The Myths of Labor Shortage and Labor Surplus

Article main image
Sep 19, 2022
This article is part of a series called Flashback.

On the one hand, the fear of layoffs is central to many employees’ concerns. On the other hand, recruiters and hiring managers report that it is exceeding difficult to find the skilled information technologists, computer programmers, software engineers, health workers, and even senior managers and executives that they need.

The time it takes to fill open positions seems to have increased, and hiring managers frequently complain that they have to settle for “second best.” Yet there are surplus immigration visas just waiting to be used, as well as thousands of Silicon Valley high techies seeking jobs.

What is going on?

Perceptions Are Changing

I believe there are several factors influencing us. The first is simply how the job market is perceived. We are defining jobs differently as new occupations are created and old ones change and sometimes blend together.

A skill such as mainframe programming in Cobol that was once important is no longer in demand at all while C# becomes the rage. There is also an uncertainty as to what will be critical in the next two to three years. Most employers are followers, not leaders, and rather than take a chance at defining the future, they are using the time offered them by the slow economy to wait and see what becomes the trend.

In many cases, the shortage of skilled labor may be caused more by very narrowly defined job descriptions and a lack of imagination than by any real shortage. We set up expectations and define jobs based more on what we want (or think we want) than on what is realistically available.

Many of us say that we cannot find qualified C# programmers, for example, when we all know that there are very few people with good skills in this area. We are left with two choices: wait to find a disgruntled one that we can steal from some other employer or decide to do something to change the supply by developing training programs or taking on apprentices.

Developing People Is a Requirement for Success

I spent many years working in the semiconductor industry when it faced a labor shortage of skilled process engineers and equipment operators. We eventually devised training programs that took basic electrical engineers and developed them into capable process engineers quickly.

IBM trained thousands of programmers throughout the 1960s and 1970s to meet its own huge needs. At the same time, IBM and other companies quietly worked with academic institutions to develop today’s academic computer curricula. This training and development does not have to be of the same type that a person would receive at an ordinary academic institution. In a most every case, corporate training can concentrate on skills that are needed right now and forego the theoretical, the basics, and the nice-to-have-but-not-critical-to-know issues.

Whether a person goes back at some point to get those basics remains a question, but I believe that efficient training can address the labor shortage issue quickly. In both world wars, the U.S. armed forces reverted to intensive training programs to fill critical positions. They learned that this can be as efficient a process as having a huge standing army.

The trick is in accepting that there is a responsibility on the part of employers to develop the people they need. Employers should be willing to provide the training and development for the jobs they have a need to get done. Waiting for the school system or the government to do your job for you has never been a very good strategy.

We Need To Expand the Labor Pool

Many available people are older or retired and have skills that have become obsolete or are not needed right now. However, these people could be retrained for some of the open positions if we took a different attitude.

Unfortunately most of us — or most of our employers anyway — would rather spend money on search fees, agency fees, administrative overhead, and advertising rather than on intensively training people with decent basic skills.

Granted we cannot train people for every job because many of them do require experience in order to be successful. But I think we could significantly lessen the labor shortage if we were willing to be a bit wider in our job expectations and definitions.

As recruiters, we need to become coaches to our managers. It is very difficult, I know, to convince a hiring manager that the kind of person he is looking for is better developed in-house than found externally. But I think it is to your credit if you can convince them.

As a recruiter you need to develop a relationship with your hiring managers that is good enough and strong enough that they will listen to you. This is why I constantly argue for integrated staffing and development, because I believe these functions are inextricably intertwined. It is very difficult to do one without doing the other.

If we are to look at recruiting has a process, we are going to have to incorporate development into our staffing thinking and staffing into our training thinking. Whether this is done through merging departments, or whether it is done simply through good collaboration doesn’t really matter. What is critical is that there is a dialogue between the two functions.

If you work in a small company where there are no separate training and recruiting functions, then this becomes even easier for you to do. You need to always think whether an open position is better trained for or hired for. Is it a job that would be impossible to train someone for in a reasonable period of time, or is it a job that someone could be trained to do fairly quickly?

When management and recruiters both develop a broader understanding of the issues and step up to the fact that in many cases skilled people are just not available at a reasonable cost, then developing people becomes sensible and cost effective. There are no labor shortages or surpluses. There are just shortages of imagination and an unwillingness to accept responsibility for filling our own needs.

Editor’s note: This article is part of our Flashback series, which reaches into ERE’s archives to bring you stories that still have significance today. This piece is adapted from the original version, published 20 years ago. It’s striking how the insights and themes in this article still seem current — perhaps for better and for worse. 

This article is part of a series called Flashback.
Get articles like this
in your inbox
Subscribe to our mailing list and get interesting articles about talent acquisition emailed weekly!