This past month the business community has been surprised by faster-than-average recovery, GDP, reopening, vaccinations, and even price increases. However, one measure has not surprised the business community is labor force participation and eagerness to get back to “normal”. The Chamber of Commerce has been contacted by many in the restaurant and leisure industry pointing out to the national shortage of labor. So what is driving this trend and what can you do to survive in this environment?

Unlike popular believe this trend is NOT being driven by discouraged workers, the share of people that have stopped looking for a job because they feel they do not fit in the labor market represents only 0.4% of the labor force which means people within employment age are choosing to either not participate or have not come back to their old employment as of March.

One possibility these people have decided to not participate in the labor market which means people are not claiming unemployment and have decided to rely on family and friends to get by, the labor participation today, meaning portion of total labor force employed or running a business, is 61.5%, down from the historical high of 67%. The downward trend in labor force participation is not new and well understood, the drivers of lower participation are lack of access to childcare, the elderly, lack of training, or even access to healthcare, all affected by the virus.

What can you do to attract a better labor force?

1. You can offer higher wages: this is a great approach if you are in a hurry and have the cash for it, however a short-lived solution is since money might not solve your employee’s troubles
2. Offer or pay for on-site childcare: employers who are big enough might be able to arrange for local childcare businesses to offer services for their employees at a discount and on emergency basis
3. Offer FSA/HSA arrangements: Flexible Spending Accounts and other arrangements can offer funds in case of an emergency to employees who are worried about getting sick
4. Seek teenage applicants: May and July is graduation season and many high-school students will become part of the labor force. Historically recent high-school graduates are neglected by employers due to lack of experience, however this might be the time to invest in an employee who is very likely to stay with you for several years before moving on to community college
5. Offer incentives for vaccinations: employers all over Maryland are offering from free transportation to appointment to cash bonuses, and gift cards to employees who get vaccinated.

Finally, this is an opportunity for you to re-think how you approach your labor force, the past year has been marked by loose credit terms, plenty of public funds, and high demand of services of goods, the labor market seems for now to be the main constraint.