12/10/2008
by Michael S. Derby / A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--Underlying the truly dismal turn in last Friday's November jobs report is continued evidence that many U.S. companies looking to fill positions are finding it hard to reach workers with suitable qualifications.
This is an old problem, owing significantly to the economy's long and slow transition from low- to high-skilled employees. But this inability to hire complicates any prospective recovery in the troubled labor market, which lost more than a million jobs in the past three months, and blunts one of the few areas of support employment has in the current difficulties.
More and more, it's the high-skilled sector in which enduring employment gains are found, and workers with those skills are proving hardest to find. Though it's hard to say what impact this shortage of skilled workers has on overall economic performance, surveys and the comments of business leaders make it clear it's a key area of concern.
In a report Tuesday the National Federation of Independent Business found that in November, nearly half of small business operators had hired or had tried to hire. Nearly three quarters of those firms that wanted to add workers "reported few or no qualified applicants for the job openings they were trying to fill," and 8% said finding the right hires was a top business problem.
According the NFIB survey, this issue persisted even as overall labor markets "have loosened up substantially. Wachovia Securities' chief economist John Silvia said in a research note rising unemployment rates in the current recession for teenagers and minorities are worrisome because of the broader message they send. Noting that the unemployment rate for high school graduates is 10.5% versus 3.1% for those with a bachelor's degree, Silvia said "unemployment is not just a cyclical issue but is a structural problem of mismatched workers and the skills needed."
David Lewis, regional manager with international hiring firm Express Employment Professionals, said sectors where hiring remains resilient and companies are struggling to fill payrolls include education, healthcare and government work, along with legal and high skill factory workers and truck drivers.
Adopting The Viking Approach
What the surveys and data are finding appears to be borne out in the experiences of business leaders.
Employers reporting trouble finding the right workers tie their problem largely to one of skills and education. They cite lost business opportunities, along with having to make extra efforts to help educate the sort of people they want to employ, as issues they are dealing with.
They note that while colleges have typically trained students in standard disciplines like engineering or computer science, firms increasingly require workers who can combine expertise from different areas. The new economy needs workers who are technically grounded, can understand and work with customers on the business side of the problem, and clearly communicate goals, they say.
"We do struggle to find the right people," said Jeffrey Owens, the president of Advanced Technology Services, Inc. The 2,500 member Peoria-Ill.-based firm maintains factory equipment for a number of large manufacturers, and was once itself part of heavy equipment maker Caterpillar Inc. (CAT). His firm has been relatively immune to the general decline in manufacturing jobs because it benefits from the increased automation of industry.
Owens said to get the workers it needs, his firm has to spend a lot of time training them. It recruits discharged military personnel with technical backgrounds and has worked with local colleges to train high school workers for the sorts of roles they might perform at Advanced Technology Services. The company even offers scholarships to help create this future pool of workers.
Dan Wendl, vice president with climate control equipment maker Trane, said his firm has also had trouble finding the right mix of technical and business abilities, saying "the combining of those skills is a resource that's hard to find."
Wendl said his company recruits from top engineering schools and takes in between 100 and 120 new hires a year. But even then, training those workers means it can take up to three years for them to become fully productive. That process "holds back the speed of business development," he said.
The difficulty of finding and training workers means the current economic difficulties will serve as no brake on recruitment. Wendl says "we are intending to fill our class" of trainees.
In some emerging fields, the scramble for workers can be even more difficult. Dawn Meade, one of the owners of Baltimore-area company Advanced Video Systems, Inc., said it's a constant struggle to find workers for her eight-person shop.
Sometimes the firm's work in corporate video conferencing must be contracted to competitors, she said.
When it comes to rounding up new workers, something the company wants to do despite a more difficult business environment, "we pretend like we are Vikings and we try to pillage other A.V. companies," Meade said.
(Michael S. Derby, a special writer with Dow Jones Newswires, has covered the Federal Reserve since 2001. He also writes about bond markets and the economy. He can be reached at 201 938 4192 or by email: michael.derby@dowjones.com.)
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