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RECORD JOB OPENINGS AND THE LOWEST PARTICIPATION RATE SINCE THE 1970’S; WHERE ARE THE EMPLOYEES?

September 6, 2016

In a recent Blog entitled “Labor Supply and Record Job Openings” GSG Labor Market Researcher and Analyst Ed Martin wrote, “Recently, the Labor Department reported record job openings for the U.S. to be 5.75 million in July 2015. In a separate news release the Labor Department stated that the participation rate of 62.5 percent is the lowest in four decades. So where is the potential labor supply for these record job openings? Many employers across the country are having difficulty in filling the job openings and are asking, where are the qualified workers? Further, more job applicants are asking, where are the jobs that match their education, training, or experience? To what degree is the mismatch between employer skill needs and worker skill availability a problem at the local and regional level and how is it affecting filling the record job openings?”

 

Recently I was meeting with a major employer in the manufacturing sector. The employer is having a very difficult time filling positions within their facilities. While speaking with the CFO and the HR Manager, I learned that the company was considering myriad alternatives to attract and retain quality employees.

 

For instance, the company has recently re-evaluated their compensation levels across the board to ensure their competitiveness in the market. The company is also considering hiring multi-lingual employees to assist them with language barriers in an effort to allow for recruitment of employees who speak foreign languages. In addition, the company has been willing to transport employees from multiple locations including temporary agencies etc. in an effort to fill numerous open positions.

 

During the conversation, the HR Manager shared a story from a recent interview that she conducted at one of the company’s facilities. A former employee who was interested in returning to the company’s employ came to the facility one afternoon to discuss job openings. Since the employee had been with the company previously and had a good understanding of the company’s manufacturing processes, the HR Manager ask the candidate if he would be willing to work the 3-11 shift. The candidate agreed and the HR Manager sent the candidate home to change clothes and return to the facility for the 3-11 shift beginning that afternoon.

 

Why? Record job openings coupled with the lowest participation rate in 4 decades. Where are the employees? Why would employers go to all that trouble? In this case, one of the company’s larger customers was bearing down on management in regard to production capabilities and the company’s ability to meet production deadlines. Further, the customer ask the company if the state workforce department was assisting in the process. The customer indicated that other states offer workforce programs, training programs and economic development programs to assist employers with employment issues.

 

Obviously it’s not best practice to interview a candidate at 2:00 and start their employment that same afternoon at 3:00 but desperate times call for desperate measures. During our discussion about employee recruitment, I also ask the HR Manager about employee retention. Currently, due to production demands, the company is only providing on average four hours of training prior to placing new hires on the production floor. While the immediate need is recruitment, lack of training is leading to retention issues as well. (Findings from a recent survey indicate that 84.7 % of employers provide from 1 to 20 hours of training annually while 15.4% provide over 31 or more hours of formal training annually.)

 

Sound familiar? Unfortunately this scenario is all too common in today’s workplace. The ability to attract and retain quality employees has become a seemingly insurmountable challenge for companies in many sectors. At the same time, findings from a recent survey show that nearly 93% of employers anticipate employment remaining steady or increasing in the next twelve months.

 

With this in mind, it is critical that companies and communities are actively involved in workforce planning. Collaboration is the key; bringing companies, education partners, workforce partners and community leaders to the table to discuss the issues and determine a path forward. We must gain an understanding of our labor market assets, gaps and challenges in an effort to support workforce planning and programming. It’s critical for the success of our companies and ultimately for our economies.

 

I recently wrote a blog entitled “We can’t forget the Underemployed… Can we?” In this blog, I posed the following questions; how could your economic development efforts be enhanced if you were able to quantify the following information for your existing and prospective employers: What portion of the labor force (underemployed, unemployed, homemaker, student or retired) would seriously consider applying for a new employment opportunity? What concerns would influence their decision? (Pay, benefits, commuting distance) What skills and educational attainment do the underemployed in your labor shed possess? In other words are you prepared to answer the most important questions regarding your workforce; What is it? Where is it? At what cost? And in what quantities?

 

In another blog I recently wrote entitled “The Advantage of the Available Workforce”, I shared the following information regarding the GSG Labor Supply Certification. The primary purpose of this GSG product is to determine the number of workers available for employers considering expansions and major investments. The total available workforce represents respondents who indicate they are either looking for employment or would consider changing jobs for the right employment opportunities. The key advantage of the Labor Supply analysis is that it expands the pool of potential workers by including workers excluded from the civilian labor force (CLF). It allows researchers to examine those members of the Area Labor Market (ALM) pool who have a propensity to consider a job opportunity given their employment expectations.

 

Findings from recent labors surveys across the country indicate that on average over 73% of the total available workforce consider themselves in the worker available category. The significance of this finding is that those identifying in the worker available category of the workforce are either actively seeking new opportunities or willing to change jobs for the right opportunity. How might this information change your conversations with existing employers and those you are working to attract to your community?

 

Further, respondents are ask a series of questions to determine the skills, education and experience that they possess that would qualify them for a new opportunity. In addition, respondents are ask to describe right opportunity. In other words, what are their desired wages, benefits and commuting patterns?

 

Further research shows interesting comparisons for those in the worker available workforce identifying within the subsets as underemployed, seeking different employment or willing to change. For instance, findings show that those actively seeking different employment on average have fewer years on the job, lower current wages, lower household income, a greater propensity for second or part-time jobs, a higher percentage with no health insurance and lower levels of education. Research indicates that top motivators for changing jobs are salary, health benefits and retirement.

 

The report drills deeper into these categories as well as other worker characteristics and decision indicators as referenced above to provide an in depth analysis of the area’s ALM for consideration. Why is this important? This detailed workforce data provides communities and regions with quantifiable metrics regarding their ability to supply an abundant and skilled labor force for employers. This gap between publicly available data and GSG’s primary research could mean the difference between your area’s ability to provide employers with proof that the necessary quantity and quality of workers exist in your area leading to additional investment or your area’s elimination from consideration.

 

Corey J Mehaffy, CEO

GROWTHSERVICESGROUP.COM | Workforce Intelligence for Growing Business

 

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