Labor shortages are returning as the Covid-19 pandemic appears to be waning, according to Labor Shortages Are Making a Comeback, a new report from The Conference Board that examines the unique factors and long-run forces driving this return to extremely tight labor markets.

Large segments of the economy continue to open at the same time and labor supply is constrained, resulting in shortages that are likely to remain for the better part of 2021, according to the report. Employers have been deeply impacted. Qualified workers are once again hard to find, and retention rates are low.

“Just as job losses in the Covid-19 recession were unprecedented in speed and severity, the post-pandemic recovery has set off a historic set of recruiting difficulties,” said Gad Levanon, VP, labor markets at The Conference Board. “Some of these reflect unique factors likely to fade by the end of 2021, easing acute hiring troubles. But they are accompanied by a return—or even acceleration—of the same long-term drivers behind extremely low unemployment before the pandemic.”

Together, these short-run and structural causes will keep labor markets tight until the next recession, according to Levanon.

Additional findings from the report:

Recruiting and retention difficulties are more pronounced in blue-collar and manual services jobs. These workers face high infection risk and elevated unemployment benefits are an attractive option for workers with relatively low wages. Tech occupations are also experiencing a tight labor market as the US economy shifts to more online activity and digital transformation grows.

Wages are accelerating. Companies are reacting to the labor shortages by raising wages, especially in the leisure and hospitality sectors and other blue-collar and manual services occupations.

After a pause in 2022, tight labor markets will remain until the next recession. Labor shortages may ease by the end of 2021, but they may reappear as soon as late 2022. And for the first time in US history, the working-age population is shrinking as many baby boomers are retiring. Though this demographic shift will create increased demand and job opportunities, as younger unemployed job seekers take up these positions, the unemployment rate will lower.

A mix of recruitment strategies can help alleviate labor shortages. Some of the quickest and most impactful solutions involve making changes to the recruitment process, such as adding or modifying employee referral programs, contracting with staffing firms or implementing technologies to streamline recruitment. Another strategy is to expand into new recruitment demographics, populations, and geographies.

Companies should reevaluate and possibly lower credential requirements. To increase the available pool of candidates, organizations could lower requirements for prior experience and for skills/competencies. However, lowering hiring requirements often creates a need for investing more in improving the skills and development of new recruits.

Remote hiring provides an opportunity to recruit candidates who were previously out of reach. Inclusion of candidates who can work remotely means employers can cast a wider net.