2020 labor situation: crisis or opportunity?

January 13, 2020 -  By
Business newspapers (Photo: Nikolaev/iStock / Getty Images Plus/Getty Images)

Photo: Nikolaev/iStock / Getty Images Plus/Getty Images

For years, demographers, economists, movie-makers, politicians, scientists and others have been famously making false predictions of future events. Remember the doomsday predictions leading up to Jan. 1, 2000, or how the stock market was going to crash if a certain person was elected president of the U.S., or any one of the end-of-the-world predictions?

Predicting the future is not easy. Nonetheless, I’m going to go out on a limb and predict that the labor crisis will not subside in 2020. There are several good reasons why I’m confident in making such a prediction. Our population continues to age. By 2030, 20 percent of the U.S. population will be over 65. The workforce participation rate has declined to historic lows. Government spending on entitlements continues to grow. Unemployment rates have never been lower. There are more open jobs today than there are people to fill them. None of these data points are likely to change anytime soon. The labor crisis is here to stay. Does anyone else want to get in on this bet?

The good news is the labor crisis has a silver lining. Companies, managers, supervisors and even crew leaders are forced to change how they recruit, onboard, train, lead and develop their people. New leadership approaches were long overdue in my humble opinion, and I am thrilled to see a new and improved model of leadership taking hold.

Organizations of all types are tossing their old employee handbooks and top-down supervisory practices out the window and, in many cases, not replacing them. General Motors CEO Mary Barra recently replaced the company’s dress code with a simple statement, “Dress appropriately.” A new day is dawning. With a focus on employee engagement and strengths-based leadership, today’s leaders are radically changing the employee-employer relationship for the better.

This begs the question, what are you and the leaders in your organization doing differently in response to these changing norms? I see some companies in our industry completely reinventing themselves, while others do nothing differently. Maybe my prediction about the labor crisis is false and the best option is to sit out these cultural changes. Maybe they are a passing fad, but I don’t think so. Do you?

The labor crisis is also fueling innovations in technology and equipment. When labor is abundant and cheap, innovation suffers. But when labor is scarce and expensive, innovation thrives. Looking at the labor crisis in this light, I see great opportunity where others may see doom and gloom.

Take notice of the many innovations in our industry. Some of these “innovations” have been around for a long time but are just now gaining a foothold. I was invited to a dinner in 1999 where there was an opportunity to invest in the newest and coolest innovation — a robotic mower. That was 20 years ago. Why do you think robotic mowers are finally gaining adoption when the technology has been around for two decades?

Technology is sure to change our industry even more radically in the future. Whether driven by big data, artificial intelligence or the lightning-speed connectivity of all things, we know innovation will continue. For now, I will reserve predictions on when the final gas-powered landscape machine will be built. The time is coming, though.

What I will ask you now is, what are you and your leaders doing to capitalize on the current advances in technology and equipment? A machine built in 2019 may produce several times what a machine built in 2014 could produce — only five years ago. And yet, I still see equipment built in 1994 in use today. It’s a head-scratcher, for sure.

I recall the “stagflation” of the 1970s and early 1980s — a demoralizing combination of low economic growth and high inflation rates. The U.S. unemployment rate in 1982 was 10.8 percent, and you could lock in a 30-year fixed-rate mortgage for 17 percent APR. I’m grateful we’re not living through anything like this today and hope we never do again.

Yes, we have a labor crisis. We also have economic fundamentals that are stronger than they have ever been in my lifetime, and we have incredible opportunities to reinvent our organizations. It’s up to us to determine how to capitalize on these opportunities.

Now go forth.

About the Author:

Phil Harwood is a Senior Advisor with Tamarisk Business Advisors. Contact him at phil.harwood@tamariskadvisors.com.

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