The Richmond Fed has a good article on the current labor shortages and what it means for the future. We personally have already experienced what the article states, let’s take a look.
You are seeing lower service standards already, e.g., hotels lessening their cleaning protocols or restaurants taking your order via QR code. We may see an increase in offshoring to markets without geopolitical pressures. All of these are particularly threatening to the last people into the workforce who might find entry is more of a mountain to climb with entry-level jobs increasingly scarce.
Richmond Fed
Anyone that travels for business or leisure can attest that hotel service has gone way done in quality and service since Covid. Is the degradation of service the way of the future if the labor shortage isn’t fixed? Quite possibly.
What can be done? The Richmond Fed states:
These ideas are worth exploring in the U.S. Additionally, it is worth exploring increased legal immigration, bringing those with skills, work ethic and entrepreneurship into our workforce. On participation, there could be significant leverage in further investment in education, job training, licensing capacity and rehabilitation, as well as in reimagining the child and elder care industries and in exploring benefit and tax policy changes that could incent further workforce participation.
Richmond Fed
Everything listed has potential but it is a tall order to change immigration policy, bring people in with skills when other countries are facing labor shortages themselves, and investing in education, job training and other avenues to fix the labor shortage. Until the situation is fixed, we can expect lower service quality over time.