Everybody into the (labor) pool
Hard pressed for recruits, many Ninth District employers are reaching out to seniors, immigrants and other societal groups that may not be taking full part in the workforce.
Phil Davies | Editor, fedgazette
Originally published on December 5, 2016, on minneapolisfed.org
Finding workers these days often requires employers to stretch the bounds of ordinary recruiting practice.
Facing a tight labor supply in north-central Minnesota, Digi-Key Electronics of Thief River Falls introduced a “choose your schedule” program in its distribution center that lets students, seniors, stay-at-home parents and others who can’t commit to a regular schedule pick the hours they want to work each week.
Avera Health, a large health care provider in Sioux Falls, S.D., that struggles to fill entry-level positions, has hired recent African immigrants who have taken basic job-skills training as a pathway into the work force.
And Express Employment Professionals, a staffing agency in Grand Forks, N.D., beset by demand for workers, offers a second chance to people with low skills, spotty work records and often troubled backgrounds. “They’re people who are coming to us because they’re out of options,” said Managing Partner Scott Lindgren. “What we do is invite those people in to go through kind of a heart-to-heart coaching session.”
Ninth District employers hard pressed to hire are turning to segments of society that traditionally haven’t participated fully in the workforce. Many of these potential workers are not counted as unemployed, either because they hold part-time jobs or because they haven’t searched for a job recently. Government labor statistics show that on average in the 12 months ending in July there were almost 300,000 people in the district — about the same number as the unemployed — who could be described as on the margins of the workforce.
Some of these non-unemployed choose not to work — or work only part time — because they value their time on the golf course, or have home duties such as caring for children or ailing parents. Others are available for full-time work but face barriers to employment — disability, limited English proficiency, a criminal record or history of drug abuse. Job applicants rejected by employers can become discouraged and stop looking for work.
Taking the underemployed and those who are largely disengaged from the working world and turning them into full-fledged members of the workforce has its challenges. While many employers in the district have succeeded in finding a few good marginal workers, recruitment efforts by others have had mixed results.
A “warm body issue”
Time was when employers didn’t have to worry about hiring enough workers to keep their enterprises humming. During the Great Recession and the slow recovery, they could take their pick of job candidates from the multitudes of the unemployed. Today in many district communities, workers can take their pick of jobs, and hiring and retention has become a nagging concern for employers.
In recent years, large numbers of people laid off during the downturn have returned to work, shrinking the pool of unemployed. And since 2000, workforce growth in the district and across the country has slowed markedly, a consequence of an aging population and a leveling off of labor force participation by women. (For more on the impact of population trends on the workforce and the economy, see Working through demographic change.)
As a result, fewer workers are available to replace retiring baby boomers and fill new jobs created by expanding enterprises. Unemployment has dropped to sub-basement levels in many metro areas in the district. In August, Minneapolis-St. Paul, Sioux Falls, Fargo and Billings, Mont., all had unemployment rates under 4 percent, according to federal labor statistics.
Job openings were running high. Last spring, Twin Cities employers posted more job vacancies — almost 54,000 — than in any comparable period going back to 2001, according to the Minnesota Department of Employment and Economic Development (DEED). In September, job openings outnumbered the employed in the Bismarck, Fargo and Grand Forks areas, according to Job Service North Dakota; demand for labor continues to strain supply in the eastern part of the state, despite a slight economic cooling due to a falloff in oil production in the western part of the state.
Scott Hodek, a regional economist with the state of Wisconsin’s Office of Economic Advisors, said businesses in the Chippewa Valley, which includes Eau Claire and Chippewa Falls, were experiencing “quantity challenges” that are projected to worsen over the next decade. “We’re already having difficulty filling positions, and it’s becoming more and more a warm body issue.”
In a 2016 labor market survey sponsored by the Eau Claire Area Economic Development Corp., and the state Department of Workforce Development, 88 percent of Chippewa Valley employers reported difficulty in filling positions; 91 percent indicated that they were at least moderately concerned about hiring new employees to replace retiring employees.
Expanding the labor pool
But a tighter labor market in many parts of the district doesn’t mean that workers are not available. There are plenty of people, besides the unemployed, who are looking for a job or more work hours. The trick is to tap into this hidden reservoir of labor by increasing wages, offering flexible hours or taking other steps to attract and retain workers.
Most job vacancies are filled by job switchers — workers who voluntarily leave a position for an opportunity with another employer — or the unemployed, defined for statistical purposes as those who are available for work and have actively searched for a job in the past month. The unemployment rate, tracked by the U.S. Bureau of Labor Statistics, is the labor underutilization measure most familiar to the public.
But there is a wider pool of potential workers: part timers who want to work full time, and people without jobs who say they want one, although they’re not counted among the unemployed and so are considered out of the labor force (see the original article for more detail on the BLS data).
The overlap between this population and specific demographic or socioeconomic groups is inexact, but some groups are more likely to be underemployed or only loosely attached to the workforce.
For example, census data show that nationally and in district states, blacks, Asians and American Indians have lower labor force participation rates than whites. Among minorities, recent immigrants in particular may have difficulty breaking into the workforce because of a language barrier or poorly matched job skills. New immigrants are a “presently underutilized section of our population,” said Steve Hine, research director of DEED.
The disabled are another group with lower workforce participation, in part because of rules for federal disability payments that discourage full-time work by people with mental or physical shortcomings (see “Disability and work: Challenge of incentives” in the January 2015 issue of fedgazette).
Others on the margins of the workforce include semi-retirees who want more time to pursue leisure activities, parents with young children and convicted felons who have given up looking for work.
The common characteristic of these disparate groups is a desire for gainful employment. It follows that, given the right incentives or opportunity, some of this unused labor capacity could be leveraged, with part timers moving into full-time positions and those currently out of the workforce finding jobs.
Nationwide, up to 70 percent of people who obtain employment in any given month were previously out of the workforce rather than unemployed, according to a 2014 study published by the Federal Reserve Bank of Richmond.
Increasingly, employers, economic development officials and other stakeholders in workforce development are asking themselves: What is it going to take to draw those on the fringes of the workforce into the mainstream?
The federal government uses several yardsticks to gauge slack in the labor supply — the share of the adult population that isn’t fully engaged in the workforce. The best known is the unemployment rate, but alternative measures track the underemployed and those who aren’t working, but not technically unemployed.
Data on labor underutilization come from the Current Population Survey, a monthly survey of households conducted by the U.S. Census Bureau for the Bureau of Labor Statistics. The CPS estimates the number of people who desire full-time work but have had to settle for a part-time schedule. It also tracks the “marginally attached” — those who say that they are available for work and have looked for a job sometime in the previous year. The marginally attached are not counted as unemployed — and therefore are not in the workforce — because they haven’t searched for work in the previous four weeks.
The marginally attached include discouraged job seekers, those who have given up looking for employment because they believe there are no jobs available or that they lack the necessary qualifications.
I really want the job, but …
District firms are using a variety of strategies to recruit and hold onto workers with one foot in and one foot out of the workforce.
Offering higher wages “is probably the first and most important ingredient in tapping into a segment of the population that might otherwise sit on the sidelines,” notes Hine of DEED. Greater financial reward for working entices people not in the workforce to take a job, and part timers to increase their hours. But Hine adds that higher pay may not be enough to induce those with domestic obligations or other commitments to apply for a job.
Another strategy is to try to accommodate the life circumstances of those who want to work but for any number of reasons have difficulty committing to an employer.
Digi-Key has raised the starting wage for workers in its distribution center about 20 percent since 2012, but flexible scheduling has also been key to attracting workers in a tough labor market. The rapidly growing distributor of electronic components introduced its “choose your schedule” program in 2013, for entry-level order picking and packing positions. The firm was “having some challenges getting enough people” because of competition from other area employers such as Arctic Cat, Land O’ Lakes and turkey processor Northern Pride, said Vice President of Administration and Human Resources Rick Trontvet.
“We added the ‘choose your schedule’ program to basically find another type of employee — junior college students, seniors, people in transition who maybe don’t want to commit to a long-term situation,” Trontvet said.
Each week, workers go online to sign up for shifts — usually in the early morning or evening — on the distribution center floor. “Choose your schedule” enrollment has been as high as 44 — about 2 percent of the total headcount in the center — although Trontvet said a sales slowdown prompted cutbacks over the summer.
Many participants are retirees, and a job-sharing program in the company mailroom is also popular with seniors. (Seniors represent a hiring opportunity for employers because over the past decade labor force participation by people aged 55 and over has increased nationwide.)
Western Wisconsin Health is another firm that uses flexibility as a recruiting tool. The health care provider has 300 employees at a new main campus in Baldwin, Wis., and locations in Hudson and Roberts.
CEO Alison Page said the firm frequently has open positions for nurses, nursing assistants, housekeepers and other workers, but has been able to fill them in part because of flexible scheduling that allows employees — 85 percent of whom are women — to trade shifts with their peers. Western Wisconsin Health also offers generous paid time-off benefits, and workers may donate their paid time-off days to colleagues coping with illness or that of family member.
“If we did not offer these things, I think that we would have difficulty recruiting,” Page said. In August, Western Wisconsin Health was certified as a “family friendly workplace” by Success By 6, an initiative of United Way St. Croix Valley that supports early-childhood development.
Just getting to work can be a problem for workers, particularly for low-income households in rural areas. “Montana is a large state, so there’s a bit of a geographic mismatch between where jobs are versus where people [without jobs] live,” observed Barbara Wagner, chief economist at the Montana Department of Labor and Industry (DLI).
So some staff-strapped companies become transportation matchmakers. Last summer, Greater Rocky Mountain Stone, a masonry firm in Bozeman, was offering free car rides — in addition to per diem — to laborers willing to work on projects in the Big Sky area, 44 miles away.
In Minnesota, Digi-Key contracts with a bus company to transport workers from Crookston, Minn., and two other distant communities to work the evening shift in the distribution center. A free ride helps to recruit workers who might otherwise decline to drive 30 miles or more to put in a less than desirable shift, Trontvet said. “In winter, it’s fully appreciated by riders.”
Helping hands and second looks
For some workers, whether to work, or work more hours, is not a matter of choice; owing to circumstances beyond their control or poor life decisions, they must clear significant hurdles to take full part in the workforce. Here, too, employers are reaching out to potential job candidates, often with assistance from community organizations and educational programs focused on improving the job prospects of racial minorities and other disadvantaged groups.
Recent immigrants are one such labor source. Since 2000, the foreign-born population of Sioux Falls has more than doubled to about 12,000 due to an influx of refugees and other international migrants. Looking for ways to alleviate a labor crunch (Sioux Falls’ unemployment rate was 2.1 percent in August), the city’s community development office last year awarded grants for jobs-skills training as part of a workforce development initiative.
A $70,000 grant went to the Multi-Cultural Center of Sioux Falls to create a job skills program for refugees and other immigrants that it serves. Christy Nicolaisen, the nonprofit’s executive director, said that the program teaches “soft” skills — making eye contact in an interview, dressing appropriately — as well as basic jobs skills required for positions in industries such as manufacturing and health care. She estimates that roughly half of the immigrants she sees haven’t looked for a job in earnest because they don’t know how to go about it, or doubt their work abilities.
“New immigrants just need a little help, that extra boost of confidence, to make a good impression and succeed in obtaining employment,” Nicolaisen said.
Area employers, among them Avera Health, have snapped up the 140 students who have taken the course. Employee turnover is high for housekeepers and other entry-level positions, said Talent Acquisition Manager Katie McNamara. The Multi-Cultural Center provided “a connection for us to this immigrant population that they serve,” she said. “Participants in their programs are seeking employment, and we have employment opportunities.”
Through September, Avera had hired six immigrants from Africa who had taken the job skills program to fill housekeeping, food service and janitorial positions.
Immigrant training programs offered by a number of community colleges in the district also serve as recruiting pipelines for employers seeking foreign-born labor. Many are geared to industries such as health care and manufacturing where labor supply lags demand.
At the North Dakota State College of Science in Fargo, new Americans in a program designed to prepare immigrants for training as certified nursing assistants learn medical terms and computer keyboarding, and practice soft skills such as problem solving and speaking with confidence.
Last year, 98 percent of students who took the class and went on to complete CNA training were hired immediately upon graduation, said program head Janie Hulett.
In East Grand Forks, Minn., Northland Community & Technical College launched a manufacturing certificate program for immigrants last year.
Across the Red River in Grand Forks, Scott Lindgren of Express Employment runs his own job skills program; you could call the firm’s Second Chance program the school of hard knocks. Under pressure to supply workers to companies in the region such as LM Wind Power and bus maker New Flyer, the agency takes on job seekers whom most employers would reject out of hand: folks who have drifted in and out of the workforce, or who have poor attendance records or a weakness for alcohol or drugs.
Job candidates admitted to the Second Chance program are placed at client locations as “evaluation hires.” During this three-month trial period, the agency tries to impress upon workers “how important it is to the employers that people show up, and are reliable,” Lindgren said. Candidates also receive coaching in interviewing for a permanent job, and staying sober.
Other groups of workers who are getting a second look from employers in tight labor markets include people with serious blots on their resume: a criminal record or a history of substance abuse (see related story on ex-offenders and former drug abusers).
Reaching out is hard to do
Saying you’re going to reach out to the margins of the workforce to help address your labor needs is easy; doing so is another matter entirely.
David Wiczer, an economist at the Federal Reserve Bank of St. Louis, notes that although those out of the labor force are a potential recruiting resource, “there’s a reason that people are not participating.” The same is true for part-time workers seeking full-time positions.
Many seniors, for example, opt to take it easy in their golden years rather than staying in their office job, or working part time in a call center or at McDonald’s.
Others on the periphery of the workforce may be too tightly bound by constraints such as the cost of child daycare, while still others lack the requisite skills for a job. Studies have shown that many part-time workers hold multiple jobs, suggesting that “they don’t have the skills for full-time jobs,” Wiczer said.
There’s anecdotal evidence, too, that best intentions don’t always produce results. Less than half of the workers in Express Employment’s Second Chance program stay on the job for more than a few months, Lindgren said. “They successfully go through the program and get started with an employer, but they end up falling back on their learned habits from the past.”
And at Northland Community & Technical College, only five students signed up for the inaugural manufacturing certificate program.
But in a time of widespread labor scarcity, district employers can’t afford to ignore the underemployed or people who want a job, yet watch from the sidelines. “This is a national issue,” said Wagner of the Montana DLI. “We’re just not seeing the growth in our working-age population, and nearly all of the increase in our labor needs to come from increased labor force participation.”
In coming years, it’s likely that employers will redouble their efforts to recruit those on the fringes of the workforce — not just by offering higher pay but also by being willing to accommodate workers’ needs and desires, and, in some cases, tolerate their human failings.
Related Workforce Special Report Content from the Minneapolis Fed
Second Chances
Opening pathways to employment for felons and recovering substance abusers
Working through demographic change
Minnesota State Demographer Susan Brower on the impact of an aging population on the workforce and economic growth
At last, a wage bump
After years of stagnation, average earnings in the district appear to be rising
