How Small Business Owners Can Overcome the Skilled Labor Shortage

In 2020, the number of open jobs was higher than the number of people looking for work. While nearly every industry is fighting to fill positions, employers in the skilled trades are struggling even more to hire trained workers. A labor shortage can have many negative effects on companies including:

• Slowing a company’s growth;
• Struggling to maintain procedure and maintenance;
• Sourcing affordable supplies;
• Hiring employees that don’t have enough skill;
• Compromising quality control.

While closing the labor shortage gap is not an easy fix, there are strategies that employers could implement to attract employees to their firms. 

Why Is There a Shortage of Skilled Workers?

The talent shortage is at an all-time high: more than 70% of companies reported labor shortages in 2019. The skilled trades industry is finding it harder and harder to fill positions. Many factors are influencing the shortage including:

• Workers who lost their job in the recession moving to other industries;
• Baby boomers retiring at the same time;
• Younger generations having no interest in skilled trades;
• Companies using outdated hiring processes.

There are also misconceptions about skilled trade jobs that keep people from pursuing careers in the industry. Examples of these myths are:

• Skilled trades are for people who flunked out of college;
• Tradespeople don’t make a lot of money;
• Skilled trades aren’t real careers;
• Trade jobs are only for men.

Combining these myths with the factors above, companies are forced to overwork their skilled workers and increase their costs. 

Social Stigmas and Obligatory College Education

There is an alarming stigma that surrounds trade schools and those that pursue the skilled trades:

• More than half of the people surveyed said they’d rather work in a coffee shop than as a welder.
• 58% said they did not know about trade schools in their community.
• 73% said traditional college provides a better future than a trade school.
• 25% felt students who attend trade school are not as smart as those who attend a traditional college.

However, traditional college is not for everyone. One study shows the various drop-out rates for college students:

• The overall dropout rate for undergraduate college students is 40%;
• Approximately 30% of college freshmen drop out before their sophomore year;
• In 2019, fewer than half of Americans between the age of 25 and 35 obtained any credentials beyond a high school diploma.

Vocational schools could be a better option for some people, however, trade jobs are sometimes seen as less sophisticated careers despite being highly skilled and often high-paying.

Aging Workforce

For many companies, their workforce is ready to retire, and they have not prepared to replace their workers with alternatives. This is because many companies are worried about the challenges they will face when it’s time to hire a new generation of workers:

• Managers are concerned about losing skilled workers and their knowledge;
• More and more baby boomers are taking late retirements, making it difficult for companies to hire and train new workers.
• Since younger generations are not as interested in trade skills, companies are clinging to older workers.

Additionally, colleges and high schools are not as invested in training for skilled trades as they once were. Therefore, there are not enough skilled workers to replace the ones that are about to retire. 

Outdated Hiring Processes

Even though the hiring process has changed, companies are still practicing outdated hiring processes:

• Generic job descriptions;
• Relying on job boards to attract applicants;
• Limiting the application pool by geography;
• Not using the interview to its advantage.

Outdated processes can have several negative effects on businesses, including:

• Turnover;
• High cost;
• Low morale;
• Decreased confidence.

To hire more effectively, skilled trade companies must adopt new processes to acquire untapped talent markets.  

The Recession and Pandemic

The Great Recession of 2008 found quite a few skilled laborers out of work, many of whom found jobs in other industries. Additionally, the 2020 pandemic caused over 40 million people to lose their jobs. Many contractors, along with thousands of other small businesses, had to close their doors because they were unable to pay their bills. A survey of workers impacted by the Coronavirus conducted by Pew Research shows that:

• 15% of adults report that they were laid off due to the Coronavirus;
• Of those, one-third have returned to a job while 15% have gotten other jobs;
• Half are currently unemployed.

Companies in the skilled trades are finding it hard to replace or rehire skilled trade workers because of worries related to stability. However, the industry remains strong as tradespeople are needed to maintain existing infrastructures. 

Strategies to Overcome the Skilled Labor Shortage

Despite the lack of workers, the workload is increasing. Skilled trade jobs handle important projects throughout every aspect of society, making them invaluable to society as a whole. Many skilled trade jobs are in demand and some pay a substantial wage. Additionally, there is no shortage of jobs — 80% of contractors are finding difficulty in hiring craft workers. To counteract the labor shortage, many firms and small businesses are changing the way they hire, adopting new technology, and creating a more diverse workforce.

Invest in New Technology

Many companies are turning to technology and automation to help increase efficiency in the workplace. However, this is no new practice. For instance, factories have used robotics to help increase the production of many products. Additionally, some programs can help automate recurring, rote tasks. By implementing new technologies to automate these tasks, small business owners can focus on other aspects of their business, like growing their workforce. For example, a heating and cooling business could benefit from using HVAC scheduling software to save time and resources, allowing customers to schedule appointments and populate routes so that dispatchers and field workers don’t have to.

Likewise, utilizing route management software can allow that HVAC companies and other businesses that provide on-site services to keep a closer track of staff in the field, and plan more efficient routes between jobs to reduce downtime and reach more customers each day. Incremental improvements using technology like this can add up to a greater impact and more profitable, efficient operations when used correctly, allowing employers to do more even with limited staff.

Create a More Diverse Workforce

Creating a more diverse workforce has been a priority for most companies, but now it can help fill the skilled worker gap even more significantly. Small trade businesses can create diversity by hiring women, people with disabilities, and people who speak other languages. For years, the skilled trades were dominated by men; Now, many companies are finding the untapped potential in hiring women. A diverse workforce can provide benefits to a company’s bottom line, including:

• Higher innovation;
• Various perspectives;
• Faster problem-solving;
• Increased creativity;
• Increased profits;
• Reduced employee turnover.

However, it’s important to note that companies should not hire diverse workers for diversity’s sake. To make the most out of skilled employees, employers should be intentional about diverse hires and ensure they are adding positively to their workforce. 

Revamp Recruiting Techniques

Attracting and retaining employees is a critical component to growing your workforce. Dealing with constant turnover can cause employers more stress as well as cost more money to hire new employees. Employers must learn new techniques to attract and retain valuable employees to their business. Examples of these techniques include:

• Demonstrating a pleasant work culture;
• Offering appealing benefits and perks;
• Reaching out to people that will benefit your company;
• Offering current employee referral bonuses;
• Offering a flexible schedule;
• Hiring an HR professional;
• Implementing an apprentice program.

It’s important to take the time to understand what current and new employees want from a career. By updating your recruiting techniques, you can target valuable employees that can help grow your business. 

The skilled labor shortage is not a small problem; many solutions can be implemented to help fill the gap. By understanding why there is a shortage, investing in new technology, creating a more diverse workforce, and revamping your recruitment techniques, you can help grow your business by targeting valuable, skilled employees.