How To Solve The Top 5 Labor Shortage Issues

An exclusive, in-depth look at the issues that employers, economic developers, and parents can address to help solve the current labor shortage challenge, from McCallum Sweeney Consulting. 

By Beth H. Land

We have all heard, perhaps too many times, that there is a labor shortage and skills gap in the American workforce. Media outlets flood my news feeds and NPR on my morning commute with yet another anecdote of employers that want to hire more people, but simply can’t find the skilled technicians to fill positions. Reducing the skills gap is a complex problem with multifaceted solutions, which will take years to correct. And the problem is only exacerbated by the fact that Baby Boomers are rapidly retiring and taking tacit knowledge with them. The national unemployment rate continues to contract and hovers at just 4.1% (December 2017).

labor shortage
(Credit: Kim Steele)

On a positive note, K-12 schools, community/technical colleges, and state workforce training programs across the country have made closing this gap a top priority. They have set in motion plans to improve skill sets, connect schools directly with manufacturers, and hopefully (in due time) reduce the skills gap. I have visited dozens of communities, all with programs and plans in place to address the issue. I am confident that the pendulum is swinging in the right direction and we will see improvements. However, it may be some time for these long-term solutions to come to fruition. I have wondered, with the market so tight, what could employers and economic developers be doing today to make a more immediate impact?    

As a part of the comprehensive workforce analysis we conduct for our clients, McCallum Sweeney gathers real-time feedback on workforce issues through existing industry interviews in markets we are evaluating across the country. It’s a powerful tool, allowing us to dig past the headlines and listen to what employers are struggling with. These interviews normally validate what I hear in the news, but also offer some nuances to the workforce dilemma discussion. For this article, I have compiled the most common responses and concerns from employers across the country.

The top five responses below paint a picture with observations, illuminating workforce preferences that are inhibiting productivity. While we must continue the crusade to engage manufacturers in the educational system and to educate the next generation with STEM curriculum and technical training, the below issues are items that employers, economic developers, and even parents can help change and influence now.

1. Schedule Preferences

Schedule preferences matter to employees, particularly with millennials. Despite their reputation as being lazy, employers reported that millennials were quite willing to work the night shift, overtime, and put in long hours. It’s not a question of work ethic…it’s more about predictability. Millennials do not like it when their schedule is unpredictable.  Employers reported higher turnover rates when schedules are not as steady. Employers should be aware of this preference and work to accommodate a more stable and predictable work schedule to retain their skilled workforce.

2. Absenteeism

Absenteeism is a problem across the country. Employers report that the most common reasons employees give for absenteeism is that their child(ren) are sick, challenges with childcare, or they have transportation issues. As with schedule preferences described above, absenteeism is contributing to higher turnover rates and lower productivity.  Several employers stated that absenteeism had historically been a real problem, but since many have implemented attendance reward programs the issue has been resolved. Employers reported implementing programs where employees get paid for unused absences, which drastically reduced the absenteeism rate and reduced problems with labor. While brainstorming internal solutions is key, employers and economic developers should also be communicating about items such as childcare shortages and transportation issues since there may be available solutions through public-private partnerships. Economic development will prosper when companies are communicating well with community leaders to develop local, out-of-the-box solutions to make an impact on the labor shortage.

3. Drug Use

The opioid crisis is certainly a topic that has dominated the headlines, and continues to be an issue for communities and employers across the country. While the severity of the drug use problem varies from community to community, employers noted a few solutions that have helped curb issues at their facilities. Some employers stated that after their HR recruiters implemented an employee referral program, where employees can recommend potential hires, drug use problems went down substantially. Employees risk their reputation by vouching for potential candidates, so they are hesitant to recommend someone who they know may have a history of drug use. Relying on employee referrals may be effective in reducing drug issues and the labor shortage. Employers also noted that by clearly stating early in the application process that they do a pre-screening for drug use, is helpful in deterring those candidates who know they will not pass.

4. Work Environment

The quality of the work environment matters to employees, especially in a tight labor market when they have options. We hear that work environment is typically one of the main reasons an employee will leave their job, not necessarily pay. This is especially true in industrial facilities where they are doing something that they didn’t expect would be challenging (e.g. reaching and squatting in a fulfillment center, handling raw meat in a food processing environment, or being subjected to extreme cold or hot temperatures). Employers stated that if facilities are not air conditioned or heated comfortably, this contributed significantly to employee turnover. Other facilities saw higher rates of turnover if there were heavy odors, dust, or work required outside in the weather elements.

Employers should be attuned to how the work environment is affecting employees. Could investing in an HVAC system drastically help reduce the costs associated with employee turnover? When employers have a less-than-ideal working environment, it is imperative that they fully understand the local wage competition, and understand how wages can be used to overcome work environment challenges that cannot be changed.

5. HR Professionals

Almost every employer we interviewed stressed the importance of human resources (HR) professionals in a facility’s success. Media coverage often stresses the skills gap of the hourly and production level worker, but few have assessed the availability and importance of HR professionals. Employers stated that HR talent must be prepared with knowledge of state and local regulations, and have a good grasp on the preferences and nuances of the local labor market. Are production level workers realistically going to cross state lines?  How can manufacturing firms in a community work together to try to prevent job hoppers that will move regularly for $0.25 more an hour?

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(Credit: Digital Vision)

HR Roundtables have popped up across the country as a way for local HR reps to collaborate and learn best practices. If a community can arm HR professionals with good data, valuable training, and creative community support, the ripple effects could be substantial and may help reduce the shortage of workers.

In summary, there are issues both in the short-term and long-term that need to be addressed. There is certainly no “quick fix” to fill the labor shortage in America, but perhaps giving some attention and effort to some of these above items can help alleviate the situation in the near-term. With Baby Boomers retiring, the workforce pool (and their preferences) are rapidly changing. It is important for all stakeholders to take ownership, think creatively, and be ready to respond to these changes.    

labor shortageBeth H. Land is a Senior Consultant with McCallum Sweeney Consulting. With more than seven years in economic development and site selection, Ms. Land has worked with major corporate clients providing location expertise and incentives negotiation services. Ms. Land also has experience in the aerospace manufacturing industry. She received a Masters of Business Administration from Wake Forest University, and a bachelor’s degree in Communication Studies/German minor from Clemson University. She is a Certified Economic Developer (CEcD) with the International Economic Development Council.