On the surface, the solution to today’s labor pains would seem to be a no-brainer. There are millions of people who need work, and all kinds of employers ready to hire. It ought to be easy to make good things happen.
Alas, if only it were so simple. Take the Chicago region as one example. “There are 250,000 unemployed residents and 200,000 jobs posted,” says Marie Lynch, president and CEO of Skills for Chicagoland’s Future. Yet the average unemployed person spends nearly a year off the job, Lynch says. On top of that, many employers in Chicagoland and elsewhere maintain that despite the numerous choices, they still have a tough time finding people with the right skill sets.
It would seem that the programs created to get the unemployed back to work are not always working as well as they have in the past, and it’s not only because of sluggish hiring on the part of employers. For some communities, the answer lies in rethinking the whole process to make the programs more responsive to the specific needs of those companies hiring now — and for the long term, making sure the pipeline will remain filled with a job-ready work force. As John Sampson, president and CEO of the Northeast Indiana Regional Partnership, puts it, “Unemployment is not the issue; the issue is skills.”
Where Are the Workers?
There are millions of people on the hunt for work, or more work than they’ve been able to find. Estimates range from 12 million to roughly twice that, depending on how one defines and tracks unemployment. But the jobless rate, most recently recorded at 7.8 percent nationally, varies dramatically from place to place — from 3 percent in North Dakota in September, all the way up to 11.8 percent in Nevada.
There aren’t a lot of generalities to observe, but one stands out: The fiercest hiring and lowest jobless rates are often in areas where shale oil extraction is hot, including the Dakotas and their neighbors. In North Dakota, for example, mining and logging employment was up 29.3 percent in September over a year before. That growth is spilling over into other sectors, with construction up 9.2 percent, transportation skyrocketing by 14 percent, wholesale trade rising 13.2 percent, and manufacturing increasing by 6.8 percent.
The situation creates some ongoing challenges — wages have to be higher to be competitive, and there have even been reports of generous hiring bonuses at McDonald’s, of all places. Some local employers are taking advantage of a decades-old cultural-exchange program created to bring in foreign college students to fill seasonal jobs and, as a result, that hotel or fast-food staffer in North Dakota may hail from Jamaica or Thailand.
Labor is in short supply in South Dakota, too, and has been for some time. Governor Dennis Daugaard, in his “State of the State” address back in January, noted that the state’s labor department was trying to fill some 10,000 jobs using a roster of just a hundred people. And if workers must come in from elsewhere, where will they live? That’s a problem for some and an opportunity for others, such as one company that’s shipping modular homes to North Dakota from plants in Indiana and even as far away as Florida, setting them up and furnishing them so they’re ready for move-in.
Meanwhile, there remain far too many areas with the opposite situation, led by Nevada, which not that long ago was an economic all-star. After years of growth, particularly in construction and leisure/hospitality, the downturn hit those sectors especially hard. Now, observers say, there are plenty of homes and offices, so they fear the construction slump will continue for quite some time.
The jobless rate remains above 10 percent in California and Rhode Island, too. Rhode Island manufacturing took a big hit in the Great Recession and still has a long climb ahead. The California jobless rate continues to be pushed up by job-seekers returning to the work force, as well as by ongoing sluggishness in the construction and governmental sectors.
Matching Skills and Jobs
Sluggishness aside, there’s a tangible mismatch between the millions of job-seekers and the volumes of job openings. Observers say the most successful communities will be those that find new and better ways to make the connection. “A strategy mix of both job creation and skills development is required to get the nation out of this unprecedented situation,” according to researchers at the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.
But the skills development needs to be the right skills development, according to researchers at the Brookings Institution’s Hamilton Project: “Successful training programs often rely on input from or partnerships with employers and industry partners in order to direct trainees to invest in courses and fields of study relevant to available jobs. Without this type of collaboration, newly trained or retrained workers may find themselves without the skills needed by industry, skills that are required for long-lasting labor market success.”
Here is an example of a program that is striving to do just that: The new public-private partnership that Lynch heads represents a paradigm shift for addressing work force needs. The idea is to match specific open positions with jobless residents who can be trained to fit the bill.
“Some of the problem is a skills gap, some is a stigma relating to being unemployed for a long time,” she says. What’s more, employers can sometimes be overwhelmed by an avalanche of applicants. “The pipeline of resumes is so significant that it’s difficult for them to identify whom to hire,” according to Lynch. “It’s difficult for employers to see why someone’s skill set may be applicable.”
The work force system has traditionally been geared toward the unemployed, Lynch says, but “we’re geared toward working with employers.” As a result, funds aren’t directed toward training unless specific jobs are identified that require the training. And Skills for Chicagoland’s Future helps with the screening process, too.
“We’re very geared toward things we can take care of in the immediate to a year range,” she says. And if there’s an identified need but the required training takes too long to complete, she’ll seek ways to condense the training and move people through more quickly. Though the new system has been set up to address the current work force situation, she says the concept will continue to work when the labor market returns to a more normal place. “Regardless of whether your unemployment rate is 5 percent or 11 percent, it’s a better value if it’s attached to jobs,” Lynch explains.
Sampson of the Northeast Indiana Regional Partnership notes that his economic development organization is co-located with the region’s work force development system, “and we do practically everything together.” There had been a growing sense in recent years that the work force development system was not working well, so it was transformed from a traditional unemployment system to what Sampson calls a “demand-driven system.”
“We knew that our future in terms of economic performance depended on our ability to supply the needs of existing companies growing in the region,” he explains. The real issue, he says, is skills. “If a community has the skills, the jobs will follow.”
With that in mind, the region last year embraced a goal to equip at least 60 percent of residents with high-quality degrees and credentials by 2025. That goal builds upon a program called the Talent Initiative, which is funneling proceeds of a $20 million private grant toward education and training initiatives in science, technology, engineering, and mathematics. The region has now developed six “New Tech” high schools and claims that’s the largest concentration of such schools outside of New York.
“We’re making sure that everything, from early childhood on up, is collaborating to meet the needs of local employers,” Sampson says. “Why bother creating jobs if you don’t have the skills those companies need?”
Tackling the shorter-term needs, the regional work force development organization, WorkOne, helped 12,000 people in the past year achieve some sort of job-enhancing certification — 9,500 of them were unemployed or working part-time jobs, and 70 percent were able to land a better situation. As a result, Fort Wayne has outperformed the nation in job growth over the past couple of years. “Our region has always been first in and last out of recessions,” Sampson notes. This time, that’s not the case.
There’s no shortage of unemployed workers in California, yet advanced manufacturing employers still have a hard time filling certain roles, according to Karen Burns, partner and manufacturing specialist at Sensiba San Filippo LLP, a Silicon Valley consulting firm. Companies may be able to attract highly educated workers for higher-end jobs, as well as those to fill the unskilled positions, but there’s a sweet spot in the middle that causes trouble for some manufacturers.
“There is a skill set where most of the lines in a manufacturing facility need computer operators,” she says. These aren’t the highest-paying jobs, but they require more training than those roles at the low end. “So there still is a labor shortage around those kinds of jobs.” She asks, “How do we bridge those gaps?”
One answer has been to get manufacturers together to find common ground and establish common needs. Burns is cofounder of East Bay Manufacturing Group, which organizes peer-to-peer events for C-level manufacturing execs in the area. One of the goals, she says, is hammering out a basic skill set that would meet the needs of multiple advanced manufacturing employers. “If we can figure out what that skill set is through manufacturers coming together, they can communicate that to the work force development agencies,” she says.
Ramping It Up
“Economic development is all about alignment. If you can align the needs of employers with the capacity of the community, you’re going to grow jobs, quality jobs,” says Eric Voyles, vice president for National Business Development at the Rockford Area Economic Development Council in Illinois.
“On the highly skilled side, we’re in need of more engineers,” he says. “At just two employers, they’ll be adding 100 engineers every year for the next 10 years.” Add to that the need for hands-on “touch labor” in manufacturing, such as CNC operators, welders, machinists, and other assembly workers. “We’re going to have to have the right people,” he says.
One answer is the Joint Institute of Engineering & Technology-Aerospace. The program brings together the region’s educational institutions and aerospace companies in an effort to more successfully transition students from school to the aerospace work force. “It’s a way to align the requirements of becoming an engineer back into high school and bring it to its potential, and have a Master’s of Engineering right here in Rockford,” Voyles explains.
As for touch labor, one approach is a boot camp through a local training institute, which is geared toward providing basic skills that will work well on the manufacturing floor. And like other areas, economic development and work force development officials are keeping in close contact with the employers who are creating the jobs, and are ready to tweak programs to fit the requirements they discover. “We can change programs and implement new training to meet the needs of employers,” Voyles adds.
New Jobs for Night Owls
In the Louisville, Kentucky, area, one major employer’s program that has been working well for a decade and a half is now growing to help other employers connect with the labor they need. Back in 1998, as UPS was gearing up its expanded Worldport air hub, “There was a concern that we would not be able to staff this expansion,” says spokesman Jeff Wafford. The answer was the Metropolitan College program. “Any student who would work the night shift of 11 p.m. to 4 a.m. would get their tuition paid at University of Louisville or Jefferson Community and Technical College,” says Wafford.
To date, more than 3,000 students have earned some type of academic credential through the program, from a certificate to an associate’s degree to a bachelor’s degree. Wafford, in fact, was one of those students, studying communications. The program has served UPS well through the years, he says. “We went from having a turnover rate of about 80 percent to a 92 percent retention rate.”
UPS has been okay with the fact that most of the participants (unlike Wafford) would not end up making a career at the company. “We get them for four or five years, and they’re dependable and extra-motivated,” he says. More recently, though, the company is helping its fellow area employers by placing its well-trained Metropolitan College participants in other area jobs as they graduate. Partners in the Ambassador Program include Ford, Norton Healthcare, Papa John’s (which is headquartered in the area), Republic Bank, and General Electric. According to Wafford, “We’re funding educated employees ready to join the work force.”
Through solutions such as those described above, communities are striving to meet their work force needs and the unemployed — and underemployed — are gaining skills that today’s industries value.