Talent Shortages and Inflation
Guest writer Ed Gordon gives readers an overview of American companies that offer training and professional development to their employees in this week’s blog post on “Talent Shortages and Inflation.”
About 20 to 25 percent of U.S. businesses provide training to their employees. This management commitment cuts across all types of businesses of all sizes. Here are some notable examples:
Airbus, Amazon, American Airlines, Boeing, CVS, KitchenAid, Lowe’s, Marriott, United Airlines
Abt(IL), Bell & Howell, Birmingham Water Works Board (AL), CCA, Global Partners, Cracker Barrel, Intermedia, Seattle Genetics (WA)
LaSalle Network (IL), O’Shea Builders (IL), Pierce Manufacturing (WI), Pulse Technology (IL), Staub Manufacturing Solutions (OH)
Among the talent measures used by these companies is investing in entry-level job training often through partnering with local technical or community colleges. They also offer continuous employee development to increase productivity and profit, attract and retain talent, and raise employee commitment and satisfaction. In the short term, training creates a pipeline to fill vacant jobs. In the long term it helps to nurture talent for the innovation and leadership needed for success in the future.
The Perils of Short-Termism
At the start of the 1990s about 40 percent of businesses offered employee training. This began to slip during the mid-1990s when many companies cut training as the trend in management strategy became maximizing short-term profit by cutting costs in areas deemed non-essential to the core function of a business. The idea was to cut your way to greatness. Wall Street rewarded those businesses that kept profits up quarter after quarter.
A big reality check began in 2019. The cumulative effect of global crises (i.e., COVID-19, the Ukraine War, rising inflation, demographic change) has intensified the need to rebuild U.S. talent resilience. Yet this is fundamental socio-economic issue that is largely being ignored. Despite the changed skill demands of the Fourth Industrial Revolution, many still cling to the 20th-century perspective that only one-third of the labor force needs a better education and specialized career training. Technology has advanced; social perspectives remain largely unchanged.
At the same time. the U.S. labor force is undergoing a profound generational change. The 76.4 million baby boomers born between 1946 and 1964 have caused big problems coming in and going out. They overwhelmed educational facilities and then flooded the job market causing over one percent annual growth in the labor force. Now they are retiring at an unprecedented rate. Between 2010 and 2020 over 28 million boomers retired; the remaining cohort will leave the workforce by 2030. Currently about one in four U.S. workers are boomers. This massive wave of retirements is generating a huge demand for workers to replace them. Rising skills requirements are making this process more difficult.
Today the official U.S. unemployment rate is very low, but the labor participation rate is more than one percent less than at the start of the pandemic. In my over 30 years as a workforce consultant, I have never seen so much skilled talent sitting on the sidelines. Perhaps as many as 20 million workers have the skills-base needed by many businesses and organizations. Yet these employers are not investing in training to give these workers the skills they may lack to obtain a precise fit for open positions.
Central banks around the world are raising interest rates to control inflation. Demographics and acute skill shortages are among the factors stoking inflation as employers struggling to fill positions raise wage offers. Companies are likely to pass rising labor bills along to consumers in the form of higher prices. In the long-term, term how much will this continue to fuel inflation? The United States is imperiling its future by ignoring education deficits in schools and training needs in workplaces. Short-term fixes including raising interest rates will not solve our nation’s long-term need to better prepare our citizens for the education and skill demands of advanced technologies.