Where are all the workers? Employers finding higher wages alone not enough to lure people

If preliminary data for November hold true, Summit and Portage counties have never had this few unemployed workers in 25 years of recordkeeping at the Bureau of Labor Statistics.

“But it can be a little bit deceiving when you see the low number of unemployed and unemployment rate,” explained Jacob Duritsky, vice president of strategy and research at Team NEO, an 18-county collaboration of business and workforce developers that includes chambers of commerce from Akron, Canton, Cleveland, Youngstown and Warren.

Duritsky and his colleagues  analyze job, wage, productivity and other data to chart industry-level economic forecasts and inform strategies that connect employers and job-seekers for a more prosperous Northeast Ohio. The local figure troubling Duritsky and regional economists interviewed by the Beacon Journal isn’t the unemployment rate, which fell to 3.5% for Summit and Portage counties in the non-seasonally adjusted November report.

It’s labor participation.

A daylong look at shortages:Fewer workers, higher prices, less stuff: Shortages are changing lives in Northeast Ohio

Compared to the same period before the COVID-19 pandemic, the number of people who’ve dropped out of the workforce — either retiring or no longer applying for jobs — is up 1% nationally, 3% for Summit and Portage counties and about 5% across Northeast Ohio.

A smaller pool of job-seekers artificially lowers the unemployment rate and makes it even harder to fill today’s surplus of jobs. That’s not good, especially in a region and a state that, unlike the nation, had yet to recover from the Great Recession when the pandemic

So, the question employers are begging economists to answer is where have the 11,367 workers in Summit and Portage — or the 89,848 across Northeast Ohio — gone since the pandemic struck?  

Not an easy answer

Duritsky and others say it’ll take more than conventional thinking to solve the curious case of the vanishing workforce. They’ve assembled a lineup of usual suspects like transportation issues or access to day care, eldercare and job opportunities, plus some more unusual issues like burnout, demand for more flexible work schedules and even wages that, despite climbing fast, have yet to make up for decades of stagnation.

In any event, the economy of Northeast Ohio — tucked in a shrinking corner of the sixth-slowest-growing state in the past decade — can’t wait for birth and migration rates to reverse.

2010 to 2020 population change by state. Ohio had the sixth-lowest growth.

“Part of answer is that we can’t grow our way out of this in the short term,” said Duritsky.

The region’s shrinking workforce is already older than state and national averages. Economists attribute some of the labor force contraction to baby boomers retiring early. They faced greater health risks, saved money during the pandemic and made fewer withdrawals from their retirement accounts in the past two years than younger generations.

Nationally known as the “silver tsunami,” this wave of retirements is expected to crash harder into the manufacturing industry, which accounts for about 20% of gross domestic product in Northeast Ohio compared to about 12% nationally, according to Duritsky.

But even if the local labor force returned to pre-pandemic proportions, there wouldn’t be enough workers to meet pent-up demand for goods and services.

“We’re still going to struggle to fill all the open jobs we have today,” said Duritsky.

Jacob Duritsky, head of research and strategy at Team NEO

A critical step, he said, is pulling “people on the sidelines” back into the labor force. Even then, he sees the potential for more automation with regional GDP growing faster than employment in almost every industry by the end of the year.

Stretched like a rubber band when the economy collapsed in March 2020, unemployment will continue to snap back to more normal levels by the end of 2022, especially in the harder hit arts, entertainment and recreation sectors. The warehouse and shipping industry is the only area projected to lose GDP this year as optimistic economists expect people to get out more and order in less.

Labor has upper hand

Regional economists envision a realignment of priorities in the balance between the needs of industry and labor.

“This is a big shift,” said Bethia Burke, president of Northeast Ohio’s Fund for Our Economic Future. “We typically — in this region, across the nation — heavily focus on the demand side piece of information: What skills do businesses want? What wages are businesses paying? What do businesses need to expand production? And we do not typically do this work around what labor values.

“I’ve not seen the level of interest in what labor values in this way in the 10 years I’ve been in this job,” she said. “It feels like a rebalancing of who holds the power in labor decisions.

“So we’ve been in a period where we have mostly been looking to employers to set the labor demand. The really interesting thing right now is the degree to which workers are being seen as a more valuable asset and our thinking about what matters to people in taking a job.”

Burke’s group, in conjunction with regional partners and building on early work commissioned by ConxusNEO in Akron, is diving deeply into workforce motivations with a series of surveys and focus groups of employers and workers.

The partners have hired Akron-based Center for Marketing and Opinion Research to survey working-age people, including job-seekers and people who’ve exited the workforce, to better understand their motivations.

That survey, which begins later this month, will set up more focus groups to further inform workforce strategies and better understand the thinking of nearly 90,000 people in Northeast Ohio who’ve left the regional economy when it needs them the most.

Not all about wages

In an early survey of 180 businesses in Medina and Summit counties commissioned by ConxusNEO, Duritsky and others heard a repetitive response to how companies are trying to attract and retain workers: increase pay.

But economists are finding that workers put premiums on more than their paycheck.

“I would hate for anybody to get the idea that wages don’t matter. For anybody that has a job, the wage that they earn is relevant,” Burke said. “It is also not the only thing a company should be thinking about.”

Flexible scheduling, benefits, training, remote work opportunities, health care and health, child care and other factors matter, too. But when it comes to wages, Burke said employers with one eye on product pricing and profit margins might want to ask if the pay hikes were enough.

“It will be important for us to think about whether wage increases we are seeing are real wage increases or catch-up increases,” she said. “We didn’t see big wage gains for workers in recent decades while we saw productivity increase. So, I think we have to ask whether the wage gains we are seeing are sufficient.”

Marketing better opportunities

Employers need to get creative with what they offer, one leading economist said.

“Hey, look, what we’re trying to do is we’re trying to pay more,” Steve Millard, president of the Greater Akron Chamber of Commerce, said he observed often in the survey of 180 Greater Akron businesses. “Every question we asked them about what they’re doing differently around staff, they kept coming back saying they’re going to increase wages.

“That’s all good and they have increased wages, and they have seen some opportunity there. But when we talk to job-seekers, anecdotally so far, it’s not about wages — it’s about flexibility, it’s about safety. Wages are a part of it, but it’s not the biggest thing.”

Millard cautioned against fine-print promises of higher wages and companies that assume job applicants know what they’re offering.

He said policies crafted to retain employees can backfire without clarity. For example, an employee is told she’ll make $18 an hour but, after her first paycheck is calculated at $15 an hour, she realizes she must stay with the company for 90 days to get $1 more and not miss a day for her $2 attendance bonus.

Forward-thinking employers who don’t require background checks, offer flexible hours and scheduling and provide unique benefits like child care, on-the-job training and tuition reimbursement should be marketing these perks more clearly to job-seekers.

“They can’t assume employees know what they’re offering,” he said.

Steve Millard, president and CEO of the Greater Akron Chamber.

Workshopping workforce solutions at work

“We also think the connections between employers and job-seekers is just kind of broken,” Millard said. “I mean, people are trying to get the word out about jobs. And in a lot of communities where folks are looking for work — and $14, $15, $16 an hour jobs would be good jobs — the message just isn’t getting into those communities.”

The chamber is piloting an approach to “literally trying to hand-to-hand match up employers and job-seekers in some of our low- to moderate-income neighborhoods,” Millard said. “Some of the barriers tend to be access to basic technology that employers think they’ve got, or employers are using electronic application software that are screening people out right away who might otherwise be good for the job.”

The program is among several promising ways to connecting disadvantaged communities to job opportunities during and beyond the pandemic.

With financial support from Walmart and the National Fund for Workforce Solutions, the Fund for Our Economic Future began partnering in 2020 with community organizations in Akron, Cleveland, Stark County and Lorain County.

“One of the gaps we noticed early on in the process is that we have not done a great job as a community on putting a dollar sign on the social capital that often community-based organizations have,” said Bishara Addison, the director of job preparation who oversaw the regional experiment. “And it’s that social capital, those relationships, those trusted relationships that we’re placing a bet will yield (better) outcomes as it relates to building the talent pipeline funnel.”

Each community tested a different approach to job matching and workforce development. 

In Cleveland, where the focus was on access, three community development corporations launched a hotline for people seeking jobs and training. Partners have since set up tables at Dave’s Markets and are talking about pivoting job outreach to resemble grassroots campaigning or political organizing.

In Lorain County, a multilingual navigator approach is coaching individuals on being good decision makers, developing skills to leverage federal grants for career and technical training.

In Stark County, partners are assessing needs, like transportation or child care, and matching job-seekers with agencies that can help.

Addison called Akron’s approach “the easiest to replicate.” The Akron Urban League, along with the Well CDC in the Middlebury neighborhood and OPEN M in South Akron, found people with community ties to mentor clients in the Urban League’s job development program. Launching in March, the program paid mentors $1,000 each as a token of appreciation as they helped 13 of the 16 clients land jobs by September, including some who went on to earn on-the-job credentials in their new careers.

“It might seem like a small number,” Addison said of employing 13 people, “but in workforce development, particularly in the era we’re living in now where people aren’t showing up for job interviews or signing up for training programs, to be able to have stronger retention and meaningful attachment and persistence through programming that leads to a job in such a short time frame … I think about quality over quantity. And this was a perfect example of that.”

Read original subscriber only release here.

Livingston, Doug. (2022, January 13) Where Are the Workers? Employers finding higher wages alone not enough to lure people.  Retrieved from Subscriber only Link