It is tough to imagine that less than two years ago there were five unemployed people in the United States for every job opening. Now we have only 0.7 unemployed to job openings. This means that if all the 6.3 million people who were unemployed filled the job openings, there would still be 2.7 million open job opportunities to fill. This is even greater than before the pandemic shutdowns, which was the most robust economy that this country has seen. How did this happen and how are businesses coping with this new challenge? 

While unemployment is the lowest it has been since the shutdown, we are slightly above where we were before the pandemic at 3.9% unemployment versus 3.6% at the end of 2019.  But some businesses have seen significant growth that needs to be addressed with qualified help. Certain industries that seem to have the greatest challenge filling openings are low paid service industries such as manufacturing, transportation, educational services and state and local government workers. We see locally, that retail trade and food services are also in great demand (though that is not a national trend).  

Some of the causes for lack of qualified employees seem to be temporary and some seem to be permanent. One of the temporary causes is Covid protocol, especially with school age children. With some schools being partially in person and virtual, as well as safety precautions that if a student (or pod) are exposed – there is a requirement to quarantine for 5-10 days. Many parents can not find childcare (especially for a potentially exposed individual), so they are forced to stay at home. In many industries, this creates a real challenge to keep employment and make ends meet, so going on unemployment is the only option they might have.

A more permanent item is early retirement. Some individuals at or approaching retirement age, who were typically more at risk of having serious Covid complications, decided to leave the work force and collect unemployment until their benefits ran out to then retire. This early exit of many of the most skilled and experienced employees not only left a lack of people to do the work, but also created a loss of some of the most productive employees who could help in training new employees.

So if the greatest restraint from further economic growth of many businesses is finding the right help, how are each organization taking on these challenges? 

One main solution is rising entry level wages. While minimum wage has not been increased at a federal level, we do see that businesses are having to offer well above the $7.25 minimum wage with national franchise quick service food starting at $12-$15/hr.  We are also seeing other incentives for employees being offered, such as next day pay, education scholarships, and, the big one for businesses that can accommodate, at home working.

Certain businesses who have adopted automation have also used this as an alternative to hiring additional help. Self checkout, robots that help to stock shelves, customer service through A.I. chatbots and computer call services, as well as so many other little things that we see as normal. Some of them have been aggravating to deal with, while others are being done without most of society knowing that automation is now part of the supply chain management. This alternative staffing is moving so fast that it is pushing up against the state and federal laws to keep machines from doing certain tasks – like driving or flying (i.e. drones). Automation also can be a real nuisance when it comes to robo-dialing, cookies in online advertising, or businesses where there is not even a single person you can talk to to solve a problem.

While it seems like so many more things are being automated today, the need for people to solve complex problems or do tasks that are not easily standardized is still essential. Commentary on the industrial revolution noted that many people were needed front load the work of putting systems and machines together to automate manufacturing. Once such great efficiency was in place, the number of employees doing those tasks decreased. We may be still at that beginning stage within the technological revolution.  

So if a job can’t be automated and there are no people willing to do the job at the available wage and benefits, how else are companies solving this problem? The answer is outsourcing. While we have seen things like call centers be outsourced to India, Brazil, and the Philippines for many years, we are now seeing more and more jobs being done in these countries because the lower cost of living allows certain jobs to be done at a fraction of the price.

Our real estate team consists of five agents and three admins – two of the admins live in the Philippines. They don’t answer calls, but do handle:

• database entry
• responding to emails
• organizing digital files
• research
• setting calendar events for agents and clients

It is amazing how much of our work is done online and how businesses such as real estate can be done overseas.

Now not all the jobs can be done on the other side of the planet, like opening a door to show a property – so outsourcing will almost always be part of helping a worker rather than causing the local worker to not be needed. Location limitations do make an agent responsibilities clearer for what administrative support must focus on.

Businesses that have difficulty utilizing digital systems based on the challenge of the industry (i.e. manufacturing and service based industries) or of the company’s ability to adapt (i.e. online filing, accounting, lead management) will find they they must hire locally and will not be able offer remote work for part of their scheduling. The challenge of finding help at a reasonable wage will continue unless a large number of qualified employees are brought to the market. This would be possible through to a change in immigration policy and/or reeducation program helping more unemployed or under utilized citizens find employment.

So how does this affect the commercial real estate industry and how have commercial agents adapted?

Our team has connected with companies who focus on recruiting to help expanding businesses find the help to have success in their new ventures. We have also helped our clients connect with outsourcing companies for things like typical admin tasks and specialized practices such as bookkeeping and lead generation. This is allowing businesses to get more done with the limited staff that is available to them.

The last thing we help clients with is finding locations where more employment opportunities are available. Certain businesses have to move or expand to locations like Durham, where many college graduates are looking for work and have newly developed skills that are crucial for the changing work environment. If you need help in any of these areas, the Coastal Land & Commercial Group at KW Commercial is willing and able.

– Written by Ethan Ash & Viktoria Alkova