By now, we've all experienced something like this: It's the middle of a non-holiday week, and you go to a local restaurant or store only to see a hand-drawn sign hanging ominously in the window. “Sorry, closed today.” You stand there for a moment. Is it a holiday?

Ten or 20 years ago, this rarely happened. But today, it is common. We are all aware by now that shops are most likely to close at odd hours because they are short staffed.

This refrain is increasingly common and a harbinger of greater issues to come. More importantly, it is indicative of a the labor force gap that can only get worse before it gets better.

A new report, The rising storm, from labor market analytics firm Lightcast, analyzes the Bureau of Labor Statistics and projects that only 6.4 million workers will join the workforce from 2022 to 2032. Only 3.8 million of those will be over age 65 and only 2.6 million people between 16 and 64 will enter the labor market in a 10-year period. For perspective, 25 million Baby Boomers entered the workforce in the 1970s.

So why is that local store having a hard time staying open? Only 900 thousand people below the bachelor's level will enter the market from 2022-2032. That's only 90,000 a year, which is exactly why those local shops and many businesses are struggling.

Related: How to Overcome the Tech Talent Shortage in the US

What is behind the lack of people?

1. Baby Boomers are retiring faster than the economy was ready to absorb: of baby boom added 76 million people to the US labor market. This generation also had an extremely high labor force participation rate (LFPR), and many women entered the labor market during these years. Businesses of all kinds had an unprecedented supply of labor. From the 1970s to the 2000s, this led to a lack of enough work for the entire potential workforce.

But in 2020, when the COVID-19 lockdowns were implemented and remote work was introduced en masse, Baby Boomers could afford to escape the emergency workplace transformations and exited the labor market in record numbers. Now, around five million have left within the past few years, well below the traditional retirement age of 65. Further, the demographics of industries such as logistics, construction, manufacturing and healthcare have many workers over 55 years of age. As they rapidly exit the market, there are not enough people in the younger generations to replace them.

2. The current workforce has a much lower labor force participation rate: The current LFPR is around 62%. This means that 62% of the prime-age workforce (16-64 years) is actually working. During the 1970s and 1980s, the LFPR of Baby Boomers was around 80%.

Further, the total LFPR is projected to continue its downward trend over the next decade. Just a 2% drop could mean the loss of two million prime-age workers.

3. The US birth rate has been below replacement since the 1970s: According to the Centers for Disease Control and Prevention, the replacement rate in the US is 1.62, meaning families have fewer than two children. For nations and labor markets to grow, they must be above a rate of 2.1 children per family, with every generation after the Baby Boomer staying below the replacement line. In fact, The year 2023 represented the lowest birth rate in recorded US history, which ultimately means fewer people coming in to handle all the work that needs to be done.

Related: I'm a CEO, founder and father of 2 – Here are 3 practices that help me maintain my health.

The tremendous importance of early talent

This trifecta is hurting the job market in unprecedented ways. A lack of human capital—the most valuable asset to any economy—will prolong Americans' economic struggles. Today, there are not enough plumbers, pilots, construction workers, teachers, engineers, doctors and a host of other workers to meet society's demands.

So what can be done?

The first and best answer is to get more people. As the Lightcast report acknowledges, immigration is a primary element that keeps the U.S. economy in better shape than many other countries with respect to growing labor shortage issues. But immigration is still complicated because most other nations also have low birth rates. This workforce gap is a global problemand we cannot rely solely on other nations to meet our labor needs.

The other solution is to improve family birth rates and LFPR. But these are difficult trends to reverse. Once birth rates fall below 2.1, they rarely change, even with dramatic policy interventions. LFPR is likely to increase as Gen Xers and Millennials spend their parents' equity or decide to marry and start families.

Early talent strategy

The main solution that many businesses will need to focus on is one early talent strategy. Organizations that rely on a steady supply of people must shift from tactical approaches to finding and developing talent to a more strategic approach.

Tactical approaches like posting job ads hoping qualified people apply or hiring a recruiter to hire people away from other firms can be expensive and are becoming increasingly ineffective, as anyone in the field can attest. human resources.

Strategic approach to talent development it's getting in front of potential candidates BEFORE they enter the labor market even before they start their job search. This means primary and secondary school. You may not be ready to hire them today, and they may not be ready to work for you yet. But awareness and relationship building go a long way. If you try to recruit and hire them after other organizations already have them, it will be more difficult. Plus, there isn't an abundant supply of available talent in the first place.

So if you're a business starting to feel the labor shortage and you're just hoping things will turn around in a few months or a few years, consider a more proactive approach to overcoming the shortage. Now is the time to rethink how you hire, recruit and source the talent you need. Your future pipeline depends on it.