• June 27, 2025

June 24, 2025 | Sahar Ehsanyar

The U.S. labor market has been struggling for years with a persistent and complex challenge: a labor shortage across industries, occupations, and regions. As organizations navigate how to attract and retain the talent they need, HR professionals are at the forefront of dealing with this crisis.  

Justin Ladner, senior labor economist at SHRM, will deliver a highly anticipated session — “Help Wanted: Understanding the U.S. Labor Shortage” — on July 1 at SHRM25. He will offer attendees a comprehensive exploration of this pressing issue, along with actionable strategies to address it

This session is essential for HR leaders, talent acquisition professionals, and decision-makers seeking insights into the labor shortage and its impact on workforce planning and talent strategies. The session is open to both registered in-person attendees in San Diego and to registered remote attendees.    

Ladner briefly discussed his upcoming session with SHRM.

SHRM: What unique challenges do organizations face in attracting and retaining talent?

Ladner: A major theme of the presentation is that organizations themselves face unique challenges based on the types of workers they are trying to attract and retain. The pandemic-era labor market boom that peaked in 2022 was relatively unique in being a time when the vast majority of organizations were simultaneously facing severe recruiting challenges; in more typical conditions, the balance of labor supply and labor demand will be uneven across occupational groups, so that there is a surplus of available talent in some groups and a shortage in others (presently, the labor market looks like this).

In short, a key takeaway of this presentation is that the difficulty an organization faces in attracting and retaining talent will be strongly driven by the occupational characteristics of the workers they need, and organizations will struggle when those characteristics are in short supply.  

While our analysis does not cover other barriers, it is reasonable to assume that additional factors strongly influence an organization’s ability to attract and retain talent. Geography, particularly for organizations requiring onsite workers, stands out as a significant constraint in this regard, even though it falls outside the scope of our examination.

SHRM: What key indicators should organizations monitor to stay ahead when it comes to the labor shortage?

Ladner: A very common labor shortage indicator is the unemployment-to-job-opening ratio. We call this value the UJOR for short. Very simply, it is the ratio of unemployed people to job openings at any given point in time. The central idea of this presentation is developing new metrics that improve upon the UJOR by accounting for plausible constraints that limit matching between employers and job seekers.

US Labor Shortage Looms: Who Will Do the Work?

SHRM: Based on current trends, how do you see the U.S. labor shortage evolving over the next five to 10 years?

Ladner: The future is always difficult to predict, especially given uncertainty surrounding broader economic conditions and the role of technological change in altering labor demand, with the potential impact of AI being particularly significant in this area. For example, a major recession would significantly reduce labor demand in the short term. However, in the long run, there is a pretty clear indication that the labor shortage will become steadily worse for the foreseeable future. The major reason for this is population aging, which has served to dampen labor supply growth for many years and could actually lead to a steady decline in labor supply in future decades. Even though it is expected that labor force participation among older age groups will also increase over time, this will not be enough.  

One huge area of uncertainty in this area is immigration and its role in facilitating labor supply growth. For many years, labor supply growth in the U.S. has depended heavily on immigration, with certain sectors of the economy, such as construction and agriculture, being especially reliant on foreign-born workers. A sustained decline in immigration will put downward pressure on labor supply and exacerbate labor shortages, especially in industries that depend on these workers.

SHRM: In such a competitive labor market, what strategies can HR leaders use to differentiate their organizations and build sustainable pipelines of talent?

Ladner: First and foremost, expand the pool of labor that can fit your organization’s needs through initiatives like reskilling and upskilling, training programs for new recruits, and skills-based hiring. Put another way, in an environment where labor is in short supply, organizations should take steps that will increase the number of people who could fill a given role. This means keeping your current workforce’s skills up-to-date and minimizing barriers that prevent external job seekers from filling roles within the organization.

Second, understand your local labor market. This may seem obvious, but it is important to understand that the size of a local labor market can vary tremendously. For this reason, organizations need to understand the characteristics of their local market, including geographic extent, occupational composition, overall labor demand, and so on. Relatedly, organizations would benefit hugely from carefully considering the constraints that exist for filling each individual role. For example, if a role can be done remotely, then filling it will usually be much easier, since the geographic constraint to matching will be significantly reduced. 

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To view the original article posted on the SHRM website, please visit: https://www.shrm.org/topics-tools/news/shrm25-preview-solving-labor-shortage-puzzle