The U.S. skilled labor market is facing record-high pressure, particularly for companies with manufacturing and construction operations. Increasing labor scarcity, amplified by the COVID-19 disruptions, has intensified competition for talent, raising the sectors’ average wages by more than 20 percent since the first quarter of 2020. Since wages have rarely, if ever, fallen in the United States, this cost reset is effectively permanent, threatening margins and long-term growth. And this squeeze on labor is set to get worse as demographic headwinds intensify.
To understand the scope of the problem and identify potential countermeasures, McKinsey & Company looked at several critical skilled roles, including welders, construction laborers, electricians, and other skill categories that are vulnerable to increased churn. For these roles, they found that from 2022 to 2032, annual hiring is expected to be more than 20 times the projected annual increase in net new jobs. This extraordinary rate of churn could cost companies more than $5.3 billion every year in talent acquisition and training costs alone. The additional lost productivity as new talent is brought up to speed could amount to significantly more.
Several manufacturing and construction companies illustrate how leaders can address job friction while boosting productivity.
- An engineering company working on a high-profile project took particular care in planning for its workforce needs. By offering attractive sign-on bonuses and relocation packages, it was able to secure scarce skilled workers, including welders and electricians, and keep the project on target for on-time completion.
- A heavy-equipment manufacturer uses cobots alongside human workers to automate repetitive tasks and free up employees for more complex and analytical work. The use of cobots has enhanced productivity by 40 percent and improved resource utilization by 50 percent.
For more insights, read the full article here.
Source: McKinsey & Company
