As college graduates fret over finding jobs, a record shortage of workers is projected

Even as job seekers fret about artificial intelligence and tech behemoths announce massive layoffs, Matt Walsh is finding it surprisingly hard to help technology companies hire certain kinds of workers.

That’s what Walsh’s recruiting firm, Blue Signal, does. And in specialties including semiconductor production, “the unemployment rate is probably negative 20 percent,” the CEO of the Phoenix-based search company said. “It’s ridiculous. There just aren’t enough people.”

College graduates booed commencement speakers who hyped AI, which has steadily reduced the number of entry-level jobs available, and Meta cited AI when laying off more than 8,000 workers in May. 

But economists are sounding alarms that the AI talk is masking a different problem. 

It’s not that there won’t be enough jobs, these experts say — it’s that the United States is already facing what’s projected to be the biggest shortage of workers in its history.

The problem “could hobble the American economy for years to come,” predicts the Georgetown University Center on Education and the Workforce. “The largest labor shortage the country has ever seen,” the Lightcast labor market data company calls it. JPMorganChase warns of a national security risk from “a pervasive talent deficit that constrains the nation’s capacity to build, compete, and protect its interests.” 

Related: Too few workers, too many emergencies, take toll on EMS providers’ mental health

And it’s not only tech workers. There will be shortages in the tens of thousands to hundreds of thousands of nurses, physicians, teachers, engineers, pharmacists, mental health counselors, construction workers and airplane mechanics, both government and independent sources project. Most are jobs AI generally can’t do.

“All of these people who keep a society functioning are the very people we’re not going to have enough of,” said Ron Hetrick, Lightcast’s principal economist. 

Among the trends that have been leading to this moment: a mismatch between the careers college graduates are pursuing and the kinds of jobs employers are struggling to fill. Far fewer students are majoring in healthcare fields than are needed to meet demand, for instance. 

“We have pumped so many young people into business and finance” when what’s really in demand are graduates in other fields, Hetrick said. “It’s like a factory producing these workers like widgets, even though society is saying, ‘We really don’t need them.’ And the factory just keeps pumping them out.”

But the principal reason for the looming workforce shortages is much more basic. It’s that a protracted decline in the birthrate is coinciding with a record wave of retirements. 

Between 2024 and 2032, when the last baby boomers sign up for Social Security, more than 18 million college-educated workers will leave the labor force while fewer than 14 million enter it, according to the Georgetown center. Meanwhile, even as the number of people with associate and bachelor’s degrees falls, the center forecasts, the number of jobs requiring them will grow. 

That will leave a gap of 4.6 million fewer workers than are needed. Lightcast puts the deficit at an even higher 6 million.

These aren’t dystopian predictions. The shortages are already showing up, the U.S. Chamber of Commerce reports. In many industries, it says, even if every worker now unemployed were plugged into an open job, there would still be positions left unfilled.

“We have a crisis in front of us in not preparing people for the world that’s coming,” said Bill Haslam, the Republican former governor of Tennessee and co-chair with Democratic former Massachusetts Governor Deval Patrick of the Bipartisan Policy Center’s Commission on the American Workforce.

The effect of population shifts on the supply of talent, with or without degrees, has been compounded by a drop in the proportion of high school graduates choosing to go to college; a sharply reduced rate of immigration; and a growing number of Americans who have left the workforce altogether because of such things as lack of childcare, early retirement, incarceration and substance addiction.

College and university enrollment is down by nearly two million students since its peak in 2010, the U.S. Department of Education reports. The low birthrate since around then means the number of college-age Americans is forecasted to decline by another 13 percent through 2041. 

The Looming Workforce Cliff

Projected shortages of workers, 2024 to 2032

Projected shortages of healthcare workers by 2038

Projected shortages of semiconductor industry workers by 2030

SOURCES: Georgetown University Center on Education and the Workforce; U.S. Health Resources and Services Administration; Semiconductor Industry Association

Fewer than half as many people immigrated to the United States last year as the year before, the Census Bureau says; yet 41 percent of the home health aides who will be increasingly needed to care for the nation’s aging population have historically come from somewhere else, along with a fifth of nursing assistants, dentists, pharmacists and registered nurses.

“We’re doing a fantastic job of rolling up the welcome mat and saying, ‘We don’t want you,’ ” said Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research.

Walsh, at Blue Signal, has a theory about why there seems to have been little attention to the looming labor shortage, outside of the industries affected. He uses the metaphor of frogs that will jump out of a pot of boiling water if they’re dropped into it but not if the water is brought to a boil gradually. In the same way, people are only slowly becoming aware of shortages, Walsh said. 

Already, in his small Illinois hometown, he said, he’s noticed it takes six months for people to get a doctor’s appointment because there aren’t enough doctors.

“ ‘Everybody needs to hear this,’ ” Lightcast principal economist Ron Hetrick said an audience member implored him after he spoke at an event about the problem. But “some people really haven’t felt the pain enough to care as much as they should.”

Besides, said Allison Shrivastava, education and labor market economist at the college search and ratings platform Niche, attention has been focused on the shrinking supply of entry-level jobs in certain fields. “When people are having trouble getting into the labor market, it’s hard to say there are going to be labor shortages soon,” Shrivastava said.

The fact is, she said, that “we are going to be hard pressed to find a corner of the economy where labor shortages don’t have an impact.”

Shortages of workers have already begun to slow production lines at manufacturing facilities tied to the defense industry, according to JPMorganChase. Semiconductor plants are being built faster than they can be staffed. Too few electricians, line workers and technicians mean delays in the modernization of the energy grid. 

The semiconductor industry payroll is projected to grow by nearly 115,000 jobs by 2030, which is 67,000 more than there are workers now or projected to be in the pipeline to become technicians and engineers, the Semiconductor Industry Association estimates.

“The semiconductor industry is not alone here,” however, said Erik Hadland, the association’s director of technology policy. “We’re a small part of a much larger issue.”

State governments, which are closest to the problem, have been scrambling to avert it. To get college graduates to come or stay and work, some will help them pay off their student loans. A bill under consideration in Minnesota would offer in-state tuition to most public colleges and universities for children of parents who take jobs in that state, waiving the previous requirement that students have graduated from a Minnesota high school after attending for a minimum of three years.

Several states have combined their higher education and workforce development agencies, including Missouri and Colorado. Connecticut has established both an Office of Workforce Strategy and a Career Pathways Commission. Illinois Governor JB Pritzker has formed a working group to review that state’s workforce development infrastructure and increase the number of college graduates. 

Some states face shortages that appear more severe than others. South Dakota has just 41 workers for every 100 open jobs, for instance, while California and nine other states have more workers than jobs, the U.S. Chamber of Commerce finds. 

Related: Minnesota’s missed opportunity on AI worker protections

In Pennsylvania, a study commissioned by the state Department of Education has projected that the state needs to increase the number of people with credentials beyond high school by more than 4 percent to fill a shortage of 218,000 such workers a year by 2032. That will be a significant challenge, considering that college enrollment there has generally been falling.

There are also shortages in industries whose workers don’t need college and university degrees. Fewer than half as many people are entering the construction trades as are needed, for example, according to Branka Minic, CEO of the Building Talent Foundation, which represents 3,600 employers who are trying to fill that gap. 

“There’s plenty of jobs” in the skilled trades, she said, some starting at $50 an hour. “Show me what college graduates earn that kind of rate.” As for the prospect that AI can fill those largely physical roles, she told of seeing a poster plastered on an unfinished building. “Finish this, ChatGPT,” it said, mockingly.

That higher pay is an example of how the market will respond to shortages, said Hershbein, at the Upjohn Institute. In some industries, he said, “wages and compensation will adjust, people will find training, businesses will train people and there will be adaptations. Necessity is the mother of invention.”

Job seekers also need more current information about where the demand is greatest, said Cheryl Oldham, former vice president of education and workforce policy at the U.S. Chamber of Commerce and now executive vice president for human capital at the Bipartisan Policy Center.

“We’ve got to develop systems that can be much more nimble and responsive to the needs of the labor market, because the labor market is changing probably faster than it’s ever changed,” said Oldham, who also served in the George W. Bush administration.

Some savvy workers are figuring it out for themselves.

Seth Russell’s high school counselor nudged him toward college. Instead he learned welding and now works full-time as a fabricator.

“I got hired straight out of high school. I have no debt. I’m just making money, paying bills,” said Russell, now 22, who lives in Torrance, California. “There’s so many jobs out there.”

Contact writer Jon Marcus at 212-678-7556, jmarcus@hechingerreport.org or jpm.82 on Signal.

This story about shortages of workers was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

This article first appeared on The Hechinger Report and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The post As college graduates fret over finding jobs, a record shortage of workers is projected appeared first on MinnPost.