As a small business owner, a student of business, someone who writes about business issues, a former human resources person, and a staff recruiter, I am interested in what we have seen in the last year or so. Many, if not all businesses are now faced with a labor shortage. Madison Hoff and Juliana Kaplan from Business Insider.com shared their perspective recently.

These two authors gave 13, yes 13 reasons for labor shortages. Using Pareto principles (Pareto stated that for many outcomes, 80% of the outcomes came from 20% of the causes) with some author creativity, we will examine three of the 13 reasons this week, and three reasons next time to give you, the reader, some perspective.

It appears that of the 13, I could divide the reasons into financial and social issues. The first of the three seems to me to be a an obvious one. People want more money. When I think about the three primary needs: food, clothing, and shelter, each has seen a rise in cost. Shelter and/or housing prices have taken a steep rise. Yet, if I think about what has been taking place in the housing industry, it takes significantly more money to get into a “starter” home. Once an individual gets into the “starter” home, if the individual is meeting their financial obligations, they can move into purchasing a home of greater cost. It would be interesting to run a simple comparison of wages with housing costs. Thus, individuals who are looking to get into a “starter” home will need more cash for a down payment and monthly expenses.

The second reason can be both financial and social. People want to be their own boss. The Census Bureau reports there has been, “a record number of unincorporated self-employed workers.” These numbers are significantly higher than pre-pandemic. A random observation of mine was when I stopped into a “big box” store just recently at 7:00 a.m. folks working in construction generate a flurry of activity, even at that early hour.

A third reason for the labor shortage is that more retirees than usual simply retired. Many of those who have retired may never come back to the workforce. If they do return to the workforce, it may not be the same position or compensation level than what they left. Goldman Sachs completed a study that 2.5 million of the 5.0 million workers missing from the workforce are retirees. Certainly, the pandemic has influenced those numbers.

20 years from now, we will write about this upheaval from both the financial and from the social perspective. We are witnessing a significant shift in the delivery of goods and services. As an economist, one would and should have questions:

1. Are we, as a country, prepared with an educated workforce for the future?

2. How will we resolve business issues?

3. How will we resolve the social issues?

More on this topic next time.