U.S. Manufacturers Face Labor Crunch as 500,000 Positions Go Unfilled

Last week, the Labor Department released its employment summary, which found U.S. manufacturers added just 20,000 jobs in February. Yet, in its most recent analysis of factory job openings, the BLS reported the U.S. manufacturing sector has reached a near-record number of unfilled positions.

Let’s take a look. On March 11th, the BLS released its most recent Job Openings and Labor Turnover Survey (JOLTS), which found that job openings in the U.S. manufacturing sector hit a 3-month high of 515,000 in January. This is the highest level seen in the sector since October 2020, when job openings hit 545,000.

To put this in perspective, between 2000 and 2017, unfilled manufacturing jobs averaged 273,000. Job openings have climbed steadily since then.

In January 2020, job openings in manufacturing stood at 321,000. When the pandemic hit, we saw job openings sink to record lows and then rebound sharply as new orders spiked and more manufacturers looked to produce more domestically. What's especially interesting is that generally, job openings tend to fall in a recession. But in this unprecedented era, job openings have spiked amid the global economic turmoil brought on by the pandemic. The chart below illustrates the precipitous drop in manufacturing job openings during two previous recessions contrasted with the surge in unfilled positions in 2020-2021.

Above: Manufacturing job openings since the year 2000

Breaking down the JOLTS survey, durable goods manufacturing faces the greatest shortage at 296,000 in January. Durable goods include items such as automotive vehicles, heavy machinery, and electronics. Non-durable goods, which includes industries such as food processing, paper products and textiles, faces a shortage of 219,000 workers.

Many manufacturers have long been facing a shortage of skilled workers, but this has been intensified by the pandemic. In addition, industrial companies are also facing a shortage of the parts, products and supplies needed to make or deliver their products. A worldwide container shortage, for instance, is driving up shipping costs, while a shortage of semiconductors is making some vehicle production all but impossible. At the same time, demand is surging, as businesses and consumers work their way towards a post-COVID world.

Long term, some estimates put the manufacturing labor shortage at 2.4 million by the year 2028.

So how are manufacturers changing their approach to recruitment and hiring? Many are taking advantage of workforce development agencies that help train and place local workers. Others are optimizing their application procedures, offering apprenticeships, and even using social media as a recruitment tool.

Staffing agencies also play a crucial role in helping manufacturers acquire skilled workers. Staffing agencies are able to access a large talent pool and their ability to place workers on a temporary basis can be a cost-effective approach for many companies in uncertain times.

If you’re looking to help manufacturers with their staffing and workforce or automation needs, an IndustrySelect subscription can help you find new customers in the industrial world.

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