Em­ploy­ers say they’re hav­ing a hard time finding enough skilled work­ers.

Un­em­ploy­ment is at its low­est since re­ces­sion, slow­ing hir­ing

Houston Chronicle - - BUSINESS - By Pa­tri­cia Co­hen

MIL­WAU­KEE — At West­ern Build­ing Prod­ucts’ banana-shaped fac­tory on the lip of the Menomonee River out­side Mil­wau­kee, the com­pany’s pres­i­dent, Mark Wil­ley, is wran­gling with a stub­born prob­lem: not enough work­ers.

“If some­one is here a year, they never leave,” Wil­ley said. “Our prob­lem to­day is just finding peo­ple who want to work.”

It is a headache em­ploy­ers across the coun­try are con­fronting, as Fri­day’s monthly jobs re­port from the gov­ern­ment il­lus­trated. The un­em­ploy­ment rate in Novem­ber held steady at 3.7 per­cent — the low­est in nearly half a cen­tury. And while the pace of hir­ing slowed to 155,000 from Oc­to­ber’s aboveav­er­age show­ing, the pa­rade of pay­roll gains marched on un­in­ter­rupted for the 98th month.

Af­ter a week in which the mar­kets gy­rated and pres­i­den­tial tweets caused trade ten­sions to flare, the la­bor mar­ket’s steadi­ness of­fered a dose of calm.

“It’s ob­vi­ously an econ­omy that is well in ex­pan­sion mode but that is com­ing off the boil af­ter a strong sec­ond and third quar­ter,” said David Don­abe­dian, chief in­vest­ment of­fi­cer of CIBC Pri­vate Wealth Man­age­ment. “So the state of the job mar­ket is good. It’s just that the pace of job cre­ation is slow­ing a lit­tle bit.”

The av­er­age monthly job gain clocked in at 170,000 for the past three months and more than 200,000 for the year.

Av­er­age hourly earn­ings rose 0.2 per­cent in Novem­ber, keep­ing the year-overyear av­er­age at 3.1 per­cent for the sec­ond month in a row, a level not seen since the re­ces­sion. “If you have solid wage growth while pro­duc­tiv­ity is im­prov­ing, that is the best of both worlds,” Don­abe­dian said.

The la­bor short­age has been a boon to work­ers who were hit hardest dur­ing the re­ces­sion: Min­i­mum-wage earn­ers, African-Amer­i­cans, Lati­nos and Amer­i­cans with a high school diploma or less have all seen their job­less rates de­cline in re­cent months.

Many of them were able

“So the state of the job mar­ket is good. It’s just that the pace of job cre­ation is slow­ing a lit­tle bit.”

David Don­abe­dian, chief in­vest­ment of­fi­cer of CIBC Pri­vate Wealth Man­age­ment

to find jobs in health care, man­u­fac­tur­ing, and trans­porta­tion and ware­hous­ing, which were among the strong­est job-cre­at­ing sec­tors.

Em­ploy­ers added 27,000 man­u­fac­tur­ing jobs in Novem­ber, on top of nearly 300,000 po­si­tions in the pre­vi­ous 12 months.

Those who are do­ing the hir­ing, though, have re­peat­edly com­plained that the field of avail­able work­ers has been picked through, and that peo­ple with suf­fi­cient skills are par­tic­u­larly scarce.

At West­ern in the Mil­wau­kee area — where the job­less rate is down to 3 per­cent — work­ers bun­dled against the cold un­loaded door frames on Fri­day. Else­where, mill­work em­ploy­ees used palm san­ders to smooth down doors sus­pended back to front from a con­veyor, like a scaled-down, less col­or­ful ver­sion of Dis­ney’s an­i­mated “Mon­sters, Inc.” fac­tory.

This De­cem­ber has been un­usu­ally busy, said Wil­ley, who is fin­ish­ing up his 42nd year at the fac­tory, where he started as a sea­sonal worker. The com­pany has 217 peo­ple on staff and ex­pects to raise the to­tal to 230 next year.

En­try-level wages are $12.50 an hour, while the typ­i­cal worker earns nearly $17 an hour plus ben­e­fits. Be­cause the busi­ness is 100 per­cent em­ployee owned, work­ers build up eq­uity in the com­pany af­ter a year, which Wil­ley said amounted to a 25 per­cent raise. He and his col­leagues have bat­ted around the idea of raising start­ing wages to $16 an hour, but “we have to have the pro­duc­tiv­ity for it to make sense,” he said.

West­ern has used tem­po­rary agen­cies and em­ploys in­mates from a nearby cor­rec­tional fa­cil­ity as part of a work-re­lease pro­gram. “When they get re­leased, we hire them,” Wil­ley said. “Some we even hire while they’re still in.”

The com­pany is also work­ing with lo­cal high schools that teach stu­dents the build­ing trades. “We’ve had a few com­ing by, hop­ing they’ll want to work here when they grad­u­ate,” Wil­ley said.

As for work­ers, in na­tional sur­veys they have com­plained for years about slug­gish wage growth and nipped op­por­tu­ni­ties for ad­vance­ment.

A grow­ing num­ber of work­ers say they are will­ing to take the risk of hop­ping to an­other job in search of higher pay and more re­spon­si­bil­ity, ac­cord­ing to Gart­ner, a re­search and con­sult­ing firm that con­ducts a quar­terly na­tional sur­vey of 20,000 em­ploy­ees at com­pa­nies val­ued at $100 mil­lion or more.

“One of the things we’ve seen is that it’s harder for em­ploy­ees to get pro­moted nowa­days,” said Brian Kropp, vice pres­i­dent for hu­man re­sources at Gart­ner. In 2006, for ex­am­ple, it took an av­er­age of about 2½ years to get a pro­mo­tion, com­pared with 4½ years now.

At West­ern, busi­ness has been good enough that the 82-year-old com­pany is scout­ing for a lo­ca­tion to build a big­ger fac­tory. Wil­ley, though, is wor­ried that the econ­omy will cool over the next cou­ple of years.

A short­age of work­ers in the build­ing trades has caused projects to back up. At the same time, in­ter­est rates have climbed and tar­iffs put in place by Pres­i­dent Don­ald Trump have bumped up the cost of ma­te­ri­als. Wil­ley pointed to the alu­minum sills that run along the bot­tom of doors, and the steel hinges bolted onto the sides.

As a re­sult, some buy­ers may sim­ply choose not to go for­ward.

“Ev­ery­body’s keep­ing their fin­gers crossed,” Wil­ley said, re­fer­ring to hopes of a trade agree­ment be­tween the Trump ad­min­is­tra­tion and China. The pres­i­dent has threat­ened to raise tar­iffs on $200 bil­lion of Chi­nese goods to 25 per­cent, from 10 per­cent, if no deal is reached.

Un­cer­tainty about trade pol­icy is fu­el­ing anx­i­ety in all cor­ners of the econ­omy.

“That is the big­gest im­ped­i­ment now,” Chris Rup­key, chief fi­nan­cial economist at MUFG, said. “The ball is in the pres­i­dent’s court to make sure the China deal is still on.”

Man­u­fac­tur­ing and re­lated sec­tors tend to be more sus­cep­ti­ble to eco­nomic cy­cles and are par­tic­u­larly vul­ner­a­ble to tar­iffs.

The Com­merce Depart­ment has re­ported that con­struc­tion of sin­gle-fam­ily homes fell for the sec­ond month in a row in Oc­to­ber. Slack­en­ing auto sales were part of the rea­son Gen­eral Mo­tors an­nounced last week that it would idle five plants and cut about 14,000 jobs in North Amer­ica. Ford has also an­nounced plans to trim its work­force.

Fri­day’s jobs re­port, which pro­vided a wel­come coun­ter­point to slow­downs, lay­off an­nounce­ments and stock mar­ket swings, is un­likely to de­ter pol­i­cy­mak­ers at the Fed­eral Re­serve from raising benchmark in­ter­est rates when they meet on Dec. 18 and 19.

Next year is a dif­fer­ent story. Most an­a­lysts ex­pect that the slow­ing pace of job cre­ation will en­cour­age the cen­tral bank to take a more cau­tious ap­proach in the fu­ture.

Steve Gon­za­les / Staff file photo

A Hal­libur­ton em­ployee works near rows of hy­draulic frac­tur­ing pump­ing units in Mid­land.

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