The Workforce is Shrinking
Can Fractional Employment Help Close the Gap?
Nov 2, 2022
Affirmative action looks likely to be curtailed on college campuses if the Supreme Court's recent discourse is any guide. A few thousand miles away, immigration at the southern border hit record levels this summer. What do these politically charged issues have in common? Both impact the US labor force of the future, but focusing on these issues ignores the pressing labor shortages of today and tomorrow in the American workforce.
Historical Full-Time College Enrollment
Source: Education Data Initiative
Let's start with affirmative action.
Supporters on both sides of the issue would agree with one statement: the supply of quality college educational opportunities is inadequate, leading various constituencies to fight over the rules for entry into a broad range of colleges (this is hardly just about elite schools like Harvard, as cases have included numerous universities public and private).
College enrollment has dropped 10% over the past decade, accelerating in 2020 - and it has yet to recover post-pandemic. Numerous smaller colleges face bankruptcy as a result. While elite colleges continue to have their choice of excellent students, the future professional workforce is shrinking fast!
There's an interesting irony here: in the short term capacity is inadequate, but in the long term, declines in birth rates are leading to shrinking high school classes, meaning that overall college enrollment and demand is actually dropping! This leads to a serious workforce problem for US corporations - how will millions of open professional jobs be filled?
Meanwhile, on the southern border, illegal crossings hit new records this summer.
The Biden administration allowed a large number of immigrants claiming asylum to enter the United States. Most of these immigrants are working age and will enter the US workforce in the coming months (both legally and illegally). An infusion of roughly one million new workers is much needed, and will help curb inflation in the service sector. But this will do nothing for the professional workforce, which is suffering from insufficient legal immigration in addition to a dearth of college grads.
Immigration began to recover in 2022 after a crash during the pandemic, but skilled immigrants are still arriving in insufficient numbers due to caps on the H1-B program and other visas. While the unskilled labor force is being replenished through illegal immigration, the professional workforce does not benefit from these trends.
Change in Immigration Population Compared to Same Month in Prior Year - January 2011 to January 2022 (in thousands)
Source: Various Sources republished by Center for Immigration Studies
What's to be done? I could pontificate on legislative solutions, but none are likely given the current political climate. Let me offer you a market solution instead - why don't we identify and utilize the surplus resources available within our existing workforce?
This is exactly why we are building fraction.work. According to McKinsey, almost 50% of all jobs can be done in a remote or hybrid capacity. Remote work has given people a crucial commodity back - commute hours. Many workers are saving two hours per day or ten hours per week by killing their commutes! When we interview software developers (and other professionals) we find that almost half are interested in taking on additional work beyond their primary job. In our experience, only about 10% of the workforce is both qualified and interested in taking on such work - but that still amounts to over 8 million workers, enough to bring the job market back to equilibrium !This is one of the largest unused supplies of talent in the world, and it's available immediately without training. So what is everyone waiting for?
 The US civilian workforce stands at 164.7M as of September 2022, per the Bureau of Labor Statistics. Per the McKinsey study referenced above, 82.3M jobs (roughly half) can be performed in a hybrid or remote manner. Ten percent of this group is over 8.2M workers, which equates to roughly 4M full-time equivalent employees, as we find that most interested fractional workers are comfortable taking on 20 additional hours of work. Adding four million FTEs to the work force would bring the job market back to equilibrium levels of the past decade, when job openings averaged 5-6M instead of 11M today.