Labor Shortages: Causes and Solutions
If your business is growing, you’re familiar with the very tight labor market we have right now. And it’s very easy to point to the low unemployment rate as the cause and to think of it as a relatively recent phenomena. But that’s not the complete picture.
During the recovery from the Great Recession, at least five years back, the manufacturing industry reported as many as 50,000 manufacturing jobs going unfilled. The labor force didn’t have the right skills, they said. Students coming out of high school didn’t see manufacturing as an attractive employment path and weren’t learning the skills needed for modern manufacturing jobs. The problem now appears to be much more complex and much larger in scope.
The Bigger Picture
A local Chamber of Commerce program on the state of our schools talked about career readiness and repeated a figure from a recent conference of school superintendents that claimed that across all industries in this country there are 6.5 million jobs unfilled. And while that’s a hard-to-swallow number, if you scour the many trade journals out there looking at economic projections, you will find reports of shortages everywhere.
The trucking industry projects a shortfall of 70,000 employees by 2020. The construction industry says they are so short of people (70 percent of firms surveyed report experiencing labor shortages) to fill positions in every trade that projects are having to be delayed in order to have enough workers to complete them. Even the restaurant industry is feeling the pinch, as evidenced by help wanted signs in virtually every store.
“Plant Services” addressed the challenges manufacturers are having filling open positions citing the wide spread need for machinists and electronic technicians. They also cited data from their Plant Services’ 2018 workforce survey which showed 70 percent of respondents indicating that finding skilled workers for open positions is a top challenge. Respondents are also challenged by knowledge capture/transfer as they try to hang on to employees that have the needed technical know-how.
This loss of knowledgeable employees is partly the result of retiring Boomers, but again, that’s not the whole story. “Industrial Equipment News” reports that American workers’ willingness to quit their current job to pursue better opportunities is at a 17-year high, 2.4 percent. And the data bears out workers’ expectations for higher salaries, with government data showing workers who switch jobs experience larger raises than those who stay put. The same article supports the above statement on the number of open positions available, 6.64 million in May. And yet, wage growth remains a meager 2.7 percent, well below the 4 percent often cited as what’s typical in a healthy, growing economy.
While low unemployment across the country is certainly a leading cause of tight labor, it’s not the only one. The shrinking labor participation rate among prime working age males is an area of concern. The New York Times published an article describing the decline of labor participation by men, and in particular by men in their prime working ages of 25 to 54. They peg this decline to the lack of good opportunities for those with lower levels of education, an offshoot of the advances in technology in industry that require higher skills levels.
There’s no doubt that more and better education programs are one of the key solutions to the problems discussed above, and all three of the articles cited include examples of programs successfully training students in the skills industry needs. Several of the examples indicate that employers are snapping up graduates as quickly as they complete their programs. A local career center reported that every one of the high school seniors in their healthcare curriculum were offered positions by local health services firms, and those firms were starting to make offers to high school juniors in the program.
There has also been a significant shift away from the societal belief that good jobs are only available to college graduates. More and more high schools and community colleges are offering vocational programs in virtually every field, from welding and HVAC to control systems, health services, and culinary arts. In Alabama, there are also initiatives from the State to promote careers in manufacturing and construction trades, working to overcome negative images of such blue collar careers. Long-term results remain to be demonstrated, but educators and employers alike are optimistic.
Another solution cited by “Control Design” is the use of what they describe as collaborative robots, or “cobots”. Rather than building a process around automation, the example in the article brought smart robots into the existing manufacturing process, where they work closely with human labor. In the case of the injection molding plant described in the article, some work stations were able to reduce labor requirements by half. And they are able to deploy these robots one at a time and get familiar with them before bringing in the next robot.
We obviously believe that automation can be another solution to the issue of labor shortages especially in areas of water/wastewater where monitoring and control of remote stations has traditionally been labor intensive. In Guntersville, Alabama, a cellular-based wireless SCADA system was employed to reduce labor required to monitor pump stations in their water distribution system. And in Okeechobee, Florida, automation of five huge pump stations that manage flood control in the watershed north of Lake Okeechobee greatly improved efficiency in what had been a totally manual monitoring and control operation.
The labor shortage issue is full of complexities, and long-term solutions involve educational, political, and societal elements that none of us have much control over. But there are some ways to alleviate impacts right now. Whether it’s implementing automation of some of your labor intensive manual processes, or employing us to augment your technical service workforce, as you lose control systems knowledge and skills to retirements and labor shifts, there are steps you can take. Talk to one of our automation expertsabout your needs.
Next month, we’ll be posting suggestions from our HR staff on employee retention, a key aspect of combatting the tight labor market.