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(June 27, 2001) This past Sunday, we stood in the long lines of our local hardware store to purchase plants and garden things. We were flanked in the line by two successful construction guys who had just come from their regular store. It wasn't open because they couldn't hire adequate staff at $12/hr.

The line moved slowly. So, in a scene resembling Eastern European rationing, we got to know the other members of the line. In the hour we spent waiting, we discovered deep local impact of the labor shortage.

The men were chipper. As successful entrepreneurs, the notion of doing things yourself on Sunday was just a part of the business they'd developed. We laughed and joked about hiring problems.

"My brother had to close a chain of restaurants in small towns in Iowa because he couldn't hire adequate help," said the one. "It was a real surprise. He'd always been the successful one. He thought that a good product at a reasonable price was the only thing he needed to know about running a business. It turns out that he needed to know about the Irish Nationals who were working in his competitors' operations."

"Sure," chimed the other fellow, "If I could print visas, I'd be a billionaire. We're turning away great projects because we can't get the people to work on them. If I hire a non-documented worker, my business will be shut down. Yet, I see all of the folks, ready to work, lining the barrio as I drive to work. It doesn't make sense to me."

The labor shortage is neither theoretical nor driven by marketplace conditions. By 2006, two employees will leave the workforce for every new one added. The impacts are already clear.

Get used to bagging your own groceries, making your own coffee at Starbucks, getting around without a taxi, waiting for renovation projects and the general rationing of work. At this point, our culture couldn't handle an immigration based solution to the problem. So, we're left considering a bank of alternatives. Here are some things to remember and consider
  • Already, more than one employee leaves the workforce for each new player. We're growing towards the 2 for one future.
  • Plan to see the re-emergence of dot com mania as online retailing forges ahead. It won't be because it's cheaper, faster or better service. It will be because it requires fewer people to execute.
  • Expect even greater workplace flexibility. Every worker, cream of the crop or not, will be valuable and worth designing the infrastructure around.
  • Lines will get longer. Invest in technology that is targeted towards making time spent in line productive.
  • As the value of each employee increases, the economics really begin to work for "personal representation."
  • The government is gearing up to lose 40% of its employees (a figure considered modest by some in the government) over the next five years. The question in this case rapidly becomes "Will working in a place with no work changes but 40% fewer employees actually accelerate the rate of departure?"
  • The skills gap is growing. As underskilled employees increase in value based solely on demographics, the economic incentives to build technical skills actually decline. Even in this climate, over 500,000 IT jobs remain unfilled.
  • New online labor force management operations will continue to blossom while the baseline firms up. Monster's recent (brilliant) moves with the labor department raise the possibility that the government may compete directly with our industry. The recent Employment Summit Job Fair had over 125 companies in residence.
What happens when there are fewer workers, barring innovation, is that things take longer and not everything gets done.

- John Sumser © TwoColorHat. All Rights Reserved.

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