Economic development leaders share lessons from the front lines.
When we asked economic development leaders around the country to tell us what they believed were the most pressing workforce challenges being faced by employers and communities alike, a clear consensus emerged.
Mounting labor shortages are by far the biggest workforce challenge of today and the coming decade, they said, and they broke that issue down further by highlighting many of its contributing factors, including, but not limited to, these seven areas:
- An aging and experienced workforce that is retiring and not being replaced fast enough.
- A critical need for more manufacturing and construction skills training and upskilling of existing workers.
- Lack of sufficient affordable housing options for front-line workers and other essential personnel.
- Shortage of available and affordable child-care options for working parents.
- The onset of AI, robotics and other forms of automation that are making many human jobs obsolete.
- The continuing disconnect between employers and employees over the amount of time that should be spent in the office or other physical workspace each week.
- The need for more talent attraction, development and retention programs at both the state and community level.
“Unemployment rates are at historic lows. The silver tsunami is on the horizon. Any community that overlooks skills gaps in their region can face an unwanted challenge: a relocation or expansion outside your region.”
— Jennifer Wakefield, President & CEO, Greater Richmond Partnership, Richmond, Virginia
When Wadley Donovan Gutshaw Consulting recently studied the landscape of labor, the corporate site selection firm highlighted several factors impacting the current labor shortage:
- Changing demographics.
- Low labor participation rates.
- Restrictive immigration policy.
- Lack of adequate soft skills.
- Historically low unemployment rate of 3.8%, the lowest since 2000.
Susan Zhu, a management professor at the University of Kentucky, studied the labor shortage crisis for WalletHub and concluded: “Employers, particularly small businesses within certain industries, are struggling to fill employment positions — a challenge influenced by factors such as talent pipeline shortages, regulatory constraints, and mismatches between employer and employee preferences. For example, there has been an explosion in demand for artificial intelligence-related roles, but the talent pipeline is not robust enough to support it. The recent legalization of marijuana in various states has complicated the hiring process for truck drivers due to outdated drug testing policies. Finally, many industries and occupations are cutting back on remote work options, while workers’ preferences for flexibility remain high.”
A Silver Tsunami is Coming
Tracey Hyatt Bosman, managing director at location advisory firm Biggins Lacy Shapiro & Co., says that while some job markets around the U.S. have softened, there is still room for improvement. “In most markets, it’s easier to find workers now than it was two years ago,” she says. “But it’s still not easy, and it’s not forecast to get easier in the next few years. Further, companies don’t just need workers; they need workers with the right skills. This will continue the pressure on companies to consider automation as a potential response. It also puts pressure on communities to consider talent attraction, upskilling and training strategies.”
Jennifer Wakefield, president and CEO of the Greater Richmond Partnership in Virginia, says the recent pandemic exacerbated the growing skills gap in the workforce. “Many workers left the workforce in the pandemic and never returned,” she says. “Unemployment rates are at historic lows. The silver tsunami is on the horizon. Any community that overlooks skills gaps in their region can face an unwanted challenge: a relocation or expansion outside your region. Like any business situation, retaining your clients is easier than finding new ones and, as economic developers, that adage still applies — especially in this tight labor market. Companies may decide to find their workforce elsewhere before your community gets a chance to develop a workforce program that meets their needs.”
Skilled trades programs are being rolled out, funded and upgraded around the country, but for many community leaders and site selectors, this isn’t happening fast enough.
Mark Litten, vice president of economic development for the Putnam County Chamber of Commerce in Palatka, Florida, says there is a critical need right now for more certified workers in specific skillsets. He cites ACT Work Ready Communities and Florida Work Ready Programs as vital to shoring up the workforce in rural areas.
Michelle Bauer, chief operating officer for the Tampa Bay Economic Development Council, says that “there is a significant demand for skilled trade positions in our market. We have a foundation that promotes career awareness and training for programs such as welding, construction, and line worker certificates that can help people without a college degree get a good-paying job quickly.”
What’s happening in Florida is not an anomaly. Nationwide, blue-collar jobs aren’t being filled fast enough. The American Trucking Association estimated that the U.S. currently has a shortage of 82,000 certified truck drivers, and the problem is worsening by the day.
Associated Builders & Contractors estimated the nationwide construction worker shortage at half a million in 2024; and the American Welding Society recently predicted that by the start of 2025, the country will be short by about 400,000 certified welders.
Needed: Housing and Child Care
Mike Swesey, president and CEO of the Greater St. Petersburg Area EDC, says it would help matters a lot if more workers could afford to live in the same community as their jobs. “Workforce housing is the biggest issue now,” he says. “Most major cities in America are dealing with this issue.” One reason for this gap, he says, is because “wages have not kept up with inflation. Employers are feeling pressure to adjust wages higher than forecasted.”
The affordable housing gap for workers even prompted a recent federal response. Last July, the Biden-Harris Administration announced an investment of $325 million on housing and community development improvements around the country. The largest grants for workforce housing went to Chattanooga, Tennessee; Huntsville, Alabama; Houston, Southern Nevada and Syracuse, New York. Each received a grant of $50 million to build more affordable homes and revitalize neighborhoods. Miami received $40 million, and Trenton, New Jersey, received $15.6 million.
Related worker needs are child care and transportation. Christine Kennedy, chief operating officer and executive vice president for the Lynchburg Regional Business Alliance, says that “affordable and accessible child care and housing” are critical needs in her community in south central Virgina. “Transportation barriers exist for our re-entry, hard-to-hire and single-parent households,” she adds.
“We need to understand how to incorporate AI into companies’ processes to assist current talent; and we need to seek candidates who have the ability and proficiency to understand AI skills and implement them.”
— Barb LaMue, President & CEO, New North Inc., Green Bay, Wisconsin
Finally, some in leadership say that a lingering disconnect between academia and the community serves as a barrier. “There is still an emphasis on four-year colleges and less on community colleges and technical schools,” says site consultant Jay Garner, “but it is improving. We need to keep pushing technical education.”
Barb LaMue, president and CEO of New North Inc. in Green Bay, Wisconsin, agrees, adding, “We need to understand how to incorporate AI into companies’ processes to assist current talent; and we need to seek candidates who have the ability and proficiency to understand AI skills and implement them.”
On the need for better skills alignment and preparedness, Robin Reimold, president and CEO for TeamCalifornia, said, “The fast pace of changes in our economy and industry sectors have created a challenge for preparing a workforce that has the perfect blend of technical and soft skills. Companies need employees to come in with essential skills like communication, teamwork and problem-solving and to be productive from day one. This gap puts pressure on both businesses and workforce development programs to create a balance between technical training and building essential soft skills.”
