Skilled Labor Shortage – Causes and Potential Solutions

by Corey Philip
August 14, 2018

The AGC recently reported that 8 out of 10 contracting companies have experienced issues with finding skilled workers to fill important positions. Moreover, the same report showed that 56% of contractors have concerns about their workers having the training required to complete skilled labor.

It seems that the United States faces its largest skilled worker shortage since 2016, and it’s not the only country that faces such issues.  Of course, if you’re a trades business owner, you already knew that — you’ve felt the pain.

The UK has experienced similar difficulties, mostly because of poor educational planning for skilled jobs. New Zealand is not far behind either. Moreover, it’s an issue that isn’t confined to a single industry. All industries that require skilled workers, such as construction and manufacturing, face the same problem.

This is quite concerning since more and more positions remain vacant each year. This causes projects to be put on hold and can have serious effects on a business facing increased demand.

The Causes

Unfortunately, it’s also not a simple problem to solve. There exist several theories as to why there’s such a shortage.

Low Unemployment

Not so strangely, a low unemployment rate seems to have an effect on business’ ability to find skilled labor. With unemployment having dropped to 4.1% in December 2017, companies have found that there simply aren’t enough skilled workers available to fill roles. Those who have the skills have already found employment and there doesn’t appear to be enough younger workers developing the skills needed to fill new roles.

This brings us to the next potential cause…

An Aging Workforce

Aging workforceThe aging workforce is perhaps one of the leading causes of the skilled labor shortage. High schools and colleges are not as invested, as they were in the past, in providing training for trade jobs. Therefore the people that occupy those positions now we’re trained long ago.

This causes a serious problem now that we’ve reached a point where the aging skilled workforce is due to retire. There just aren’t enough skilled young people available to fill the positions that they leave behind.

Promises of High-Tech Riches

What do most graduates these days tend to steer towards? Many look for jobs in the software programming niche or similar technological fields. Such industries certainly require skills of their own, plus they offer the promise of excellent pay, and a comfy 9-5 office complete with ‘work/life balance’. As a result, they pull young people away from the skilled labor fields.

Many young people gravitate towards technological industries, which means going to college. This, in turn, means that they aren’t likely to invest their time in learning practical trades.  


The Push Against Trade School

There is a trend among the majority of US high schools to eliminate shop classes and vocational training. The focus instead primarily lies on pushing young people towards college. Additionally, the lack of trade-relevant education in schools means that industries aren’t able to engage young people during the formative years of their careers.

Leaving the Family Business

Not a lot of people realize that many of the contracting, plumbing, landscaping firms, and others are family owned. A lot of these businesses that have been around for two or three generations have started to struggle as younger members of the family decide to forge their own career paths.

There’s less interest in the new generations to follow in the family footsteps and get the education needed to take the company’s reigns. This happens a lot, especially when a business is not doing as well as it used to. But many may wish to move away from the family trade to define themselves in a different manner.

Potential Solutions For Contractors Frustrated With The Skilled Labor Shortage

With so many potential causes, the issue requires a robust solution. Again, it’s not a simple issue to resolve. However, there are some potential solutions that could remedy the issue in the long-term.

Refocused Hiring Practices

Skilled Labor ShortageMany companies focus their hiring practices on finding workers who have already developed the skills needed. However, this is done at the expense of younger workers who are immediately excluded from the role.

Adjusting your recruiting funnel so that it focuses on bringing new and eager people on board. Granted, such hires won’t have the immediate skills needed for the role. But they will bring a fresh energy to their work and will want to learn much and as quickly as possible in order to succeed.

On that note a recruiting funnel is vital, yet often overlooked by small trades operations.  Most trades businesses simply post a job ad when they need to hire. If you want to remain adequately staffed in this market, and beat the skilled labor shortage, you’ll need a funnel that is always recruiting so that you are always hiring.  This can be a simple as systematically reposting job ads with a fresh copy, and then making a weekly process for reviewing the candidates. That way, you never miss someone with potential. Bonuses to current employees that refer a new hire (and who stays on for a period of time, usually 90 days), are another good way to fill the funnel.

Implement a Training Program

Instead of relying on the dwindling returns offered by trade schools, companies can instead focus on developing their own training programs. These can be as simple as teaching the basics of a trade to generate interest, through to dealing with the more advanced aspects of the role.

While this does require an investment on the part of the business, both in terms of time and money, it also engages new employees. When tied into the first solution, a strong training program creates a recruitment funnel that attracts eager workers and equips them with the necessary skills.

Make The Trade More Glamorous

Another way of drawing more people towards learning a trade is to offer them a better workplace experience. The incentives attached to a job are often one of the most important deciding factors for applicants. Those who consider skilled labor may find themselves dissuaded by companies that can’t offer work environment on par with the alternatives.

In essence, you need to make the job more glamorous.  Keep newer and well-maintained vehicles. Provide professional work uniforms that are comfortable and functional.  Have a physical office. Embrace modern technology and provide your team with the technology such as tablets in the trucks and damage proof cell phones.  Provide new, top of the line tools, not junk. While all this certainly adds cost, it makes the company a more attractive prospect to a young person searching for their career path.

Other incentives include offering health plans and a strong benefits package, both of which can help with drawing in more eager applicants. Again, this requires an investment on the part of the company. But the payoff comes in attracting the skilled labor needed to keep the company operational.


There’s no singular culprit to blame in the skilled labor shortage in the US or in Europe. The emergence of tech-centric industries certainly seems to play a part, as do the changing aspirations of young people. Compounding the issue is the lack of focus placed on skilled trades by the educational system.

Solving the issue requires a more active stance on the part of those in trade industries. Targeting a younger and more enthusiastic workforce with your recruiting efforts is a good start, especially when accompanied by the promise of training. Training your talent pool helps people to develop the skills needed to fill the gap and keep your operation staffed, as do any efforts to make skilled labor appear more glamorous in the face of other industries.



About the author

Corey Philip

Corey Philip is a small business owner / investor with a focus on home service businesses.

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