There are many more jobs nationwide now than qualified people to fill them, and that is a drag on the health of U.S. commercial real estate.
"Labor shortages result in higher vacancy rates, lower asking rents and greater concessions across markets," JLL's "Where Are All The Workers?" report said. Moreover, the impact isn't just on the office sector, but also on industrial, retail and apartments.
At a 3.9% unemployment rate, the U.S. economy is at full employment, or pretty close — economists disagree on that fine point. But the fact remains that as of January, about 6.3 million positions are open but unfilled, a record high.
Yet companies across industries are having trouble finding employees, which is hobbling growth. According to the Manpower Group, roughly 40% of employers globally report difficulty filling jobs due to insufficient talent. It isn't just tech or IT jobs — the jobs gap is impacting the skilled trades most of all.
The JLL report argues that structural, not cyclical, factors are responsible for the shortage. On the supply side, U.S. labor force participation rate has fallen to 62.7% this year, down from around 65% in the 1990s and early 2000s. Also, labor force participation among prime-age workers (between 25 and 54) peaked in 1999 and has been falling ever since.
JLL Chief Economist Ryan Severino said the labor shortage isn't temporary, at least not in the sense that it will evaporate with the next recession. Also, paying workers more isn't a panacea for the problem.