The big news out today was a huge drop in the labor participation out and many seemed surprised by it but we’re not sure why. We’ve been writing about the boomer demographic crisis for some time now. We have 10,000 boomers retiring every day and a few more thousand expiring which results in the depletion of the labor force.
The peak labor participation since 2000 was in January 2000 at 67.3 percent then dropped to an all time low in April 2020 to 60.2 percent but is now hovering at 62.5 percent but the added trend line shows a decline in the labor participation rate.
There are too many older citizens and not enough young people, that’s the cause and the graph above is the effect. Ironically, we’re heading to a situation where we will all die of thirst in an ocean of water proverbially speaking because while there are 8 billion people in the world, we don’t have the right skilled labor to support, maintain or innovate the existing global infrastructure. It can be turned around through extensive education and training but no one has the will do do that, every country with labor shortages wants ready-to-work skilled labor and it doesn’t exist.
The issue isn’t unique to the United States. The following countries have stories all of their own:
South Korea – Korea Gov’t to Expand Foreign Labor Inflow to Ease Labor Shortage.
China – The Great People Shortage Hits China.
Germany – Half of German Companies Face Labor Shortages Despite Economic Stagflation
Mexico – 75% of Mexico Businesses Struggle to Find Workers
Greece – Greece to Provide Work Permits for 30,000 migrants to curb labor shortage
Japan – Japan’s 18 Year-Olds At Record Low
The links above are just a sample and some countries like Italy are in real trouble as is most of Europe, United States and Asia sans India.
There are many effects of the labor shortage issue. Recently Walgreens slashed its dividend because of acute labor shortages. From Yahoo Finance:
Recruiting is an issue,” Tanquilut explained. “There are initiatives from companies such as Walgreens and CVS (CVS) to partner with pharmacy schools… They’re also introducing more automation to try and ease the burden of the job. They’re putting in the effort to maximize the efficiency and capacity of their pharmacists.”
Source: Yahoo.Finance.com
We are avoiding investing in companies that have dependency on large pools of labor such as retail in favor of those companies that can do more with less so to find out where we’re investing, stay tuned, stay profitable and stay solvent…