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Commercial Lines: Labor Shortages Affecting Liability Risk

By Nina Terenzi, May 10, 2022
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In April 2020 when the worldwide COVID-19 pandemic erupted, the U.S. shed nearly 21 million jobs. Analysts at the time forecasted a difficult climb back - yet two years later the biggest workforce challenge facing the U.S. economy is not joblessness, but persistent labor shortages that cut across market sectors. In fact, The U.S. Labor Department’s Bureau of Labor Statistics indicated that in March 2022 the unemployment rate had fallen to 3.6 percent - down from a 14 percent high in 2020. Today, as baby boomers continue retiring at an accelerated rate and evolving expectations around work usher in sweeping transformation, there are millions more open jobs than there are people to fill them.

Any business that relies on employees for continuous operation is vulnerable to increased risk due to labor shortages and so are consumers who depend on the supply chain. One recent high-profile example of how an industry has been hobbled by an insufficient number of workers spotlighted cargo ships that became docked for weeks because ports lacked the stevedores to unload them. Many restaurants and bars now operate at reduced hours or have simply closed. In every industry lack of training and overwork can result in more professional liability; vehicle, product, or equipment damage; and on-the-job injuries.

Business leaders are under tremendous pressure to adapt. Attracting and retaining high-quality employees has never been more crucial to successful business operations. Below, Eastern Insurance offers insights and best practices to help companies create modern strategies for mitigating liability risk while creating a dynamic workforce.

Train people and upgrade equipment

More inexperienced employees on a job site can lead to workforce injuries, particularly when vehicles or equipment lag behind code or contemporary standards. This is particularly true in the building, manufacturing, and food service industries, but every type of business is vulnerable to risk. To mitigate it, consider investing in a system for training and re-skilling employees, and  ensure the tools they work with are in top-functioning condition.

Expand your benefits

The labor shortage has driven up salaries across all industry types turning large financial compensation offers into table stakes instead of competitive edge. People across all organizational levels seek more influence and control over their jobs and careers. Fair compensation is vital but a flexible benefits package that offers employees real choice—over schedule, physical location, or other traditional workplace constructs—can be a powerful, modern incentive.

Lower barriers for hiring

Not every job demands a college education, networking prowess, or fluency with the English language, yet many employers won’t consider candidates without these attributes. Business leaders can open the door to entirely new categories of workers by simply examining and adapting hiring policies. Are you overlooking a whole pool of potential employees such as adults with cognitive or physical disabilities, senior citizens, formerly incarcerated people, or non-native speakers? In addition to mitigating workforce shortages, a careful review of hiring criteria may also result in a stronger culture of diversity, equity, and inclusion.

Review your risk with a trusted partner

Today’s labor shortage is historic, driving change throughout the U.S. economy and culture. Exhausted, untrained, and minimally supported employees increase every business owner’s risk of liability and injury. Refreshing your strategy for attracting and retaining talent is a good place to start for business owners seeking to mitigate the risk associated with a depleted workforce. It’s also a good idea to review your insurance policy. Your Eastern Insurance agent can help you understand even the most subtle ways in which workforce shortages may affect your business. Contact us today at to review and modernize your strategy for managing liability risk.

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