Any way you cut it, from coast to coast, the national employment numbers are looking better than they have in years.
The United States unemployment rate declined to 4.3% in July as the economy continued its rebound from the staggering 10% unemployment rate at the height of the Great Recession.
The national unemployment rate has finally returned to its pre-Recession levels, and consumer confidence and other readings of economic health are mostly positive. In fact, July’s unemployment numbers were even better than many analysts predicted. Hiring continued in the service and professional sectors, where employment growth was enough to offset the ailing retail industry, which continues to shed employees as retail continues to succumb to competition from the digital marketplace.
PREMIUM CONTENT: July US Jobs Report
But is it too much of a good thing?
Some areas have even lower unemployment rates than the national average: nearly 130 metropolitan areas boast unemployment rates below 4%, according to the Bureau of Labor Statistics. The New York Times reports that other areas have rates that would have been inconceivable just a few years ago.
Boulder, Colo., for instance, has an amazingly low 2% unemployment rate, making for some high times in the Rockies.
The good news on the American labor front raises one obvious question. As we approach full employment, are there enough qualified workers to fill all the positions available across various employment sectors? Wage increases are usually an inevitable response to any labor crunch, which will bring more benefits to workers and the consumer economy as a whole. But wages haven’t accelerated as quickly as they have in past post-recession periods, and the labor market is already nearly saturated. So until wages substantially increase across the board in all sectors, we are in very much a buyer’s market when it comes to staffing.
And paradoxically, drastic reductions in unemployment rates can actually stall economic growth, as factories are unable to meet orders, or distribution and logistical systems can’t keep up with demand.
Companies have been slow to raise wages, despite an inability to find workers. One reason: the incoming members of the workforce are young and inexperienced, eager to find a job, and don’t negotiate as aggressively as their older colleagues. Lower wages at the bottom keep wages lower for everyone.
Labor shortages are already quite pronounced in the agricultural sector and the construction industry. And increasing wages has not proved a panacea: Forbes reports that despite raising hourly wages to $16 and providing more generous benefits packages, one California lemon grower is losing employees to Napa Valley vineyards because of even higher wages. That’s going from the frying pan into the fire.
The manufacturing sector, one of the prime drivers of the staffing industry, has been particularly hard hit by a lack of workers. That shortage is expected to grow even more pronounced with the anticipated retirement of 2.7 million workers from the manufacturing industry over the next decade – that’s 22% of the current workforce. Overtime is only going to cover a portion of these vacancies – those in manufacturing jobs typically work longer hours per week than average.
So how to stanch the bleeding, or at least ensure another well-educated cohort is on the way to fill these jobs? The American education system needs to produce more STEM (science, technical, engineering, mathematics) graduates, and the stigma of the blue-collar job needs to be addressed. After all, skilled industrial worker salaries can easily approach $75,000. That’s markedly higher than average per-capita earnings, and absolutely nothing to sneeze at.
Manufacturers and other sectors of the economy also need to look within themselves to solve this problem: Reduce turnover; discourage immediate retirement; partner with community colleges and trade schools; and evangelize the industry.
Businesses can throw all the money they want at the problem, but at the end of the day they need to determine their own way out of a labor shortage that could cut the throat of a recovery that is beginning to hum.
How to Keep Job Reqs from Getting Stuck in the Slow Lane
