recruiting difficulties versus 64percent among companies in "mostly white-collar industries."Further, almost a quarter (23 percent) of companies in mostlywhite-collar industries report having neither recruitment norretention difficulties, whereas this is true for only 8 percent ofcompanies in mostly blue-collar industries.

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"Employers' complaints have merit, and the labor shortagesproblem is having a strong impact on the US economy," the authorswrite. "If not addressed, the problem could get worse, yet most USlabor-market thought leaders are currently much more focused on therisk of massive technological unemployment in the distant futurethan on the existing labor shortages. If left unchecked, today'sconditions could easily develop into one of the worst laborshortages of the last 50 years."

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Several trends have contributed to a dramatic decrease in thelabor supply, according to the report:

  • The massive retirement of the large baby boomergeneration is bringing growth in the working-age population to ahalt — a trend that will continue through 2030. "Never before havesuch a large number of retirements and almost zero growth in theworking-age population happened before."
  • As a growing share of young adults are enrolling in four-yearcolleges, the number of working-age people with a bachelor's degreeis increasing by about 2 percent annually. On the flip side, thenumber without a bachelor's degree is shrinking.
  • The recovery in labor force participation has beendisappointing, especially among men, and especially compared toother advanced economies in the last decade.
  • The large increase in recent decades in the number of peoplenot in the labor force due to disability – and almost all lack acollege degree.
  • Compared with earlier decades, young men without a collegedegree are less likely to be in the labor force. "Thatdecline in participation is partly because they are muchmore likely to be single, living with their parents,and have less of a need to earn income," the authorswrite. "These trends are more structural than cyclical and will behard to reverse."
  • The large drop in labor force participation of 16-24-year-olds."While good from a societal perspective since it is aresult of higher education attainment at this age, thesteep decline in the labor force participation of youngpeople significantly reduces the supply of workers in occupationsthat typically hire young and less-educated workers," theywrite.

While the supply of blue-collar workers has dropped, the demandfor such labor has risen, particularly as eCommerce continues togrow substantially. Employment in personal care and health supportjobs has also been increasing rapidly.

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To combat these issues, organizations are raising wages toattract and retain more blue-collar workers, the survey found.

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"Given the variation of tightness across occupations, it is notsurprising that most of the wage acceleration is occurring inblue-collar and manual services jobs, where wage growth is alreadyabove prerecession rates," the authors write. "Wage growth formanagement and professional workers, which includes close to 40percent of the workforce and most of total compensation, isaccelerating more moderately, which is one reason why, despite thehistorically tight labor market, overall wage growth is still wellbelow prerecession rates."

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As companies raise wages, their profitability declines,according to the report. "With the US economy projected toslow and labor shortages escalating, the pressure on corporateprofits is likely to increase in the coming years," they write. "Ifthe current trend continues, profitability rates will soon drop tohistoric lows. Lower profits make companies more reluctant tospend, a trend that may slow down economic growth even further andrisk the sustainability of the current economic expansion. Inaddition, the drop in corporate profits and growing labor costs mayforce more industries to raise prices and lead to a higher overallinflation rate."

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As a result, a number of those surveyed are using a mix ofstrategies, including lowering requirements for prior experienceand/or certain skills and competencies, as well as expanding thetarget recruitment demographics to include more women andminorities.

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"Lowering hiring requirements often creates a need for investingmore in improving the skills and development of new recruits," theauthors write. "Many forward-thinking companies are activelycreating talent pipelines by cultivating connections with localhigh schools, trade schools, and universities with the goal ofimproving technical curricula and developing internships andapprenticeships. In addition, these companies have been moreintensely providing or expanding online learningopportunities."

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Companies suffering the most recruitment and retentiondifficulties are making stronger efforts to make the company a moreattractive place to work by improving working conditions (such aswork environment, job hours, and responsibilities); increasing workschedule flexibility; increasing efforts to monitor and, ifnecessary, reduce employee workload; and decreasing requiredemployee overtime. In addition, they are increasing efforts tostreamline boring or burdensome tasks.

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"Governments could improve participation by improving healthoutcomes for working-age individuals, by reducing the number ofincarcerated people, by making work more attractive and non-workless attractive from a tax/benefits perspective, and by removingexisting barriers to labor market participation," the authorswrite.

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.