Skilled trade workers are still in short supply

The Fed publishes its Beige Book eight times per year. It’s a compendium of reports on local economic conditions from the 12 regional Federal Reserve banks. 

The October edition, the most recent, reported this in its national summary about the U.S. labor market: “Demand for workers eased somewhat, with hiring focused primarily on replacement rather than growth. Worker availability improved, as many contacts reported it had become easier to find the workers they need.”

But also, there was this: “Contacts noted that it remained difficult to find workers with certain skills or in some industries, such as technology, manufacturing, and construction.”

The Richmond, Virginia, Fed mentioned a charter bus company that had to dramatically raise pay to attract skilled mechanics; in Louisville, Kentucky, contractors were reported having a hard time hiring painters and drywall installers; the San Francisco Fed’s section described “some challenges attracting workers in construction and nonprofit community support organizations as well as for some management positions in the technology, accounting, and health care sectors.”

In Portland, Oregon, Stephen Sasa works as a senior project manager with construction company Green Gables Design and Restoration. On a recent cold, blustery morning, he was downtown supervising a small crew outside Lúc Lác Vietnamese Kitchen, rebuilding pandemic-era sidewalk dining patios to meet new city codes. 

“Journeyman carpenters, these guys are probably making $40 or $50 an hour,” Sasa said. “They’re also getting full medical benefits, reimbursement for our trucks and travel expenses.”

Even with solid pay and benefits, though, Sasa said it can still be hard to keep workers.

“We pretty much just work in the wintertime, all winter long, outside — just dig big holes and get muddy,” he said.

Another reason it’s hard to fill these jobs? A shortage of skilled workers.

“Sometimes it goes so long that there are just gaps where the higher-level positions can’t be filled,” said Sasa. “If we haven’t been able to train somebody for the position and somebody leaves, that creates a huge problem.”

While the overall U.S. job market may be slowing down, “we haven’t heard any of our members telling us that it’s getting easier to find qualified workers to hire,” said Brian Turmail, vice president of workforce at Associated General Contractors of America.

In AGC’s latest workforce survey, published in August, 94% of employers said they’re having difficulty filling skilled hourly craft positions, while 92% reported difficulty hiring salaried construction professionals. Roughly one-third said the problem was worse than a year ago. Well over half of firms reported difficulty finding carpenters, cement masons, concrete workers, electricians, heavy equipment crane operators, mechanics, pipefitters, welders, pipelayers, plumbers, surveyors and truck drivers on the hourly craft side, and engineers, estimators, quality control superintendents, supervisors and project managers on the salaried side.

Demand for construction workers is high, Turmail said, with the surge in federal funding for infrastructure, semiconductor and electric vehicle production. 

But he pointed out that the sector’s also beset by generational deficits. Baby boomers with deep experience and skills are retiring. And there have been decades of educational disinvestment, as detailed in a report AGC jointly published in June with the Progressive Policy Institute.

“Eighty percent of what the federal government spends, it spends encouraging and supporting people to get a four-year college degree,” Turmail said. “Only 20% goes to what we call career and technical education, workforce training and development.”

That includes apprenticeships, community college construction programs, workforce training and retraining for people in the workforce but out of a job, or those transitioning from one sector to another, he said.

Part of the problem is the image of blue-collar careers, said Michael Gritton, executive director of KentuckianaWorks, the workforce development agency for the Louisville region. Employers, he said, “had been laying people off for 20 years in places like Louisville. And the parents of those kids were saying, ‘Don’t go into manufacturing, because the jobs aren’t going to be steady, there’s a lot of uncertainty.'”

Gritton also thinks employers need to be more willing to take on entry-level workers — those right out of high school or with training credentials but little or no on-the-job experience. 

“Almost every employer wants someone else to hire the person when they’re new, and pick them up when they have some experience,” he said. “There’s this phantom just-in-time idea: ‘I’m not going to do anything up front, but boy, when I want somebody, they better be trained and they better have experience.'”

He predicted that as the job market gets looser, employers will become even pickier. “All of a sudden, they don’t just want someone off the street, fresh out of high school, even if they have an entry-level certification,” he said.

KentuckianaWorks partners with local employers and educators to try to build a skilled-worker pipeline. One example is GE Appliances, headquartered in Louisville. Katina Whitlock, senior manager for community engagement, said the company now employs 6,000 workers in the area, double the number it had seven years ago.

GE collaborates with Jefferson County Public Schools, Whitlock said, on a program in local high schools.

“We built a mock assembly line where students learn hands-on experiences from our production employees, from our engineers.”

She said high school seniors can work part time in the factory, then get a full-time union job after graduation starting at $17 per hour, with benefits.

Whitlock said GE Appliances also recruits workers in Louisville’s many immigrant communities through local nonprofits, including Catholic Charities and Kentucky Refugee Ministries. She said 80 languages are spoken in the plant, including Spanish, French and Swahili.

“We have hired multilingual talent recruiters,” Whitlock said. “We have shifts where we actually speak the first language of those employees so they can have better understanding and be trained.”

The challenge starts with helping young people navigate blue-collar careers — to understand what they pay and how to get started, said management professor Peter Cappelli at the University of Pennsylvania’s Wharton School.

“The dilemma now for kids is, ‘OK, how do I get one of these jobs?'” said Cappelli, who directs Wharton’s Center for Human Resources. “I did look into this for one of my kids who was interested in becoming a welder. And it was virtually impossible to help him figure out how to do it.”

Cappelli said many high schools don’t offer vocational education anymore, and community college programs can be expensive and teach a lot of stuff that workers in the skilled trades don’t need. 

“There are union apprenticeship programs, but they’re smaller and smaller,” he continued. “Employers have been backing out of training, and especially training for new skills. To get hired someplace and then they’re going to train you as to how to do the job? You don’t see that much anymore.”