Firms strug­gle to find, re­tain work­ers as econ­omy hums

The Washington Post - - FRONT PAGE - BY DAVID J. LYNCH

Ron San­dlin has tried ev­ery­thing.

He has boosted pay, added va­ca­tion days and even low­ered the min­i­mum age re­quire­ment from 25 to 23. But he still can’t find enough qual­i­fied peo­ple to drive Pa­triot Trans­porta­tion Hold­ing’s oil trucks.

“I’ve been in this busi­ness since 1984, and I’ve never seen what we’re deal­ing with in terms of hir­ing peo­ple,” said San­dlin, pres­i­dent of the Jack­sonville, Fla., truck­ing firm. “Driver pay is go­ing to have to con­tinue to go up, and our cus­tomers are go­ing to have to pay for it.”

This is what full em­ploy­ment looks like. A decade af­ter the worst eco­nomic down­turn since the Great De­pres­sion, the United States sud­denly finds it­self at a place where al­most ev­ery­one who wants a job can find one. The un­em­ploy­ment rate in De­cem­ber was 4.1 per­cent, leav­ing em­ploy­ers strug­gling to at­tract and re­tain good work­ers and rais­ing the prospect of higher wages as the United States ap­proaches con­gres­sional elec­tions in Novem­ber.

“Em­ploy­ees to­day have lots of op­tions in all cor­ners of in­dus­try, whether you’re in fast food or re­tail or in­vest­ment bank­ing,” said Art Ma­zor, a prin­ci­pal at Deloitte Con­sult­ing. “This feels su­per tight.”

Since Pres­i­dent Trump signed a $1.5 tril­lion tax cut in De­cem­ber, sev­eral ma­jor em­ploy­ers have an­nounced pay in­creases or one-time bonuses. The lat­est came Thurs­day when Wal­mart an­nounced plans to raise its start­ing hourly wage to $11 from $9, and dis­trib­ute bonuses of up to $1,000. Other com­pa­nies, such as Amer­i­can Air­lines, AT&T, Com­cast and Bank of Amer­ica, have cited the tax leg­is­la­tion as the trig­ger for sim­i­lar moves, draw­ing cheers from Repub­li­cans.

But the pace of wage growth

has been ac­cel­er­at­ing at least since the fall of 2015. For the year end­ing Sept. 30, wages rose 3.2 per­cent, com­pared with 2.9 per­cent for the same pe­riod one year ear­lier and 2.2 per­cent two years ago, ac­cord­ing to econ­o­mist Jim O’Sul­li­van of High-Fre­quency Eco­nomics.

Un­em­ploy­ment has been lower than the 4.6 per­cent rate that the Fed­eral Re­serve says is sus­tain­able over the long term since March, which helps ex­plain the bright­en­ing out­look for work­ers.

“It’s re­ally not un­til un­em­ploy­ment drops below the full em­ploy­ment level that you get up­ward pres­sure on wages,” O’Sul­li­van said.

Em­ploy­ers face an es­pe­cially daunt­ing land­scape in Ames, Iowa, which has the na­tion’s low­est job­less rate at 1.5 per­cent. The lo­cal Cham­ber of Com­merce has helped re­cruit work­ers from as far away as North Carolina, while em­ploy­ers have dou­bled bonuses for em­ploy­ees who re­fer new hires, said Brenda Dreyer, the Cham­ber’s head of work­force de­vel­op­ment.

“This is not the same world of re­cruit­ing,” she said. “You can’t do just one thing any­more. You re­ally have to be go­ing at it in a num­ber of ways.”

At Mary Gree­ley Med­i­cal Cen­ter, the 220-bed hospi­tal in Ames, chief ex­ec­u­tive Brian Di­eter has adopted more flex­i­ble em­ployee schedul­ing to ap­peal to stu­dents from nearby Iowa State Univer­sity. The hospi­tal also has tried to re­cruit to “non­tra­di­tional work­ers,” in­clud­ing re­tirees, to fill en­try-level cler­i­cal, house­keep­ing and valet park­ing jobs, he says.

Chris Nel­son, the fourth­gen­er­a­tion owner of a cen­tu­ry­old elec­tri­cal busi­ness in Ames, strug­gles to main­tain a full ros­ter of elec­tri­cians. He has raised wages, re­dou­bled ef­forts to at­tract young peo­ple to ap­pren­tice­ships that last four to five years and even taken on semire­tired work­ers to plug the gaps in his 70-worker firm.

“As the econ­omy has con­tin­ued to im­prove, it’s re­ally hit this past year,” Nel­son said. “There’s more work around than there are peo­ple trained to do it.”

In Novem­ber, when Dupont an­nounced plans to close a lo­cal cel­lu­losic ethanol plant, 90 work­ers found them­selves job­less right be­fore Thanks­giv­ing. Dryer, of the Ames Cham­ber, con­tacted them within a week, act­ing as a match­maker for com­pa­nies with va­can­cies. Many soon landed po­si­tions at firms such as Hach Chem­i­cal and Dan­foss Power So­lu­tions.

At Pa­triot Trans­porta­tion, San­dlin, 56, says hir­ing dif­fi­cul­ties have in­creased as the econ­omy healed from the pun­ish­ing re­ces­sion. A lack of driv­ers is caus­ing him to forgo new busi­ness op­por­tu­ni­ties, he said, adding that he could eas­ily boost his roughly 600-per­son pay­roll by 10 per­cent if he could find qual­i­fied can­di­dates.

He has raised pay over the past year by 3 to 4 per­cent, added two va­ca­tion days and of­fered hir­ing and longevity bonuses that run up to $10,000 in cer­tain cases.

“We’re try­ing to do things to make the job more ap­peal­ing,” he said.

San­dlin’s strug­gles are not unique. The con­struc­tion in­dus­try has com­plained about a short­age of ex­pe­ri­enced work­ers. In a sur­vey by the As­so­ci­a­tion of Gen­eral Con­trac­tors re­leased ear­lier this month, 78 per­cent of re­spon­dents said they were hav­ing a hard time find­ing qual­i­fied work­ers, an in­crease from 73 per­cent one year ago.

In the short run, econ­o­mists ex­pect the job­less rate to con­tinue fall­ing, dip­ping below 4 per­cent later this year for the first time since De­cem­ber 2000. The econ­omy al­ready has been ex­pand­ing for more than eight years, steadily shrink­ing the un­em­ploy­ment rate from its Oc­to­ber 2009 peak of 10 per­cent.

Last month, Congress ap­proved the $1.5 tril­lion tax cut that econ­o­mists say will fur­ther stim­u­late the econ­omy.

Mil­lions of ag­ing or dis­cour- aged work­ers who re­treated to the side­lines in the af­ter­math of the re­ces­sion will likely be drawn back into the work­force. That would be a healthy de­vel­op­ment, un­less the job mar­ket gets so tight that em­ploy­ers en­gage in bid­ding wars that rapidly drive wages and prices higher.

“We still have some slack,” said Michael Strain, an econ­o­mist with the Amer­i­can En­ter­prise In­sti­tute. “The un­em­ploy­ment rate can con­tinue to fall with­out spark­ing a sig­nif­i­cant in­crease in in­fla­tion.”

In Wi­chita, Spirit Aero-Sys­tems will take up some of that slack. The maker of air­craft com­po­nents such as fuse­lages an­nounced in De­cem­ber that it will hire 1,000 work­ers over the next five years as part of a $1 bil­lion ex­pan­sion.

The com­pany says it al­ready is fac­ing a tight la­bor mar­ket, es­pe­cially for skilled work­ers. Spirit has broad­ened ties with lo­cal vo­ca­tional in­sti­tu­tions, ex­panded its skilled ap­pren­tice­ship pro­gram and gone na­tional with re­cruit­ing ef­forts that for­merly stayed close to home.

“We’re see­ing a wide va­ri­ety of ap­pli­cants but fewer with di­rect aero­space or man­u­fac­tur­ing ex­pe­ri­ence than we have in the past,” said Justin Wel­ner, vice pres­i­dent for hu­man re­sources. “Those ex­pe­ri­enced can­di­dates who do ap­ply are highly sought af­ter, and we gen­er­ally find our­selves com­pet­ing with other em­ploy­ers.”

Tight la­bor mar­kets are likely to per­sist. Over the next decade, as the baby boomers re­tire, the la­bor force will ex­pand by 0.5 per­cent an­nu­ally, roughly one-third as fast as it did be­tween 1950 and 2016, pre­dicted the Con­gres­sional Bud­get Of­fice.

Such an ane­mic work­force rise will sap the econ­omy’s for­ward mo­men­tum, which is why most econ­o­mists ex­pect Trump to fall well short of his goal of 3 to 6 per­cent growth. Through 2027, the CBO an­tic­i­pates, the United States will grow at an av­er­age an­nual rate of 1.8 per­cent.

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