A labor shortage is jeopardizing economic expansion in almost every state, putting pressure on lawmakers to find ways to attract more residents and coax people who have dropped out of the workforce to rejoin it.
States are offering financial incentives to entice prodigal natives to move home and raise families. They’re also reaching out to discouraged workers who don’t show up in the record-low unemployment rate because they’ve given up seeking jobs. Among them: people with outdated skills, high-school dropouts and those with criminal records.
In 39 states, there are more jobs than people looking for them, according to a Stateline analysis of June hiring and employment data from the federal Bureau of Labor Statistics.
North Carolina had the highest job openings rate, with 5.7% of all jobs unfilled. Missouri, North Dakota and Virginia were close behind at about 5.3%.
In Northern and Midwestern states such as Missouri and North Dakota, the labor pool is limited by slower population growth and a higher proportion of older residents.
In fast-growing Southern states such as North Carolina and Virginia, there aren’t enough construction and health care workers to meet the needs of new residents.
Sources: U.S. Bureau of Labor Statistics data, Stateline analysis
Tiffany Evans, who owns a construction business in Wilmington, North Carolina, said a decline in skilled immigrants, lack of interest in blue-collar jobs among young people, damage from Hurricane Florence last year and a continuing construction boom has dried up her labor supply and that of her subcontractors.
“It’s like watching the tide recede before a tsunami. What can we do?” Evans said. “It’s like you got 30 houses under contract and now it’s taking three months before you can get guys to do the siding. It’s a slow trickle of taking longer with less people.”
North Carolina is seeing “the most challenging hiring environment in recent memory,” with half of businesses reporting hiring trouble in a state survey last year, up from less than 40% in 2016, said Andrew Berger-Gross, senior economist for the state Department of Commerce.
“North Carolina takes this situation very seriously,” said Berger-Gross, referring to efforts by the NCWorks Commission to support apprenticeships and training for existing workers to make them more productive.
States have two options to deal with labor shortages, said Ryan Nunn, policy director at the Hamilton Project, an economic policy initiative of the Brookings Institution. The first is a “zero-sum game” in which they compete with other states to attract the same workers. The second is a “positive sum” response: making existing workers more productive by giving them new skills, and training new workers drawn from disadvantaged groups like prisoners and dropouts.
States with the highest rates of openings are developing programs for residents who never started looking for jobs again after the Great Recession, when there were more than six people looking for every open job. Despite many openings now, the share of people working or looking for jobs remains low compared with 2000.
Part of the reason is the aging of baby boomers, but even among prime working-age people, a smaller share of black men and men without a high school diploma are looking for work, a study by Federal Reserve Bank of Philadelphia economists found.
That may be because of an increasing gap in pay between unskilled and skilled work, the study said, one reason why Missouri and North Dakota, among other states, are subsidizing college-level training for high-demand jobs.
“Missouri can’t afford to squander a single potential worker by not giving them the skills they need,” said Karen Buschmann, a vice president of the Missouri Chamber of Commerce, which outlined plans to find workers in last year’s Workforce 2030 report, which is the subject of a summit meeting this month including Republican Gov. Mike Parson.
Some of the recommendations already have gone into new legislation, such as a bill signed by Parson in July to ease transfer of occupational licenses from other states, and to fund college training for people who need job skills. The report also suggests teaching more jobs skills to students starting in middle school, including making kids aware of good jobs they can get in manufacturing, technology and health care and how to qualify for them.
Missouri is one of many states, including North Dakota, that is trying to find jobs for former prisoners. A Manhattan Institute study in 2015 showed that ex-prisoners who get jobs quickly are less likely to commit new crimes.
Missouri’s Department of Corrections started helping prisoners near their release dates to prepare for the job market with interview suits, mock interviews and counseling about handling the inevitable questions about incarceration.
It worked out well for Michael Eanes, 48, a member of the first class of Missouri’s Connections to Success program.
Soon after his release last year after more than 23 years in prison on a drug charge with a mandatory minimum sentence, Eanes took a job as a peer counselor in a recovery clinic in Columbia.
“Thirteen months out I’ve got a job, a car, an apartment, a fiancee and a new daughter,” said Eanes, who adopted the African name of Mataka Asari at the Algoa Correctional Center as a symbol of his reinvention. The skills he learned in Connections to Success helped him cope with employer questions and his own sense of trauma after spending half his life behind bars for selling cocaine to an undercover officer.
“As a young black man coming up in St. Louis, we didn’t talk about having emotional issues. We came from a culture where you stand up and be strong and push through it,” Eanes said. “It behooves the community for people who are coming out to have an easier path to productive citizenship.”
North Dakota also is planning a series of moves in the 2020 legislative session to lure workers. High on the list is providing money for nurse and health care technician training, as well as job training for prisoners before release.
North Dakota state Rep. Jim Grueneich, a Republican who sponsored a bill signed into law in April to fund more college-level job training, said employers all over the state need more skilled employees.
“It doesn’t matter where I go. Everybody is crying the same thing: ‘We need more help,’” Grueneich said. “We need electricians and plumbers and truck drivers. There’s a mindset that you need a master’s degree, but our people are getting those degrees and coming back and working in the trades.”
North Dakota also wants more people to come back home. State officials hope to attract them with incentives and license transfer agreements with other states, Commerce Commissioner Michelle Kommer said.
“What we see is people who have left North Dakota coming back after seven or eight years of being away,” Kommer said. “They are familiar with our climate, their families are here, and it’s a great place to raise a family.”
The state has a history of labor shortages, most recently during the boomtown period of oil patch growth in the mid-2010s, when makeshift worker camps surrounded oil wells and even high school dropouts could get well-paying jobs.
Today’s energy jobs are more automated and require more technical skill, the so-called gold collar jobs that combine manual labor with the technical skill to run machines, Kommer said.
“You will get your hands dirty doing these jobs,” Kommer said. “But they’re also well-paying and more technical. Today’s energy job might be sitting in a big bright room operating a machine, but technically it’s a welding job.”
With two years of training, a beginner can start at $55,000 a year in such energy-related jobs and quickly move up to $90,000 after gaining experience, she said.
Such automation is likely the ultimate solution to labor shortages, said Srikant Devaraj, a research economist who studies Midwestern regional economic trends at the Center for Business and Economic Research at Ball State University in Muncie, Indiana.
For that reason, states should prepare for the next downturn, when cost-cutting will inevitably lead to growth in unemployment, Devaraj said.
“The Great Lakes states are all about manual labor. When companies want to cut their costs, the obvious way is to cut labor costs,” Devaraj said. “Automation will bring the need for new skill sets, and this should be taught in schools. When machines are doing more work, there will be a high demand for people who can fix the machines.”