In recent years, the manufacturing labor shortage has become a significant challenge for the US manufacturing industry. With the demand for goods increasing and the supply of available workers decreasing, many companies are struggling to fill positions and maintain productivity. This has led to concerns about the long-term viability of the sector and the impact of the manufacturing worker shortage in the US.
A recent report by Deloitte and the Manufacturing Institute (MI) projects that between 2024-2033 as many as 3.8 million additional employees will be needed as current workers retire, change careers and new roles are created in the manufacturing industry. The effects of the skilled labor shortage in manufacturing jobs are significant. With fewer workers available, companies may struggle to meet production targets and fulfill orders, which can result in lost revenue and a decline in the industry's overall competitiveness. Additionally, the shortage of skilled workers has led to a lack of innovation and a slower pace of technological advancement.
One of the main factors contributing to the manufacturing worker shortage is an aging workforce. Many skilled workers in the manufacturing sector are nearing retirement age, and there are not enough younger workers to replace them. This has created a skills gap, with many companies struggling to find workers with the necessary experience and expertise to operate advanced manufacturing technologies.
Why is there a skilled labor shortage in manufacturing?
The root problems of the manufacturing worker shortage are complex. Early retirements are high, with a substantial increase in workers over 55 choosing to leave the labor force. As the skilled labor shortage in manufacturing continues, these exiting workers take valuable institutional knowledge with them.
This trend is further exacerbated by declining birth rates and decreased immigration, both of which reduce the pipeline of new workers. The national labor force participation rate has steadily declined, indicating a long-term US labor shortage trend. Additionally, a lack of accessible childcare prevents many parents from entering or returning to the workforce. The rise of remote work and digital commerce has also altered the labor landscape by presenting alternative paths for potential manufacturing labor employees.
Modern manufacturing roles increasingly demand specific, advanced technical skills. Roughly half of open manufacturing jobs require degrees; others are hard to fill. A decline in vocational training contributes to this labor shortage in manufacturing. Persistent societal biases have long favored white-collar professions over skilled trades, deterring younger generations from considering manufacturing careers. Overcoming these deeply ingrained perceptions is crucial for attracting new talent and addressing the manufacturing labor shortage.
Escalating challenges and economic implications of the manufacturing labor shortage
The persistent labor shortage in manufacturing directly endangers US manufacturing output. The manufacturing worker shortage impedes innovation, slows technological advancement, and hinders the industry's ability to capitalize on new opportunities.
Furthermore, massive recent investments from the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act (IRA) are driving the construction of new factories across America.
While beneficial for the economy, this surge in demand for workers may make the manufacturing labor shortage even more critical. Current industry hiring trends reveal a widening gap between available talent and industry needs. These profound manufacturing industry challenges threaten to derail growth and stability across the sector.
Finding workers during a labor shortage in manufacturing
So, what can companies do to help alleviate the pain of the manufacturing labor shortage? Attract and retain top talent using a variety of methods.
Invest in Training
To address the manufacturing worker shortage, companies are taking a variety of approaches. One of these is investing in training programs to develop the skills of existing workers and attract new talent. By having a robust training program, companies can upskill and cross-train their current workforce which can remedy issues when workers leave the company. This type of training allows for a diversity of work as well which can keep employees from getting bored with their jobs. Upskilling and reskilling employees also shows a commitment to their success that often leads to higher job satisfaction and lower turnover.
Embrace Diversity, Equity, & Inclusion
A recent study by Deloitte and The Manufacturing Institute shows that companies’ diversity, equity and inclusion (DEI) initiatives greatly affect the fill rate of open positions. By integrating DEI into all aspects of the company and training, not just one-off programs, companies can increase the rate at which employees feel they belong and are valued. This can help to boost creativity, increase employee engagement and retention and strengthen the decision-making process, all while emphasizing a commitment to social responsibility, which in turn can help companies attract top talent and enhance their reputation.
Focusing on DEI will also help attract younger workers who have been shying away from the industry in recent years. In survey after survey, Millennial and Gen Z workers routinely put diversity as a top priority for where they want to work. Promoting and working on DEI efforts as well as touting the benefits of manufacturing careers to younger generations can help bridge the employment gap during a skilled labor shortage in manufacturing.
Look Inward to Drive Culture Change
The general lack of interest among younger generations in pursuing careers in manufacturing is having a negative impact on the industry. When you pair this problem with the fact that 41% of manufacturing workers are over 40 years of age and many are nearing retirement, this exacerbates the issues of an aging workforce.
This is partly due to misconceptions about the industry, such as the belief that manufacturing jobs are low-paying or the work will not be fulfilling. Companies should take notice of what younger generations are looking for in their work and incorporate those facets into the company culture. Younger workers want the opportunity to have their opinions heard and acted on by company leadership and they crave meaning in their work.
Companies that have a truly open line of communication with their employees and have a culture of philanthropy have a better chance of attracting and retaining this younger demographic when there’s a manufacturing worker shortage. By promoting a thriving company culture and meaningful work, Millennial and Gen Z workers will begin to take notice of open manufacturing positions.
Hire (& Retain) Contingent Labor
Many manufacturing companies are utilizing contingent labor these days, but it’s not just about getting people in the buildings, it’s about keeping them there. Many companies drop the ball right from the start with contingent workers by treating them differently from their own full-time employees. Creating that type of “us vs. them” culture only makes it harder to keep contingent workers from leaving the company in short order.
Organizations need to embrace the importance of these employees and make them feel like they are part of the team from the beginning. Feeling a sense of belonging goes a long way to making someone feel happy at their job and wanting to stay.
Advanced strategies for mitigation and growth in a labor shortage in manufacturing
To overcome the challenges presented by the manufacturing labor shortage, companies must implement more strategic and forward-thinking approaches. Fostering partnerships between manufacturing and education is vital for vocational training. Companies must actively work to motivate candidates by clearly articulating the value, career progression, and competitive compensation available in modern manufacturing roles.
Technology empowers the existing workforce. Automation and digital transformation augment human capabilities, optimize processes, and enhance employee efficiency, mitigating the manufacturing labor shortage. This approach ensures tech investments directly address workforce constraints by enabling more output with fewer people.
To navigate the tight labor market, companies should consider specialized support. Manufacturing staffing agencies play a crucial role in identifying and placing skilled talent, offering a flexible solution to immediate needs and long-term planning. For instance, hiring during a recession can be a strategic counter-cyclical approach to build a talent pipeline when competition for workers is lower. Furthermore, cultivating an inclusive culture where all employees, including contingency workers, feel valued is important for retention.
Treating all team members with respect and integrating them fully fosters a sense of belonging, which significantly contributes to job satisfaction and a willingness to stay. This comprehensive approach helps companies not only attract but also retain talent. These strategic actions represent critical manufacturing industry solutions for a robust and competitive future.
Overcoming the Challenges
A skilled labor shortage in manufacturing is a significant challenge for the US manufacturing industry, and its effects on manufacturing jobs can be far-reaching. However, by investing in training, recruitment, culture, and diversified hiring practices, the industry can overcome these challenges and continue to play a vital role in the US economy.