Good Jobs -- But Where Are the Workers?

The number of manufacturing jobs in the Midwest is going down, but factories say they can't find workers to fill manufacturing jobs. As they say, it's a puzzlement.

A Chicago Tribune article laid out the problem, without pinpointing the reason or saying what to do about it. In his invaluable blog, Bill Testa, the vice president and director of regional research for the Federal Reserve Bank of Chicago, has charted the trends -- Midwestern manufacturing jobs down sharply (from 4.2 million jobs in 1998 to only 2.7 million in 2010), with any improvement likely to be "modest."

This is the heartland of manufacturing, right? We know the Midwest has always lived on factory jobs. Even if the number of those jobs have declined, many factories are still there. Many factory jobs these days pay well. Most workers in factory towns don't go to college, so would be attracted to industrial jobs -- or so you'd think.

All this makes sense. And yet the workers don't seem to be there.

The Tribune story zeroed in on a factory owner in Pekin, Illinois, who says his company, which makes parts for machines used in the mining industry, has hired 30 to 40 machinists recently but needs about 25 more. The jobs pay $23 per hour, a good wage in Pekin, but the workers, he says, just aren't there.

A survey last year by Deloitte and the Manufacturing Institute said 600,000 manufacturing jobs nationwide are going unfilled. Testa reported that, in the Midwest, "manufacturers bemoan shortages of skilled workers, even while they tout emerging employment opportunities."

I know from dozens of meetings around the Midwest that owners and managers everywhere complain that they just can't find high-skilled workers, including machinists. Most say they have jobs open that they would fill if they could find the right people. I heard these complaints before the recession began and I'm still hearing them.

You'd think that, in these hard times, skilled workers would be lined up outside any factory that is hiring. You'd think these workers would take any job going. You'd think that, after years of this worker shortage, that community colleges and other workforce training programs would be filling the gap. But it's not happening.

Some factory owners say that workers are just lazy, that they would rather collect unemployment pay than take a job. Sorry, but I don't buy it.

Something more is going on here. Testa suspects it may be a "disconnect" in skills. That is, there may be plenty of skilled workers looking for jobs, but they lack the specific skills needed for the jobs that are available. This would square with what I've been hearing from manufacturing experts in Chicago who say the city is loaded with unemployed skilled workers.

One problem seems to be a genuine shortage of young skilled workers -- the kids who are going to replace the older baby-boom generation of workers who are beginning to retire. All my knowledge here is anecdotal, gleaned not from rigorous surveys but from many conversations. But these conversations add up to a real frustration among factory owners about this younger generation of workers.

First, there aren't many of them, they say. The mantra today is that every young person must go to college, shunning labor in factories. High school students hear this from their guidance counselors, who seemed programmed to steer students toward colleges. They hear it from their parents: some parents want "something better" for their children, which means anything but factory labor: other parents, many of them factory workers themselves, earned a solid salary without benefit of education or skills, and don't realize the world has changed.

(A second reason, much discussed among employers but seldom aired in public, is that too many potential workers, especially the younger ones, flunk drug tests. No employer wants a drug-addled worker running high-precision equipment.)

There's another reason. Manufacturing is a genuinely hard sell. Yes, skilled factory jobs offer good pay. But, as Testa says, there are a lot fewer of them, with no real recovery in sight. In an earlier recession, he says, one in five manufacturing jobs disappeared. Even in good times since then, this didn't recover. Then, when outsourcing hit, an even bigger number -- one in three -- vanished in that 1998-2010 span.

A Midwestern manufacturing recovery began in mid-2009, with some increase in manufacturing jobs, "but these gains are very modest."

The upshot is that manufacturing probably is never going to support as many Midwesterners as it once did -- not exactly a come-on for a young person considering his or her life's work.

But still, there are those good jobs left unfilled. Many of the lost jobs, especially since 1998, were routine assembly-line jobs that were easy to ship overseas. There clearly still is a demand for high-skilled workers: these jobs, requiring much more education, are harder to outsource, and so are more likely to stay here.

But still, no takers. Or more accurately, a lot of takers but not many young people who can fill the slot. The Tribune reported that manufacturers often have to interview 60 to 100 applicants to find one skilled worker.

This is an education problem. It goes back to those high school guidance counselors, and it reflects the lack of vocational education in schools. Even in schools with shop classes, enrollment is sparse. In addition, high schools are churning out students without the math and science knowledge needed to do these new, high-tech, high-skilled jobs. By the time community colleges get them, these students are more fit for remedial classes than vocational training.

It's easy to blame the schools. I'm more inclined to blame employers themselves. With some exceptions, too few employers work with schools. They seldom go to a school -- a high school or community college -- and tell them what these schools should be teaching so the employers can hire their grads.

Second, apprenticeship programs can work wonders, as they have in Germany. How many employers are offering to take students into their factories and have them learn their trade from a veteran skilled worker? Some do, but not many.

Third, even schools that offer vocational training often do it with equipment that is 30 years or more old, out-of-date, of no real use to students learning modern manufacturing. Schools in blue-collar districts are having too much trouble buying books and paying teachers to pop for expensive new machinery. If employers want students to know this machinery, they may have to provide it themselves.

This adds up to a new social contract between employers, workers and schools. Employers can argue that they're paying taxes to enable schools to educate workers, but the fact is that, with public support for schools shrinking by the year, less and less of their tax money is going to schools.

If employers need skilled workers, they must take more responsibility for skills training. They are going to have to stop being just consumers of the schools' products and get involved with the schools themselves. Otherwise, those good jobs will stay unfilled and Midwestern manufacturing will continue its march toward oblivion.

Comments

[Andy]

You are correct, the shortage of workers is a fake problem -- manufactured by the manufacturers, as it were. The real problem lies with the employers. It is puzzling why they seem to prefer concocting stories about labor shortages rather than training their workforce. It is equally puzzling why the media is willingly assisting them in perpetuating this fiction.

[Everett]

Not to mention that most of the new manufacturing machinery uses proprietary software and controls, making it difficult to just switch from one shop to another without some kind of additional training. Employers can't expect new hires to be familiar with tools that only a handful of shops use, and they can't expect community colleges to teach so narrowly either. I agree, employers need to meet potential hires halfway.

[Aaron M. Renn]

I do think there's something to the notion that we've stigmatized blue collar work. Tocqueville said something to the effect that in America, "All honest occupations are considered honorable." I'm not sure that's true anymore. By talking about "McJobs" a lot of the intelligentsia has said that some jobs just aren't worth doing.

Also, just because there are openings now, doesn't mean those jobs will be around for the long term. As you note, employment has dropped and manufacturing has been in a secular decline for quite some time. It could be perfectly rational for a young person to conclude that whatever the immediate term prospects, this is no place to be your career.

Lastly, my own experience in the high tech space suggests that employers are grossly exaggerating the skills shortage. Frankly, I believe some of them do it to justify bringing in lower paid immigrant workers to fill positions. But in other cases they've got too narrow a definition of who they want to hire. In Chicago, you never stop hearing about the "developer drought" yet I know several tech people locally without jobs. One of my friends is considering moving for just that reason. Someone with a basic background in technology is readily retrainable into a new tech space, even for example crossing from apps to infrastructure. But firms for whatever reason refuse to hire people who don't have a very specific narrow profile. Honestly, for all the talk about "talent", firms seem to hire less for general talent than specific skills than at any point in my lifetime. In 1992 when I joined, Accenture epitomized the idea of "hiring athletes" and they relying on training to teach them what they need to know. Consultancies have long understood this approach. Too few employers conceive of their recruitment in this way anymore, however.

Also, you can't underestimate the power of money. If you have no takers at the price on offer, there's always the option of paying more money.

[Dan]

Thank you, Mr. Renn, for pointing out that money is a powerful motivator. The complaints of employers are reminiscent of stories we get when the economy is in better shape- "massive shortages" for particular skill sets, which really means "massive shortages at the wages we're willing to pay".
I don't completely buy into the idea that blue collar work is completely stigmatized. Many young people are very interested in the DIY trend (see canning, urban farming, etc) and a great way to be seen as interesting in "hipster" cirles is to to do your own metal fabricating for some arts project. I'm sure that many of these people are quite willing to work extraordinarily hard at a blue collar job if they were assured it could provide a future for themselves and their prospective families.
There is an interesting parallel conversation in a series of recent Ezra Klein posts where he essentially claims that many Ivy League graduates with liberal arts degrees opt into finance/banking jobs because they have few practical skills (at least in their own minds) and no real idea what to do with their degrees. Goldman Sachs et al hire a very large number of these college graduates, train them up, and see which ones can take the stress and workload, and then keep them around for the long haul. Those who leave at least feel like they've gained some practical business skills and go into other fields with some nice credentials on their resumes. On the one hand, Goldman can do this because they have huge profit margins; on the other hand, Goldman realizes there's enormous untapped human talent in the Ivy League graduate pool that has little idea what to do next, so why not hire a bunch of them and see what happens? Manufacturers might do well to take note of the practice.

[Eric Davis]

Ok, we've all heard the problem, so lets work on a solution. There needs to be a massive re-think on how we perceive many things in this country, "blue collar" being one of those. Media hype and political posturing are devaluing the issue all together. Everyone wants to point blame but there is plenty of blame to go around.

The solution needs to begin with a massive public relations campaign about the value of work. We need to rethink how we promote education and vocation. Hearing recently that some guidance counselors in our region tell students they have only two options, college or military after high school, I can only imagine what else is NOT being said.

[Everyday Freethought]

I think Aaron Renn made some good points. I think a lot of these complaints about a "talent shortage" are lies or cluelessness. It is the same in software. A lot of companies say they want smart people, but then reject you if you do not meet their long, specific checklist. Everybody says they want a generalist, until they meet one. If you say you are looking for a permanent employee, don't act like you are looking for a short-term contractor.

This has been going on for years. A few years ago I read an article about this on the Wall Street Journal website. They quoted an engineer who was rejected for a position designing heating systems because he did not have experience designing them for hospitals. The quote that still sticks in my mind is "a heating duct is a heating duct".

You can have strict requirements, you can complain about not being able to find anyone, but if you do both, then maybe the problem is you.