The Rising Storm: Understanding America’s Workforce Challenge

By Jeff Campbell, Director of Marketing and Business Development, Carlsbad Economic Development Corporation

Drive through Carlsbad on any given day, and you will find countless businesses looking for employees. Our community has experienced times when restaurants cannot be open during specific hours due to a workforce shortage. One thing we typically hear when we announce the prospect of a new business coming to Carlsbad is, “Who will work there?” And this problem is not unique to our market. It is being faced throughout the nation.

America’s labor market is entering a period unlike any in modern history. In The Rising Storm, labor economist Ron Hetrick argues that the nation’s greatest workforce challenge is not unemployment, but demographics. Decades of declining birth rates, an aging population, and changing workforce participation are combining to create what he calls a “demographic drought.”

For much of the second half of the 20th century, the U.S. experienced rapid labor force growth. High birth rates following World War II, combined with the dramatic increase of women entering the workforce, created an abundant supply of workers that shaped employer expectations and economic expansion. Today, however, those conditions no longer exist. Millions of Baby Boomers are retiring, and there are simply not enough younger workers to replace them.

Hetrick notes that the COVID-19 pandemic accelerated existing demographic trends by prompting many older workers to retire earlier than expected. At the same time, labor force participation has struggled to recover, particularly among older adults, leaving employers with persistent hiring challenges. Projections suggest labor force growth over the next decade will remain modest while the number of consumers continues to increase, placing additional strain on businesses and public services.

One of the report’s key observations is that the labor shortage will not affect every occupation equally. Many of the nation’s fastest-growing and hardest-to-fill jobs—including healthcare, skilled trades, transportation, construction, food service, and manufacturing—do not necessarily require a four-year college degree. Yet educational trends continue to steer many students toward professions where labor supply may eventually exceed demand.

Hetrick suggests that addressing the shortage will require multiple strategies rather than a single solution. Immigration will likely continue to play a significant role in workforce growth, while automation and artificial intelligence may improve productivity in some industries. However, the report cautions that technology alone cannot replace workers in many hands-on occupations such as healthcare, construction, and personal services.

The Rising Storm encourages employers, educators, and policymakers to rethink traditional workforce strategies. Organizations may need to broaden hiring practices, invest more heavily in training and retention, strengthen career pathways into skilled occupations, and prepare for an economy where qualified workers—not available jobs—become the limiting factor for growth. The demographic storm is already forming, and communities that adapt early will be better positioned to succeed in the years ahead.

Finally, the next time you see that a new business is coming to Carlsbad, and you see the knee-jerk reaction being “no one wants to work,” remember it’s not that no one wants to work; it’s the fact that there truly are not enough people available to work from the shrinking labor pool.

For this reason, we are always at work building a sustainable workforce pipeline here. We all must adapt to this new environment, as it will affect employers and consumers alike going forward. Increasing the labor pool takes time if we want to rely on a growing birthrate. Alternatives like AI and immigration will lead the way for the time being.