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Home / Washington Business - Current Issue / Workforce: Washington faces shortage of workers |
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Workforce: Washington faces shortage of workers |
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Written On: March/April 2008 |
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Written By: Mike Luis |
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Editor’s Note: This is the first installment of a three-part series by Mike Luis covering workforce issues in Washington.
As human resources professionals already know, and as businesses across the state are finding out, we are entering uncharted territory when it comes to the state’s workforce.
For as long as anyone can remember, the battle cry of economic development in Washington has been “jobs, jobs, jobs.” First, employment in the state’s timber, fishing and mining industries shrank; then aerospace began to shrink permanently, and it seemed like there would always be a large pool of unemployed people that needed work. But that pool is now reduced to a shallow puddle.
In the early 1980s, the state had 28 consecutive months of double-digit unemployment. The next two recessions, however, produced unemployment rates that maxed out briefly at just 7.5 percent. And with economic storm clouds now on the horizon, the state still has an unemployment rate below 5 percent, and fewer than 4 percent in the Wenatchee, Bellingham and the Puget Sound regions.
Does that mean we can relax and suspend longstanding job creation efforts around the state? No. But the game has changed in two important ways. First, we increasingly have the luxury of emphasizing the quality of jobs and not just the quantity of jobs. Second, while we have always worked to find jobs for people, we must now spend as much or more effort finding people for jobs.
More jobs than babies
The 18- to 22-year-olds now entering the job market were born in the mid-1980s, during the “Baby Boom Echo,” a cohort that averaged around 70,000 per year. But the state added 106,000 jobs in 2007, so even if no one retired, those new workers could not fill all the jobs created. This imbalance will only get worse, since births dropped from over 15 children per 1,000 population in the 1980s to under 14 per 1,000 in the 1990s. A smaller cohort enters the workforce just in time for the massive wave of Baby Boomer retirements.
So how does Washington grow its job base by up to 3 percent per year while “natural” workforce growth — graduates minus retirees — grows at around 1 percent? Migration, of course: those hoards of footloose Americans from California, Oregon, Alaska and elsewhere, plus a substantial number of immigrants from overseas. Over the long term, about half of the state’s population growth comes from “in-migration” — those moving here minus those departing — but that climbs to three-quarters of all growth during boom years.
Washington’s attractiveness for jobs and lifestyles allows it to have robust growth even if the maternity wards were not bursting at the seams a generation ago. The importance of migration goes beyond just bodies, however. Washington is in the paradoxical position of having one of the most highly educated workforces in the country and, at the same time, one of the smallest four-year college systems. That means that Washington imports college degrees at a high rate. Of the people who moved to the state in 2006, 42 percent had a college degree, versus 30 percent for the overall population.
Migration also acts as a moderating factor in the business cycle. When the economy is booming, in-migration picks up, as people in the rest of the country see opportunity. But as the economy slows down, so does migration, as was seen in 2002, when net in-migration slowed to a trickle.
Where the jobs are in 2008
The problem with relying on in-migration to meet our workforce needs is that those migrants do not always match the available jobs. Several areas of employment still have persistent shortages of workers that in-migration will not remedy. According to the Washington State Department of Employment Security, the occupations with the most job openings are:
Healthcare. The shortage of healthcare personnel, nurses in particular, is a well-known national problem. Not only do nursing schools not produce enough graduates, but the turnover in the profession is very high. Many nurses, after a few years of intense, emotionally draining work, move to part-time status or leave the profession entirely. And the profession remains heavily part-time, with many nurses’ decisions about where to work tied to family considerations, making it unlikely that we can address nursing shortages with in-migration.
Administrative and technical. While software firms may be able to recruit talent nationally and internationally, other management and technical fields must rely on the local or regional labor pool. The competition for technical talent weighs particularly heavily on smaller firms that cannot offer the benefits and career tracks of larger firms. These niche players may attract talent right out of college, but will lose their best employees to bigger firms once they have gone to the effort of training them.
Retail. A recent stroll through the Bellevue Square mall revealed 46 signs in store windows inviting people to “Join Our Team.” That nearly one-third of the retailers at this mall had openings during the post-holiday slump shows just what a struggle retailers have finding employees. The regular survey of vacancies by DES found more than 12,000 openings in retail around the state. With a median wage of $8.00 per hour and two-thirds of openings part-time, retailers can only expect to absorb the surplus labor in their local area, and right now there just is not much slack in the labor supply in most of the state.
The need for homegrown talent
These three examples point to the downside of relying on in-migration for our state’s workforce needs: people do not uproot themselves for just any job. National recruiting is limited to high-skill professions, and the daunting cost of housing makes it challenging for even medium-skilled people to drift into the state and take whatever employment comes their way. Washington needs to do a better job of growing its own pool of talent.
That begins with expansion of the state’s four-year-degree granting universities, so fewer of the state’s best and brightest leave at age 18 and never come back. It does not speak well of our state that we send our own children away only to replace them with young talent from around the country.
Moving the limited workforce we have to the places with the most job openings requires something that is now in very short supply: affordable housing. The DES employment report shows 33,000 job openings in King County at a median wage of just $11.00 per hour. A full-time worker at that wage would spend more than half his earnings on a basic apartment in most areas of King County. No wonder Bellevue Square stores can’t find employees.
A century ago the Klondike Gold Rush brought tens of thousands of people to the young state of Washington, causing the population of Seattle to jump from 43,000 in 1890 to 237,000 by 1910. The state has always been a place where smart, talented, ambitious people come to build their lives, and we have benefited from that enormously.
But we cannot meet all our workforce needs by flashing pictures of Mount Rainier and apples around the world. A major economic development challenge for our state’s future will be to fit the available workforce to the opportunities that sit unfilled.
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