It’s Labor Day — But Where is the Labor?

Aidan Madigan-Curtis

|

Aug 30, 2023

|

6 MIN

Our industrial workforce is central to the U.S. GDP and a key factor in remaining a global economic power. But there are millions of jobs currently unfilled in the skilled trades and the gap continues to widen as demand grows for goods, housing, and infrastructure. Eclipse Partner Aidan Madigan-Curtis discusses what must be done to make the trades an attractive place to work again in order to catalyze a new wave of growth for domestic industries.


We are in our “structural labor shortage” era. Younger generations have limited interest in physical or vocational work. Meanwhile, experienced generations are retiring or leaving the workforce, compounding the problem by creating a four million skilled worker gap in the U.S. economy.

This significant gap of skilled workers relative to available jobs is wildly expensive for the U.S. GDP. For context, if those four million people earned the average manufacturing salary of ~$50,000 per year, we’d have an additional $200 billion in annual U.S. GDP. We know this because wages are a GDP multiplier, meaning we count wages as gross domestic income, and we count the purchases and investments people make with those wages as part of our GDP. On top of that, unfulfilled jobs mean that companies across manufacturing, construction, renewable energy, and other physical industries have insufficient capacity to meet demand and are missing out on revenue. With these considerations in mind, the real loss is likely 4-7x larger, or potentially up to 1-5% of the U.S. GDP. A 5% hit to GDP is extremely large, especially when you put a figure like that in the context of the work that goes into a ~$50 billion dollar (or 0.02% of U.S. GDP) bill like the CHIPS Act.

Beyond the financial weight of these millions of unfulfilled roles on the U.S. economy, extreme structural unemployment is standing in the way of some of our most critical national priorities, including manufacturing reshoring, rebuilding our domestic semiconductor industry, constructing affordable homes to remedy our housing shortage, enabling our renewable energy transition, and strengthening our national defense.

So, why are these key jobs unfulfilled? The basic math is that more jobs are becoming available in these industrial fields than there are trained, skilled job seekers to fill them due to:

1. The demographics of baby boomers (who filled the majority of these skilled positions) shows that many workers are retiring in the next 0-10 years. The American Welding Society estimates a 400,000-worker shortage in the metal fabrication industry by 2024, and the decades-long shortage of automotive technicians is continuing to grow to the tune of 210,000 workers annually. 

2. There is considerable growth in domestic demand for these industries due to long-term disruptive trends, such as manufacturing reshoring, semiconductor industry repatriation, and renewable energy proliferation. 

The labor transition is happening faster than we expected 

More people above 55 retired during COVID than the historical rate of retirement, and manufacturing, logistics, transportation, utilities, and other industrials were disproportionately impacted.

Source: Census 2021

In a free (capitalist) economy, such a large workforce gap would generally push employers to focus on attracting workers into these roles with tactics like raising wages and improving benefits. We’re seeing a bit of that — for instance, UPS driver wages are now $170,000. Strong labor unions obviously played a critical role here as well. 

However, many companies in industrial sectors where a large majority of these unfilled roles exist also face significant margin pressures as commodity and energy costs are rising, equating to a possible recession on the horizon for the U.S. Through this broader lens, wage increases are not a panacea.

Skilled industrial roles are not “fire” and they don’t “slap” — at least according to GenZ

To translate the youthful language used above, skilled industrial jobs have not appeared attractive to younger generations.

As a result of the technology industry's preeminent role in our economy the last two decades, digital work is generally perceived as higher paying, more flexible, and overall more fun than work tied to physical industries. Encouraged by parents who saw the urgency of enabling their children with a technical skill set, many students pursued software engineering and computer science, intrigued by the promise of solving challenging problems, high salaries, competitive perks, and perceived job security. 

We need to flip the script. Our technical industrial roles are not only important, they are essential. And they can also offer a lot of the same career benefits, delivering the right mix of practical and quantitative challenges for young people who want career growth and a healthy blend of behind-the-screen and real world impact. 

Our technical industrial roles are not only important, they are essential. 

Perception matters: when people better understand the potential a specific career can net them and their families, interest in pursuing that career increases. Both the public and private sector must help facilitate a culture shift that helps drive talent toward the education and skill development needed for a promising career in the trades.

Technology is a central enabler to driving labor to industrial sectors

Between automation, machine learning, artificial intelligence, and other new technologies, there is ample opportunity for skilled tradespeople to pursue industrial careers that look drastically different than they did ten — or even two — years ago. As companies turn to these technologies to make nearly all facets of industrial roles safer, more efficient, and more rewarding than ever before, there’s ample space to rewrite the narrative around lifelong careers in industrial sectors, doubling down on the job security, benefits, and growth opportunities for those who excel. Technology is changing what the day-to-day looks like for tradespeople in the field, transforming monotonous tasks and creating avenues for a more gamified, exciting, and satisfying worker experience.

Eclipse has been a long-term proponent of re-equipping and rebuilding our industrial workforce. Here are several technologies in our portfolio that we believe can  significantly move the needle to reduce our industrial workforce employment gap and transform the worker experience for the better: 

1) Reframe Systems is poised to quadruple labor productivity improvements by 2025 with cutting-edge robotics and software-driven flexible manufacturing. This level of productivity will reduce the system costs of net-zero construction and offer an overall lower cost structure, creating the opportunity to deliver affordable, net-zero homes en masse.

2) VulcanForms’ next-generation manufacturing facilities use breakthrough 100-kilowatt laser additive manufacturing technology, automated machining, integrated robotics, and a proprietary digital thread to manufacture everything from 3-D printed medical implants and critical defense-related components, to heat exchangers and on. Operating this highly advanced equipment is far from the repetitive assembly line tasks many Americans think of when they picture a career in the trades.

3) Forge offers an apprentice program designed to build skills fast, teaching workers construction fundamentals in only 12 weeks before assigning them to jobs under the watchful eye of seasoned trade supervisors. Programs like Forge’s can be a trade industry analog to coding bootcamps.

Pairing these core benefits with economic incentives, job security, and clear growth opportunities in the industry can help cast a new light on an enduring career path. 

Another central deterrent from the trades is rugged working conditions. The U.S. Bureau of Labor Statistics found that in 2019 (before COVID-related illness), one worker died every 99 minutes from a work-related injury, including transportation incidents, falls, and contact with equipment or machinery.

By leveraging technology to automate or remove the most chaotic or dangerous elements of the job, we can make daily work at warehouses, factories, fabrication plants, and construction sites safer and more attractive to an entirely new crop of workers — especially those who may appeal to jobs that can be done remotely or from home. Innovations from companies like VoxelAI use technology, such as advanced computer vision algorithms to detect and prevent safety risks within existing camera infrastructure. By identifying risks from PPE misuse and poor ergonomics to dangerous vehicle handling behaviors and area controls, VoxelAI has reduced workplace injuries for large employers like Americold Warehouse, Verst Logistics, and Builders FirstSource. 

Technology not only enhances the worker experience in these industries while lowering the physical risk for workers, it also provides macroeconomic benefits for the industry by boosting productivity, sustainability, and scalability.

Building the New American Industrial Workforce

Turning the promise of trades as wealth-generating, enduring careers into a reality is essential. Technology, coupled with premium salaries and clear growth pathways, are core elements to doing just that. Adding more technology into the mix can be a game-changer for making skilled U.S. industrial roles some of the most intriguing, exciting, efficient, and well-paid positions in the country.

Turning the promise of trades as wealth-generating, enduring careers into a reality is essential.

The domestic tech talent pipeline will take years to grow to sufficient levels even if we work to address it immediately with programs like apprenticeships and educational programming. In addition to what’s been recommended here so far, we should consider whether immigration policy enables U.S.-based organizations to best attract and retain international engineering talent. Some of the world’s most successful innovators and job-creators — like TSMC’s Morris Chang, NVIDIA’s Jensen Huang, and Google’s Sergey Brin — are foreign born and American-educated. There are many millions more like them. To fulfill our skilled workforce targets, we would benefit from ensuring that many U.S. master’s and doctoral engineering graduates in the country who are foreign citizens can stay and bring their skills to U.S. firms after graduation. 

For America to be a leader in manufacturing and remain an economic world power, a fresh attitude and a new class of technical education are required to fulfill the millions of available jobs in trades. The demand for skilled workers like construction, HVAC, and mechanical workers; welders, plumbers, and carpenters; electrical engineers and lab, automotive, or aircraft technicians — and the list goes on — is only growing, and efforts to rebuild these trades industries are the essential link to the future of our critical industries. 

If you’re building a company with a mission to reimagine the trades, I’d love to hear from you: aidan@eclipse.vc.

Follow Eclipse Ventures on LinkedIn for the latest on the Industrial Evolution.

Tags

  • Artificial Intelligence
  • Automation
  • Construction
  • Logistics
  • Manufacturing
  • Renewable Energy
  • Reshoring
  • Semiconductors
  • Talent
  • Trades

Related Articles

Insights, News
https://i0.wp.com/eclipsevcprod.wpengine.com/wp-content/uploads/2024/02/Arc-scaled.jpg?fit=2560%2C1752&ssl=1
Feb 15, 2024|4 min read

The Industrial Evolution: Paving the Way for a New Wave of Good Jobs

Read More
Insights
https://i0.wp.com/eclipsevcprod.wpengine.com/wp-content/uploads/2023/11/Graph.jpg?fit=1707%2C1168&ssl=1
Nov 1, 2023|5 min read

Long Live High-Performance Computing

Read More
Insights
https://i0.wp.com/eclipsevcprod.wpengine.com/wp-content/uploads/2023/09/Arc-5.jpg?fit=1707%2C1168&ssl=1
Sep 7, 2023|9 min read

Electrifying the Marine Industry: Mitch Lee, Co-Founder and CEO, Arc

Read More
Insights
https://i0.wp.com/eclipsevcprod.wpengine.com/wp-content/uploads/2023/08/Transportation-Blog-1.jpg?fit=1707%2C1168&ssl=1
Aug 22, 2023|7 min read

Investing in Technology for a New Era of Transit

Read More