Jobs and Workers: A Note From the Field

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In comments to yesterday’s post about firms having trouble finding qualified workers even with millions of unemployed to choose from, Bob offers this:

My day job is with a regional Workforce Investment Board and I might be able to offer some additional clarification based on what we are seeing in this job market.

There are indeed some jobs that remain vacant because employers cannot find workers with the right skills. You correctly noted that this problem was MUCH worse mid-decade when the economy (at least here) was doing well. At that time employers were willing to hire people as long as they had very basic employability skills (work ethic, attendance, hygiene, etc). They would train for job specific skills.

Today, I would break “the problem” into several problems.

  • First, there is a significant fraction of the unemployed who are reluctant to re-train. The reasons behind this are: (1) Early on in their unemployment, some feel they cannot afford to take time to go back to school — even if it is government financed like we provide. They need money today and figure looking is their best choice because they’ve “always been able to find a job.” As unemployment lingers they start to broaden their horizons but can afford it even less. As background, one must be unemployed, through no fault of one’s own, when applying for training. However, we will continue to pay for training if the client finds a job. In fact, we encourage and assist people in finding employment to pay for basic needs while training. (2) They were poor students and/or hated school the first time around. The idea of going back, sometimes after decades, is extremely intimidating.
  • Employers who once would take any warm body are becoming more choosy and, at the risk of overstating it a bit, feel they can find over qualified workers at bargain basement prices. It seems like this is what is happening with the pharmaceutical company in the NYT article.

    I read the issue a bit differently than you are. The 9th grade reading and math test, which a “significant” proportion failed (is that 25%, 50%, more, less???) is a floor. It is likely the company is looking for much more than that, a point that is alluded to by the disappointment with local training programs. Moreover, per the article, the company is paying 60-67% of the going rate for skilled workers. Workers who were living check to check before the recession will be reluctant to take a 30-40% pay cut. Also, many with professional backgrounds forget that factory work pay scales are pretty rigid. A worker who accepts a position 40% less that what they were making will likely never make up the difference. That is a tough nut to swallow.

    Here is where the right wingers have a partial point. Unemployment insurance (UI) is a cushion that has a tendency to delay that point at which such a worker as described above gets desperate enough to take anything. For my part, I don’t think this is bad. When the economy rebounds, underemployment is a drag on growth. Fitting people to the best employment for which they are qualified is the optimal solution. To the extent that UI helps this, it is a good thing.

My region is quite diverse in that we cover urban, suburban and rural areas. Each brings its own challenges. Recently, a large paper mill closed in the rural part of our region putting 1,200 out of a job in the space of 4 months. Over 200 have found jobs, in manufacturing, with a local private shipyard. This company has been willing to take skilled machine operators and put them through an extensive, and expensive apprenticeship program. The vast majority of the workers leaving the paper plant have no more than a high school diploma yet the shipyard willingly took them on as trainees. In this instance, the shipyard is paying a decent apprenticeship wage, with the opportunity of moving into a more lucrative career path AND providing a “blue chip” training experience.

One could argue that this is “government funded” because the shipyard is a 100% Navy contractor and that other employers cannot profitably offer that same deal. However, the workforce investment system is able to provide on the job training funds to employers willing to hire and put workers through a legitimate training experience. Each workforce investment board is able to set its own policies. In our case we will pay up to 50% of a trainee’s salary for up to 6 months. The primary requirements are that the newly hired employee does not displace an existing employee; the trainee gains measurable skills over the course of the training period; and the trainee’s salary increases after the training period ends (commensurate with the increase in skills).

The system is flexible enough to accommodate the great variety of situations present in individual local job markets. Both employers and prospective employees need to be aware of the services and willing to take advantage of them.

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