Labor Shortage in the United States: Is There a Solution?
As of this past August, there were 10.4 million unfilled vacancies for available positions in the United States labor market, and approximately 4 million workers are unemployed. Prince Manufacturing offers two straightforward solutions to the labor shortage in the United States.
After a global health crisis characterized by workers’ mass confinement, we expect most jobs to be filled once the emergency subsides. During the coronavirus epidemic, layoffs due to production cuts in industry reduced the income of millions of households. During the current year, however, the economy has moved along the path of recovery. As a result, workers have sought to return to their pre-pandemic standard of living.
Because, during the coronavirus pandemic, many young people could not proceed with their studies, the prediction was that more people would be looking for a job today than in February 2020. In reality, the opposite has been confirmed. Millions of vacancies still need to be filled because no one wants to fill them. In practice, there is a labor shortage in the United States.
If the 4 million unemployed Americans do not want to work, they will surely have non-work income or enough savings to allow them to stay in their living room enjoying leisure. However, this harms society. Those millions of workers are necessary for the economy to move forward, and they are not there. A solution to the labor shortage in the United States may lie just south of the border with Prince Manufacturing.
The sectors most affected by the shortage of employees in the US are manufacturing and services. The effects are already being seen across the United States: Places like Starbucks and restaurants are sometimes closed three days a week, and supermarkets are sometimes open half a day because they don’t have enough staff to operate. In addition, many manufacturing facilities have been flying banners reading “Now Hiring” for months.
The problem is not only one of convenience for the consumer that wants to dine and finds the restaurant closed or the manufacturing supervisor that needs workers to labor on production lines. Of particular concern is the transport sector. Without drivers to move the goods, we must conduct our daily lives; their shortage will translate into palpable economic damage. At the same time, companies have to offer higher wages in the manufacturing sector, in particular, to hire or retain current employees. This set of circumstances reduces profit margins and increases the cost of goods to the consumer. As a result, companies raise prices to compensate. As a result, the price of the basic basket of goods products will rise. This implies the advent of inflationary pressures that have had the Federal Reserve Bank on alert throughout this year. The transportation sector is also affected by a global shortage of microchips utilized in vehicles and the drastic production cuts in manufacturing caused by the confinement of the nation’s workforce.
There are several possible reasons why US workers have been reticent to return to the labor force. An obvious one is a concern about getting sick. Others include new vaccination requirements imposed by the US government agencies and certain industries and the semi-closure of borders to international travel. This prevented the passage of migrants who often occupy difficult-to-fill low-wage jobs. If those are, in fact, the main reasons for this state of affairs, the problem will, hopefully, be a temporary one.
As the global epidemic has subsided and the nation’s borders reopened, employment levels will eventually return to normal. But there may be, however, more to the causes of the labor shortage in the United States. We may have millions of people who have decided to retire prematurely. This could be combined with a change in the mentality of many workers, who, when faced with the threat of illness and death, value job satisfaction more and income less. The labor shortage in the United States will result in higher prices and slower economic growth that may affect us all for years to come. Of course, it can be fixed with more investment in advanced technology to replace the missing workforce. There are, however, companies like Prince Manufacturing that offer services that can address this critical issue.
Prince offers two services that can be solutions for manufacturing companies experiencing difficulties adequately staffing their operations. The first is a fully and expertly staffed contract manufacturing solution in the United States and south of the US border in Mexico. This service enables companies contracting with Prince to access both countries’ strengths, labor pools, and cost advantages. The company’s US locations are strategically situated in Lexington, South Carolina; Asheville, North Carolina; Garrett, Indiana; Detroit, Michigan; and El Paso, Texas. While Mexican locations are on the country’s northern border at Ciudad Juarez, Chihuahua, and in the nation’s interior in the industrial center of Monterrey in the state of Nuevo, Leon. Any labor shortages currently affecting your US operations are eliminated when one or more of the above Prince locations becomes an extension of your factory. Companies that choose this offering benefit from the fact that Prince Manufacturing acts as their company’s factory. These are the services that the company’s customers enjoy:
- Part production as needed. Prince is particularly well suited for projects requiring metal fabrication, stamping, or simple or complex assemblies.
- Painting and coating. Prince’s capabilities include powder coating, liquid coating, CARC, and E-Coating.
- Assembling or manufacturing a complete product. For instance, in 2020, Prince entered into a partnership with TOMCAR to complete its TOMCAR TX assembly at its facilities. Prince leveraged the strengths of facilities in the United States and Mexico to provide TOMCAR with the best service and customer value.
In addition to easing the challenges related to the current labor shortage in the United States, using Prince Manufacturing as a contract manufacturing partner can enable companies to:
- Limit their use of production square footage.
- Tap into a vast pool of managerial expertise and skilled labor.
- Benefit from economies of scale generated through Prince’s participation in several contract manufacturing relationships.
- Reduce employee health care and government regulation compliance costs.
- Reduce total overhead costs.
The second solution that Prince Manufacturing offers to companies to ease challenges posed by the labor shortage in the United States is its “Mexico Shelter Service.” Under the shelter model, which has been successfully implemented in Mexico for almost five decades, Prince Manufacturing provides service in all areas that are non-core to manufacturing. That is, while shelter service customers control all aspects of their manufacturing processes, Prince Manufacturing taps into the Mexican labor pool to provide professional service in the following non-core, but critical areas of operations:
- Industrial real estate in Mexico
- Mexican customs and logistics services
- Human resources selection and administration
- Mexican accounting and worker payroll
- Supply chain services in Mexico
- Environmental rules and regulation compliance
- Mexican procurement
Under this model of doing business in Mexico, companies have complete control over their production and quality without having to be familiar with the complexities of doing business in Mexico or the need to establish a legal entity in the country.
Companies that would like to help Prince Manufacturing to ease the challenges linked to the current labor shortage in the US are encouraged to contact us to speak with our experts.