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.