Lower unemployment rates mean a lot of companies, including private label manufacturers, are having a hard time finding skilled workers. In this report from PLMALive! Brad Edmondson examines the impact.
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Work Force Woes
The problem of labor shortages has not made big headlines. But with the economy improving, the national unemployment rate has now fallen below five percent — that means a lot of companies, including private label manufacturers, are having a hard time finding skilled workers. And demographic trends are about to make this trend even worse.
The biggest reason is the aging of the labor force. Baby boomers are aged 52 to 70 this year. Over the next decade, about ten thousand boomers will turn 65 every single day. So here’s the problem: in many areas, there aren’t enough younger workers to fill the jobs boomers are leaving. And it’s worse for skilled jobs, because they pay enough so you can retire at 65.
How bad the problem is depends on where you do business, because the ratio of young people to older workers varies from place to place. The ratio is lowest in the Northeast and Florida, so this is where labor shortages should be worst. It’s highest in Southwestern states where there are lots of Hispanic immigrants. But it can vary a great deal from one city to another, depending on what local leaders are doing to re-train workers.
Of course, the working-age population is growing quickly in developing countries like Mexico, India, Nigeria, and Brazil. And, it’s not hard to persuade skilled workers from those countries to move here. But there is another way to attack the labor shortage that’s a lot better for the United States. That is because the true unemployment rate in the U.S. is a lot higher than five percent.
The official unemployment figure doesn’t count people who are forced to take two or three part-time jobs when they would prefer one full-time job. It also doesn’t count people who have been out of work for so long that they’ve stopped looking. When you add in those people, the unemployment rate in July 2016 wasn’t 4.9 percent. It was 9.7 percent. That means there are more than 15 million Americans who want better jobs than the ones they currently have.
Community colleges and local employers are teaming up to solve this mismatch. In Central New York, where unemployment is a chronic problem, Onondaga Community College works directly with agribusiness and food processing companies to train local workers for specific job openings. In St. Louis, the community college offers free training to be an assembly mechanic for the Boeing Corporation. The starting salary for that position is about forty thousand dollars a year.
Moving people into better-paying jobs helps sales, too. Labor shortages should push wages higher for the next few years, which means that more people will have more to spend on food and personal care.