Is investing in technological growth the answer to labor shortages?

reDespite rising wages and increasing job openings, unemployment in the United States remains high, leaving many companies looking for ways to fill the void.

More companies are turning to technology to try and meet the productivity demands of a shrinking workforce, reports the the Wall Street newspaper.

A top-down look, in numbers, on the current job market

The WSJ reports that the payroll has increased by 1.6 million in the past 3 months and is up 1.7% since the start of the year, figures which, under normal circumstances, would have been indicative of positive growth.

However, as the United States experiences a productivity boom, employers are currently hiring less, in large part thanks to the pandemic.

Historically, the typical pattern of recessions has resulted in declining productivity, but in three of the last four quarters during the pandemic, businesses’ hourly output has actually increased. From January to March of this year, production increased 4.1% from the previous year, the fastest growth in a decade.

Meanwhile, vacancies rose by 1 million in April to 9.3 million, the highest number since the record began in 2000, indicating persistent labor shortages. The factors here are manifold, including death and disability related to the pandemic which is having a disproportionate impact on certain industries; the persistent reluctance of workers to re-enter the labor market due to fears related to the pandemic and lack of sufficient wages; and the changing expectations between work and personal life.

Technology as a solution to employee shortages

To meet demand, a large number of companies have turned to technology.

“This recession took a life of its own, resulting in more remote working, more reliance on technology,” said Jason Thomas, head of global research at private equity manager Carlyle Group.

With much of the workforce working remotely, software investment grew 10.5% in the first quarter compared to the same period a year ago. Companies have invested heavily in sectors such as collaborative communication, cloud computing and e-commerce since the start of the pandemic.

“The longer the shortages persist, exerting upward pressure on wages, the more companies have an incentive to turn to technology to save on labor and the longer the recovery in employment will take time,” he said. declared the WSJ.

Invest in technology with ENTR

the ETF ERShares Entrepreneur (ENTR) invests primarily in large-cap U.S. entrepreneurial companies using the Entrepreneurial Factor ©, an approach that uses research, AI, and thematic investing to identify high-growth opportunities.

ENTR tracks entrepreneurial disruption in industries such as cloud computing, 5G and next-gen communications, e-commerce, and more, all of which are aligned to pursue their growth opportunities as companies continue to invest in technology to meet productivity requirements.

The ETF has an allocation of 36.07% in information technology stocks, an allocation of 17.46% in communication services companies and 12.21% in consumer discretionary companies.

ENTR has a gross expense ratio of 0.49%.

For more news, information and strategy, visit the website ETF Entrepreneur channel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.