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Key Workforce Challenges: Businesses Struggle to Find Skilled Workers
by Nick Beleiciks, Gail Krumenauer
Published Mar-17-2014

 
As the economy slowly starts to regain some of the jobs lost in the recession, some businesses are struggling to find the qualified workers they need, despite the continuing high level of unemployment. We hear about these struggles from Oregon employers first hand, and job vacancy surveys find that about one-half of Oregon employers report difficulty filling jobs. When jobs go unfilled because employers can't find qualified people to fill them, it slows the overall speed of recovery.

Examples of shortages abound in the health care, trucking, and manufacturing industries, but the struggle to find workers does not appear to be widespread. In fact, the difficulties may be limited to hiring for certain occupations, or in certain industries, or in certain regions. Easing the difficulties in finding skilled workers will require adjustments to the expectations of both employers and job seekers. Adjusting isn't going to be easy, which is why businesses' struggle to find skilled workers is one of the key workforce challenges facing Oregon.

Far More Unemployed People Than Vacancies
 
On the surface, there are plenty of unemployed workers for the number of jobs available. In the fall of 2013, there were 32,300 vacancies in Oregon, at the same time there were 133,130 people without jobs and looking for work and the unemployment rate was 6.9 percent. That's nearly a four-to-one ratio of unemployed to vacancies. So how can businesses be struggling to find enough workers?

One reason is that the industries and occupations that need workers may not match up with the education or experience of recent graduates and the unemployed. In addition, the long-term unemployed may experience attrition in skills, or have relatively dated skills in rapidly changing industries.

Businesses hiring for some occupations and in some industries may also experience continual difficulty finding workers if the conditions of the job - such as long hours, high stress, or low pay relative to a similar job elsewhere - are unfavorable. Some employers may be limiting their supply of potential employees by only hiring workers who are already employed. Earlier this year the Oregon Legislature passed a law banning discrimination against the unemployed in job advertisements.

There's also a structural consideration: there could be available jobs in Medford, but qualified workers in La Grande or Klamath Falls may not be able to sell their homes to move for those jobs, even if they wanted to do so.

Most Businesses are Finding Qualified Workers
 
The majority of Oregon employers appear to be finding the workers they need to fill their job openings. In a job vacancy survey conducted by the Oregon Employment Department in fall 2013, only 18 percent of Oregon businesses cited "lack of qualified candidates" as a barrier to hiring. Research from The Conference Board also suggests that the Pacific region has relatively less difficulty finding skilled workers than the Midwest and upper Plains states, citing the higher unemployment rates - and therefore a surplus of labor - in our region as a main reason.

But Some Businesses Struggle to Find Workers
 
Employers hiring for some occupations do face distinct difficulties though. Vacancy survey results show a diverse set of occupations with the largest number of openings that had gone unfilled for 60 days or more (Table 1). The 60+ day vacancies could result from the overall size of that occupation, or the amount of time to complete the hiring process for some openings. However, long-term vacancies may also indicate that positions are hard to fill. Top occupations with the most long-term vacancies ranged from truck drivers to registered nurses to cashiers.

Table 1
Top 25 Occupations With the Highest Number of Vacancies Open 60+ Days, Oregon Statewide, Fall 2013
Occupation Open 60+ Days Share of Total   Typical Entry Level Education1
All Occupations 4,357 13%    
Heavy and Tractor-Trailer Truck Drivers 300 25%   Postsecondary non-degree award
Registered Nurses 184 19%   Associate's degree
Meat, Poultry, and Fish Cutters and Trimmers 163 39%   Less than high school
Cashiers 152 27%   Less than high school
Massage Therapists 146 54%   Postsecondary non-degree award
Forest and Conservation Workers 139 50%   High school diploma or equivalent
Nursing Assistants 105 21%   Postsecondary non-degree award
Cutting, Punching, and Press Machine Setters, Operators, and Tenders, Metal and Plastic 103 94%   High school diploma or equivalent
Construction Laborers 100 54%   Less than high school
Social and Human Service Assistants 91 54%   High school diploma or equivalent
Automotive Service Technicians and Mechanics 77 38%   Postsecondary non-degree award
Automotive Body and Related Repairers 76 75%   High school diploma or equivalent
Electricians 75 49%   High school diploma or equivalent
Combined Food Preparation and Serving Workers, Including Fast Food 70 16%   Less than high school
Computer Occupations, All Other 69 42%   Postsecondary non-degree award
Financial Managers 64 48%   Bachelor's degree
Sales Managers 58 33%   Bachelor's degree
Emergency Medical Technicians and Paramedics 57 34%   Postsecondary non-degree award
Licensed Practical and Licensed Vocational Nurses 55 52%   Postsecondary non-degree award
Helpers--Production Workers 54 26%   Less than high school
Preschool Teachers, Except Special Education 52 25%   Associate's degree
Educational, Guidance, School, and Vocational Counselors 51 65%   Bachelor's degree
Medical and Clinical Laboratory Technologists 51 63%   Bachelor's degree
Managers, All Other 50 79%   Bachelor's degree
Helpers--Roofers 49 100%   Less than high school
1 As identified in the Employment Department's 2012-2022 employment projections
Help Wanted: Education, Training, and Experience Required
 
Fourteen of the top 25 occupations listed in Table 1 required a minimum of postsecondary training, an associate degree, or a four-year or advanced degree to be qualified for the job. In other words, many of the occupations that take a longer time to fill require specialized training, so they can't immediately be filled by just anyone who is unemployed.

In addition to educational requirements, there is a desire by employers to hire experienced and trained applicants. This could be contributing to their struggle to find enough workers. The job vacancy survey results showed that nearly two-out-of-three openings required workers to have previous experience. Education may substitute for experience at some jobs, but that's often not the case. Of the vacancies that required a bachelor's degree, 96 percent also required previous experience. Dr. Peter Cappelli of Wharton's Center for Human Resources describes this as a Catch-22 situation for workers - "to get a job, you have to have that job already."

The Shortage of Health Care Workers
 
The struggle to find enough qualified workers to fill vacancies in the rapidly growing health care industry has been going on for years. Health care is expected to be the second fastest growing occupational group this decade and add nearly 26,100 new jobs in Oregon between 2012 and 2022. In addition to these new jobs, an additional 25,700 workers will be needed to replace retiring health care workers, so there is going to be a continuous need for newly trained health care workers.

Unlike nearly all other industries, health care continued to add jobs during the recession. With fewer layoffs relative to other industries, there's no large pool of already trained (but unemployed) healthcare practitioners and technicians ready to fill current or future vacancies.

A possible way to help ease the shortage of health care workers is to train unemployed workers from other industries for jobs in health care, and some people do receive such training. But many health care occupations with hard to fill vacancies, such as registered nurses and physical therapists, require years of education and training before a person is qualified for the job. Even while unemployment is high, growing industries like health care will still have a shortage of applicants with the specialized education needed for the available jobs.

The Shortage of Truck Drivers
 
There has been a surge in demand for truck drivers in Oregon (Graph 1). The Conference Board's Help Wanted Online data series in February 2014 showed an ad volume of 1,838 for heavy and tractor-trailer truck drivers in Oregon - the highest for all occupations statewide.

This occupation illustrates many aspects of the key workforce challenge at hand. The nature of the work can be difficult. Long-distance routes require extended time away from home, and the job often includes long work hours. Truck drivers must also invest in training, and depending upon the job, the pay may be low. In addition, many employers require drivers with previous experience.

The U.S. Department of Transportation (DOT) recently instituted new regulations for truck drivers in an effort to increase safety by reducing driver fatigue. The new hours of service regulations reduce the maximum work week by 12 hours. Still, truck drivers can work as many as 11 hours per day, or could work up to 82 hours in a seven-day period. New rules also require that drivers take a 30-minute break after eight consecutive hours of driving, and mandate a sleep period between 1:00 a.m. and 5:00 a.m. at least two times per week.

In terms of minimum qualifications, truck drivers need postsecondary training and a commercial driver's license (CDL). A cursory review of online ads in Oregon shows some other requirements for selected truck driving jobs:

  • "Able to drive and/or work to the maximum number of hours allowed under DOT Hours of Service Regulations."

  • "Ability to seldom lift up to 70 lbs (to apply tire chains). Ability to push/pull up to 148 lbs (connector kingpins, dollies, jiff locks, gates)."

  • "Environmental working conditions vary and employee may encounter vibration, noise, odors, and extremes in temperature and wind?occasional exposure to petroleum-based products such as gasoline, diesel fuel, oil, and grease."

  • "We get you home every two to three weeks. Need around two years of experience, plus a decent motor vehicle record."

These job postings pay salaries between $35,270 and $38,110 per year. That translates to between $17 and $18 per hour for a 40-hour week, but these jobs would pay closer to $9 per hour at the maximum allowable hours per week. While the conditions and requirements shown here are not fully representative of the occupation as a whole, they do reflect possible reasons that truck driver vacancies could be hard to fill.

Graph 1
Recruitment for long-haul truck drivers is up in Oregon
The Shortage of Skilled Manufacturing Workers
 
Manufacturers in particular seem to be struggling to find workers. After cutting millions of jobs nationwide during the recession, some manufacturers who are hiring again report difficulty finding enough workers, especially those with specialized skills. Nationally, the number of hires in manufacturing was running below the level of openings through January 2014, suggesting a relative shortage of manufacturing workers at the national level (Graph 2).

There are a number of reasons why some manufacturers are having a tough time finding the right workers. It could be a supply issue - the experienced manufacturing workers who were laid off during the recession may no longer be available. They may have taken jobs in other industries and not want to return to manufacturing, or they could have retired or moved away and no longer be part of the local labor pool. In addition, college graduates may be discouraged from pursuing manufacturing careers, or there could be a disconnect between vocational training and on-the-job requirements. It could also be a skills mismatch; the skills that manufacturers are looking for could be different than the skills possessed by people looking for work.

A recent survey of metal manufacturers in Marion, Polk, and Yamhill counties, conducted by the Oregon Employment Department, found that 31 percent had difficulty filling at least one position in 2011. According to many of the manufacturers, the difficulty filling vacancies was a barrier to their companies' growth.

Most survey respondents who reported difficulty filling positions said they struggled because of skills or skills-related deficiencies among job applicants. Besides the lack of technical or soft skills, other common reasons given by manufacturers were a lack of work experience or training among applicants (see ,i>What Employers Need,  www.qualityinfo.org/pubs/skills/fabmetals.pdf).

Graph 2
U.S. manufacturing job openings, hires, and employment seasonally adj 2004-14
What Can Struggling Employers Do to Find Workers?
 
Employers with difficulty finding qualified workers can take steps to attract more skilled applicants. Below are a few suggestions that Dr. Cappelli and others offer to help business attract the skilled workers they need to have an advantage over their competition.

Increase recruiting intensity: Employers can increase advertising or search intensity to fill a vacancy. They can screen applicants more quickly and, where possible, try to fit the location of the job to potential hires.

Recruiting intensity may be one of the most cost-effective ways of attracting the right candidates. For example, employers are welcome to use the Oregon Employment Department's free job placement tool iMatchSkills (www.iMatchSkills.org) to help find applicants that have the skills they need.

A team of researchers using establishment-level data from the Job Openings and Labor Turnover Survey found that recruiting intensity fell during the recession, which was not a surprise given the weak labor market. A recruiting intensity index, published in their paper The Establishment-Level Behavior of Vacancies and Hiring, found that recruiting intensity declined 17 percent in 2008 and remained low through 2011, even below the recruiting levels of the 2001 recession.

Expand employee training: Employers may already have the perfect candidate working for them, with a little training. Dr. Cappelli suggests that companies promote from within and provide apprenticeship type training to help get workers up to speed. Current employees already know the ropes and have knowledge that no outsider could have, and filling a vacancy with a current employee lowers recruitment costs.

Apprenticeship type training, which pays new workers less as they learn the required skills, is a traditional way that employers create the skilled workers they need. There is a risk though that the skilled employee may leave for another company once the training is complete, in which case the company loses their investment in that worker and their shortage of workers continues.

Increase wages and benefits: Raising the wages or benefits offered to workers with skills that are in short supply will increase the number of qualified applicants for the vacancy. Of course, it is also likely to be the most costly option. Many employers may not be able to afford to pay enough to attract skilled workers and still remain profitable.

The average hourly wage of the vacancies reported in the 2013 job vacancy survey was $15.04, less than the median wage earned by all workers covered by Oregon's unemployment insurance system in the second quarter of 2013 ($16.91)..This suggests that on average, employers are offering wages lower than the rate people are willing to work for and this may cause shortages even in jobs with no barriers to entry. It is likely that higher wages would draw more of the people back into the labor force that left the labor force due to scarcity of high-paying jobs.

Work with education providers: Businesses with persistent difficulty finding skilled workers can team with community colleges and other education providers to provide courses tailored to the specific needs of the employer. The prospective candidate usually pays the costs of the training, while the employer gets trained applicants who they know have the required skills. According to Dr. Cappelli, the approach also works with current employees where the employer reimburses the cost of tuition, but the workers invest the time, usually outside of work, learning the skills.

There are plenty of examples in Oregon of connecting workforce-related training to the actual needs of businesses. That topic is the subject of the next article in this series, Key Workforce Challenges: Connecting Training to Workforce Needs.

The Struggle Continues
 
The shortage of skilled workers is a hot topic right now. Some employers are finding it very difficult to fill key positions. Adjusting their recruiting approach and new employee expectations may help with their shortage, but there may simply not be enough qualified workers available at the best wages some business can afford to pay. Until businesses can find enough workers to get the job done, the struggle will continue to be one of Oregon's key workforce challenges.