By Phil Trubey
November 23, 2022
It didn’t take long after my article announcing the re-opening of the RSF Barber Shop, a long time Village mainstay, for appointments to fill up. Last week, appointments were booked out a month in advance for the barber shop’s only stylist, owner Juleah Roll.
But now Roll has finally found another stylist to join her on Thursdays starting next week (December 1st). So, probably temporarily, there are now a bunch of extra times available between now and Christmas. Appointments can be booked via the website at https://www.rsfbarbershop.com/
Roll had been trying to find additional help for at least the last six months, but has found the hiring environment challenging.
Scarce Workers, The New Normal?
I’ve mentioned this before, but it bears repeating. Even though we appear to be on the cusp of a recession, worker shortages could very well continue. Normally, this doesn’t happen. During a recession, people get laid off and unemployment rates rise. Here’s a chart of the last 52 years of unemployment data with recessions shown as shaded areas:
The chart clearly shows that recessions cause unemployment rates to spike. Note something else though. Our current unemployment rate (3.7%) is basically a historical low. If Covid had never happened, this would be the longest low unemployment stretch since this time series was being tracked starting in 1948. Hmmm.
Why would that be, what has changed? Baby Boomers are retiring and/or quitting, that’s what has changed. Baby Boomers are the largest demographic bulge we’ve had in 100 years and their absence from the workforce will be keenly felt for the next 20 or so years. The replacement generations are either not large enough (Gen-X), or haven’t accumulated enough work experience to be as productive (Millennials). You might have noticed that workers in general aren’t quite as on the ball as they were in the past – no it isn’t only your crotchety old-timer imagination, the young replacement workers are being thrust into jobs that more mature experienced people used to do since there aren’t enough experienced workers to go around. It isn’t young people’s fault, we were all similarly in-experienced when we were 20 years old.
And it isn’t even a given that we are or will tip into a recession, even as the financial markets are predicting it. It is a testament to how resilient our economy is given how many unusual things have simultaneously happened to it:
- Covid, obviously (look at that unemployment spike in the above chart!)
- Huge government spending and resulting inflation as a response to Covid
- The Ukraine war which has jacked up energy prices and thus
- Curtailed access to a wide variety of commodities for industrial and agricultural uses
The Great Re-shoring
As if Baby Boomer retirement wasn’t bad enough, another huge global trend is underway: The re-shoring of manufacturing into North America. Just like Germany recently discovered the problem of relying on Russian natural gas, US based companies are realizing that relying on China as the world’s manufacturer is also a bad idea.
China’s recent belligerence isn’t really the issue (although US sanctions against China can’t be discounted), it is that they have become unreliable. Between the state’s crackdown on its own tech industry and seemingly random and increasingly draconian Covid shutdowns even as the rest of the world has moved on, China has shown itself to be an unreliable manufacturing partner. It doesn’t help that Chinese wages have skyrocketed making them expensive as well. Even Apple is diversifying its manufacturing out of China.
So we will be seeing a lot of companies setting up shop in Mexico, Texas, Arizona, and (to a lesser extent) California in the next ten years exacerbating our already tight labor supply.
As Always, Flexibility Required
The only constant in business is change. What worked last year or last decade won’t likely work this year. Owners of small sole proprietorships like the RSF Barber Shop (yes I’m finally bringing this article back full circle) to CEOs of large multinationals, need to understand the unique current environment and act accordingly. Be particularly wary of advice that goes “well, when I ran my company [in 1965], we did …”. The world is always changing and we must all be nimble enough to change with it.
Barbershop…
Oh yes, the Barbershop. Juleah Roll is a great stylist, who I know has high standards (which is one reason it has taken a while to find a suitable second employee), so do consider her business if you can. If her assistant’s schedule gets similarly filled up, she might able to convince her to work more days there. She also asked me to tell you that she offers free beer, coffee and sparkling water ?.
