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updated: 10/18/2017 12:17 PM

Tight labor market has challenges, opportunities

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  • Brian Richards

    Brian Richards

 

In a recent business climate survey conducted by Northern Illinois University's Center for Governmental Studies in partnership with the Daily Herald and Daily Herald Business Ledger, finding and retaining quality workers emerged as a major business concern. Of 211 randomly selected companies with 10 or more employees in the six-county Chicago metropolitan region, 74.9 percent of respondents said it was somewhat or very difficult to recruit high quality job candidates, while 31.8 percent said that skilled labor is lacking in the state.

The tight labor market is being influenced by issues related to both demand and supply. As the economy has improved in recent years, total employment has grown. However, this growth has not occurred evenly across skill levels and many employers' skill requirements are increasing. Employment growth since the recession has primarily been in occupations in skilled-services industries, such as health care, finance, and information technology. By contrast, job growth before the recession was much higher in traditional blue-collar industries like manufacturing, transportation, and construction.

This growth in higher skilled jobs has led to a skills mismatch. Available workers too often do not possess the skills that are in demand. While the obvious solution to this is education and training, it is not sufficient to simply make them available. Many students need supports to be able to attend school including financial aid, dependent care, or transportation. There is significant evidence that these support services improve long-term educational and workforce outcomes for those who receive them. Better education and training outcomes for workers means better skilled employees for businesses.

As the demand for workers has increased, the supply of potential workers has also declined. Principal causes of this include an aging workforce, young workers who are more likely to be out of the labor force, and the out-migration of workers and their families. As baby boomers reach retirement age, the proportion of the population that is over 60 years old is increasing. Naturally, this older population is more likely to be retired and out of the workforce. While there may be ways to entice workers to stay in the labor force to a later age, these solutions will never be a complete solution to labor shortages.

Despite these trends, employers are discovering that partnerships with education and training providers are well worth the investment. In the 2014-15 school year, more than 400,000 public high school and community college students in Illinois were enrolled in a broad array of career and technical education programs.

Employers are becoming more involved with these schools to interest young people in careers in their industries. They also are able to reinforce the importance of essential employability skills and provide students with exposure to the workplace and work experiences, experiences that often lead to a job with their company.

Employers also have access to value-add resources that are currently underutilized. Illinois has a network of publicly-funded American Job Centers that offer job placement, recruitment, assessment, and training services to employers (go to careeronestop.org/Site/businesses.aspx to find a nearby center). Apprenticeships are another new opportunity in which Illinois is investing heavily.

These "earn and learn" training opportunities combine structured on-the-job training with classroom instruction and are moving from a primary focus on the trades into nontraditional occupations and industries including health care, insurance, and information technology.

A tight labor market poses opportunities as well as challenges. Now is the time for employers to act individually and collectively to shape workforce solutions.

The problem is not that there are insufficient numbers of potential workers, it is that these potential workers lack the specific skill sets that employers need. By engaging more actively with local education and training providers and leveraging available resources that they help support through their taxes, employers can help build the workforce they need to remain competitive and grow.

• Brian Richard is assistant director and Diana Robinson is director of the Northern Illinois University Center for Governmental Studies.