EDITOR’S NOTE: This is Part 1 in a 2-part series within Richland Source’s “Rising from Rust” project looking at how Richland area employers are addressing a labor shortage. Part 2 can be read here.
MANSFIELD — “We can’t find employees.”
It’s a statement heard repeatedly across Richland County – in conference rooms of manufacturers; inside the industrial park; at monthly Regional Manufacturing Coalition meetings and in conversations between employers and often anyone who’s willing to listen.
There are variations, for sure.
“We can’t find good employees.”
“We can’t find skilled employees.”
“We can’t find employees because of the opioid epidemic.”
“We can’t find employees who will even show up on time.”
There is an apparent gap between the type of jobs available and the workers equipped to fill them, according to Richland Community Development Group’s workforce development director Clint Knight. He recently completed a regional survey to get a better understanding of the situation.
“The key information from our recent wage survey is that employers are having a hard time locating the skilled employees that they need,” Knight said. “This means that we need to make sure that we are training the employees that we have to have diverse abilities and be as highly skilled as possible.”
He says the community needs to be preparing high school students to fill local jobs and to give the existing local workforce pathways to become the skilled employees that local employers need.
At Richland County’s recent economic forecast breakfast, chief investment strategist for Key Private Bank Bruce McCain recognized the skills gap, but highlighted another problem: There’s not enough people.
Knight’s survey noted this, too.
Area employers identified “lack of applicants” as one of the top reasons for hiring challenges. It was listed second, directly behind “lack of qualified and skilled applicants.”
For the first time in 40 years, McCain explained, the United States is approaching a time where employers are short on labor. Finding enough skilled labor is the number one problem heard from businesses, the economic expert said.
“It’s going to be a competitive marketplace, where it’s difficult to get pricing power and it may be hard to find the people that we need to employ,” McCain said about the country’s immediate future.
In the past two years, the issue has already been reported by CNBC, FOX, CNN, the Washington Post and countless other media outlets.
“The U.S. labor shortage is reaching a critical point,” CNBC reported in July 2018, and only a few months earlier, a CNN Business report explained how the problem exists in big and small businesses alike.
In April 2018, an article posted by FOX business suggests looking in the Midwest, if in need of a job. There are more jobs than people to fill them, FOX reports, citing the U.S. Department of Labor statistics.
“There’s not an idle workforce, or a learning curve in employees who need training in order to advance — there is actually an absence of workers,” the article states, paraphrasing Dave Swenson, an associate scientist at Iowa State University.
McCain predicts the labor shortage may soon become more challenging. The labor force in the United States has been growing by 1.5 percent per year, but that meager growth will soon further decrease, he said at Richland County’s economic forecast breakfast.
Based on the growth of the prime working age group, those 20- to 60-years-old, the labor force should be growing at 0.2 percent, he said.
“That’s because we’ve been pulling people in off the sidelines who have been unemployed or otherwise unengaged. Once we run through that pool, however, of unemployed workers, we’re going to drop back to that 0.2 percent,” McCain said.
What about keeping workers with higher wages?
When competition this significant arises, wages should rise, McCain explained, but that hasn’t been the case throughout the United States.
“If you look at the wage rates, you’ll see we’ve reached the point with unemployment where we’ve crossed over the full employment level,” McCain said.
He estimated a 3.3-percent wage increase could be sustained by the United States economy, but it could be challenging for employers to implement.
“What we’re seeing with most businesses is it’s been pretty difficult to pass price increases along, so that’s probably part of the reason,” McCain said.
Knight says his recent survey shows Richland, Ashland and Crawford County businesses have already raised their wages to competitive levels when compared to Wooster and Delaware Counties.
Results showed that assemblers and fabricators in Richland, Ashland and Crawford counties make an average of $15.86 per hour, while the same positions (on average) are paid $15.82 per hour in Wayne County and $16.25 per hour in Delaware County. Production workers are paid an average of $14.24 per hour locally, $14.31 per hour in Wayne County, and $15.42 per hour in Delaware County, according to data Knight collected in collaboration with Kent State University’s Stark program.
“Our local employers are keeping an eye on the wage trends, and are responsive to our regional labor market,” Knight said. “Our local employers are not out of range of those counties around us. We have competitive wages.”
Still, it is indeed one of the tightest labor markets in years in Ohio and Richland County, he explained.
“Specifically in Richland County manufacturing, we have seen wage increases over the last 18 months — these increases are in response to that competition,” he said. “The increases are already happening here due to both a tight labor market and a positive economic situation.”
But there’s several factors that play into this.
“Since labor wages do not respond to supply and demand the same way as product, it poses considerable challenges,” Knight said. “When there is less oil, the prices goes up, and typically that is the same with the availability of skilled labor.
“However – when there is more available oil, the price goes down, and that can’t necessarily happen with labor. Once a wage is raised that becomes the new wage. The only alternative for employers is a layoff, and no one wants to lay off employees.”
He encourages employees who are seeking a higher wage to attain a higher skill level, as there are available positions that require more further skills and local opportunities to train.
Read Part II here.