Diversity and Inclusion Emerge as a Manufacturing Labor Shortage Solution

There are about 500,000 unfilled manufacturing jobs in the United States, and the total is expected to reach 2.1 million by 2030, according to a recent Manufacturing Institute study.^1,2

Manufacturers are looking to tap into more diverse and inclusive pools of workers to address critical labor shortages. In addition, industry leaders are learning the importance of going beyond diversity recruitment and investing in retention. Along the way, many employers are finding additional benefits as they leverage underutilized human resources with unique skills that help them remain competitive and ensure the future of global manufacturing.

In a recent National Association of Manufacturers (NAM) survey,³ more than three-quarters of manufacturing executives identified attracting and retaining a quality workforce as their top business challenge. In interviews with Deloitte, 45 percent of manufacturers said they turned down business opportunities because they lacked workers.⁴

Some manufacturers are addressing this persistent labor shortage with efforts to expand diversity and inclusion, integrating more women, minorities, LGBTQ+ individuals, and neurodiverse workers into their teams. More than 6-out-of-10 manufacturers responding to the Manufacturing Institute survey said they pursued diversity and inclusion initiatives to be an employer of choice and that diversity and inclusion was a key focus for their company.¹ What’s more, roughly 79 percent of women are optimistic about women’s progress in manufacturing.⁵

Some employers may feel their job is done once a diverse new hire is onboarded. However, ensuring diverse employees feel comfortable and supported in their workplace is crucial to preventing costly turnover.⁶ Only one-in-three workers in a 2024 survey reported feeling their workplace was inclusive.⁷

Strategies for inclusion and retention that focus on underrepresented groups can help with retention and leadership development. Other strategies will benefit all employees, including diverse groups.

High-level strategies include creating DEI goals, gaining buy-in among leaders for those goals, and holding leaders accountable for achieving them.⁸

Specific goals and strategies include:

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Addressing pay gaps: Closing pay gaps helps retain diverse workers. In U.S. durable goods manufacturing, men earn an average of $1,132 a week compared with $890 for women.9 Offering flexible work arrangements: Statistically, women carry more caretaker responsibilities at home.10 Flexible work arrangements can enable more caregiving workers to meet both their at-home obligations while meeting workplace expectations. Developing health and wellness programs: People are more likely to choose and remain at an employer with health and wellness benefits.11

Providing professional development: Workers can envision a pathway to moving up when their company is invested in their future by offering assistance with the cost of additional training or academic coursework. Recognizing accomplishments: Workers feel seen and valued when their employer recognizes them for a job well done. Such recognition can come in the form of bonuses, time off awards, gift cards, and a weekly company email or chart praising successful project members or employees who are especially helpful to others. Listening to workers: Use focus groups and discussions to understand what your employees want and need. Then, develop strategies unique to your workplace and diversity goals.12

Strategies don’t need to be costly. One manufacturer committed to hiring more neurodiverse workers listened to and understood those workers' need to better visually distinguish between employees in different roles. They assigned unique colored vests to new hires, experienced workers, managers, and supervisors.¹³ With this system, all new employees — whether neurotypical or neurodivergent — knew who they could ask for help.

Different demographic groups and people with varied life experiences and backgrounds bring unique skills and problem-solving approaches to the workplace.

Overall, organizations with effective DEI initiatives also reported a greater ability to attract top talent, more employee engagement, and less turnover, according to research by the Association for Supply Chain Management¹³ and the Society for Human Resource Management. Nearly three-fourths (73 percent) of leaders in companies with very effective DEI practices say their company's supply chain performs better or somewhat better than the competition.

With the right steps in place, hiring a diverse workforce is an investment that can result in a competitive edge in the global marketplace.

1 U.S Bureau of Labor Statistics, Economic News Release, accessed September 2024.

2 The Manufacturing Institute, Diversity, Equity & Inclusion Benchmarking in Manufacturing, October 2021.

3 National Association of Manufacturers, Manufacturers’ Outlook Survey: Third Quarter 2022, 2022.

4 Deloitte, Competing for talent: Recasting perceptions of manufacturing, March 2022.

5 WiM x Xometry; The 2023 Women in Manufacturing Career Advancement for Manufacturing Report (xometry.com); 2023

6 Harold Andrew Patrick and Vincent Raj Kumar, Managing Workplace Diversity: Issues and Challenges, Sage Journals, April 2012.

7 Michael Page, Talent Trends 2024: The Expectation Gap, April 2024.

8 Association for Supply Chain Management, The Power of IE&D in the Supply Chain: Unlocking Resilience and Growth, June 2024.

9 Statista Research Department, Gender wage gap by industry in the United States in 2021, by median weekly earnings, August 2024.

10 U.S. Bureau of Labor Statistics, American Time Use Survey, June 2024.

11 Debra Wein, Win With Wellness — Attract And Retain Talent, Forbes, August 2018.

12 Karen Brown, To Retain Employees, Focus on Inclusion — Not Just Diversity, Harvard Business Review, December 2018.

13 Elizabeth Rennie, 5 Steps to a High-Performance Supply Chain with IED, Association for Supply Chain Management, June 2024.