A new data report from Lightcast, a provider of global labor market data, analytics, and expert guidance, shows U.S. employes will soon face the largest labor shortage the country has ever seen, putting urgent pressure on both public and private entities to pivot their talent strategies and build a future-ready workforce.
Lightcast’s new report shows how the deluge of baby boomers’ retirement, plummeting childbirth rates, and historically low labor force participation will compound to create a deficit of six million workers by 2032. With the biggest impacts of this expected to hit the healthcare, hospitality, and service industries hardest, it is critical that government and business leaders take immediate steps to address the workforce deficit.
This workforce deficit is driven by several key factors, including the following.
- The “Silver Tsunami” hitting shore. Of the five million workers who have exited the workforce since 2021, 80% were over the age of 55. Now, the average retirement age has dropped to 61, diminishing hope that older workers might fill new gaps in the labor force.
- A rapid decline in the U.S.-born labor force. The only growth in the U.S. labor force since 2019 can be attributed to immigration, including April’s record-high level of prime-age women participating in the workforce. Foreign-born workers are keeping the economy afloat.
- A major mismatch between workers and available jobs. The shrinking U.S.-born labor force is also becoming younger, more educated, and more female, but these groups aren’t filling key trade, service, and healthcare roles. Immigrants are essential; one in four doctors and one in five nurses in the U.S. are foreign-born. In some states, the dependencies are much higher.
- The decline in workforce participation of prime-age men. Men are disappearing from the labor force, driven by an uptick in issues like substance abuse and incarceration that disproportionately impact this demographic.
“Like an approaching hurricane, we felt the outer bands of this storm coming during the pandemic as the ‘Silver Tsunami’ of boomer retirements began, immigration came to a halt, and more than five million workers left the labor force,” says Ron Hetrick, senior economist at Lightcast. “But that was just a preview. Over the next five to seven years, our labor pool’s growth will not match our population’s. We will increasingly have more consumers than producers, driving price hikes and product shortages, if we don’t take swift action.”
According to Lightcast’s analysis, organizations will need four core strategies to adapt to the shifting labor market: globalization, automation, immigration, and workforce development. Finding new ways to expand the talent supply, whether through seeking capable employees abroad or exploring the potential of AI in key roles, will be necessary to bridge gaps across industries.
Meanwhile, educators and employers must prioritize skills development and adaptability over college degrees. To overcome hiring deficits, Lightcast suggests organizations prioritize skill adjacency, upskilling, and development to build a future-ready workforce, rather than filtering out talent that doesn’t meet their specific skills requirements at face value. This adaptable approach to trainability will provide greater agility and broaden the talent pool considerably.
