Help Wanted: In Unexpected Twist, Some Skilled Jobs Go Begging

From the Wall Street Journal
Nov. 26, 2011
http://online.wsj.com/article/SB10001424052970203707504577010080035955166.html


By BEN CASSELMAN
DENVER—Ferrie Bailey's job should be easy: hiring workers amid the worst stretch of unemployment since the Depression.

A recruiter for Union Pacific Corp., she has openings to fill, the kind that sometimes seem to have all but vanished: secure, well-paying jobs with good benefits that don't require a college degree.

But they require specialized skills—expertise in short supply even with the unemployment rate at 9%. Which is why on a recent morning the recruiter found herself in a hiring hall here anxiously awaiting the arrival of just two people she had invited to interviews, winnowed from an initial group of nearly five dozen applicants. With minutes to go, the folding chairs sat empty. "I don't think they're going to show," Ms. Bailey said, pacing in the basement room.

Her challenge is a familiar one to recruiters, especially in industries that require workers with trade skills such as welding. Union Pacific struggles to find enough electricians who have worked with diesel engines. Manufacturers in many places can't find enough machinists. Oil companies must fight for a limited supply of drilling-rig workers.

"There's a tremendous shortage of skilled workers," said Craig Giffi, a vice chairman of the consulting firm Deloitte. A recent survey it did found that 83% of manufacturers reported a moderate or severe shortage of skilled production workers to hire.

The extent and significance of the skills gap is hotly debated in economics circles, in part because of its policy implications. If companies aren't hiring primarily because of limited demand for their products or services, the standard policy prescription offered is some form of stimulus, such as lower interest rates or taxes, or more spending. But to the extent that the problem is companies' inability to find the workers they need, the remedy might instead be training or other efforts to help workers get the skills.

Most research suggests the sluggish economy is the biggest reason for the weak labor market. Data show the skills gap doesn't exist in whole industries but in specific jobs, including certain heavy-duty blue-collar ones.

Pay levels provide evidence. While hourly wages in the broad category of maintenance and repair workers rose 6.4% from 2007 to 2010, increases were 10% in the subcategory of heavy-vehicle mechanics and 15% for specialists in electrical repairs on commercial and industrial equipment. The implication is that employers were competing for a limited pool of qualified workers.

Such scarcities can have an outsize effect. Though companies may be able to get their unskilled work done by shifting around existing staff or using temps, a shortage of skilled workers is harder to finesse. The Deloitte study found that 74% of manufacturers said a shortage of skilled production workers had a "significant negative impact" on either their productivity or expansion plans.

AAR Corp., a Chicago-based aviation-parts manufacturer, has 600 job openings, mostly for skilled trade jobs like welders and maintenance mechanics. Chief Executive David Storch said the shortage of workers has forced the company to pass up business and delay some manufacturing work. He said the company would like to start a third shift at its Indianapolis aircraft maintenance facility but has been unable to do so because of worker shortages.

"It's a little bit frustrating to sit around and talk about the ability to grow your business if you could only hire skilled people," Mr. Storch said.

A skilled-worker shortage can even darken the jobs picture for the less-skilled, because companies that can't expand production for lack of enough skilled workers may not need as many salespeople, forklift drivers or janitors. They may buy fewer parts, potentially affecting the size of their suppliers' work force.

Such ripple effects wouldn't matter as much if less-skilled workers had more options, as many found, for instance, after the dot-com bust, by going into home construction. Today's economic sluggishness leaves fewer such escape routes.

"In every recovery you hear about the mismatch of skills to available jobs, but this time around it seems particularly pernicious," said Dana Saporta, an economist with Credit Suisse, She estimates the skills mismatch and similar so-called structural issues add 1.5 percentage points to the unemployment rate.

Demographics are part of the explanation. Railroads went on their last big hiring spree in the late 1970s. Manufacturing employment peaked in the early 1980s. Many of those hired then are now nearing retirement. Union Pacific expects about 4,000 of its 45,000 employees to retire in 2011.

Replacing them has been a challenge for a number of reasons: an erosion of vocational education at the high-school level, a reduction of in-house training through companies and unions, a now-vanished construction boom that once gave people well-paying jobs without the need for much training, among other things.

Perhaps most significant is that the well-publicized decline of the country's manufacturing sector has made blue-collar careers appear less stable and attractive. Another Deloitte survey found that although a large majority of the public thinks it is important for the U.S. to have a strong manufacturing sector, barely a third would encourage their children to pursue a manufacturing career.

A final factor is that, according to some experts, companies have become pickier amid the slow economy. Jeffrey Joerres, CEO of staffing firm Manpower Inc., said that with demand for their products weak, companies only want candidates who have all of the skills they are looking for, and if the companies can't find someone who fits the bill really well, they'll just leave the job unfilled.

"It's lack of demand that's creating the talent shortage," Mr. Joerres said, adding that if demand picks up, companies will relax their standards to fill jobs.

Reluctance to hire isn't an issue at Union Pacific. Ms. Bailey expects to have filled 200 jobs in 2011 by the time the year ends, and her colleagues at the railroad 4,300 more.

But when the railroad had openings for diesel electricians earlier this year, it took Ms. Bailey 10 hiring sessions to fill 24 jobs. At one session she held in Rawlins, Wyo., none of the five invited candidates showed up.

At her event in Denver last month, the jobs were easier to fill, but barely. Known as "installation technicians," the workers are responsible for putting in and maintaining a sprawling network of cable, microwave relays and related equipment that enables the railroad to monitor 850 trains running daily along its 32,000 miles of track.

This doesn't require a bachelor's degree but demands technical skills gained either through an associates' degree or four years of experience in electronics. And it is grueling work. Technicians have to climb 50-foot communications towers, clamber up utility poles and work outdoors through Wyoming winters and Kansas summers.

They put in 10-hour days, in clusters of eight or ten days, and are routinely away from home more than half of each month. Apart from the necessary skills, said Union Pacific's construction manager for the Denver region, John Haberle, the job has two things that make attracting workers hard: the heights and the travel.

"Those are the two deal-breakers," he said. "Whatever your situation is at home, you're going to have to manage that. You won't be able to manage that out in the field somewhere or on top of a tower."

After a website job posting, Ms. Bailey initially drew 58 applicants. Of them, she deemed about two dozen sufficiently qualified so that she invited them to take a $25 aptitude test, at their own expense.

Eighteen took it and 13 passed, earning an invitation to an interview and hiring session.

But of the 13 she invited, three didn't reply, five declined, and three withdrew their applications before the session. So of the original 58 people, just two qualified candidates accepted her offer of an interview session later in October.

Minutes before it was to start, neither had shown up. "All we can do is just wait," she said.

Finally, Josh Phillips, 27 years old, walked in, followed a few minutes later by the second candidate, Paul Bouley, 30. By coincidence, the two were co-workers at a contractor that installs fiber-optic cable for mobile-phone companies.

Both grew up in Colorado, both were married with young children, and neither had a bachelor's degree. They were interested in the job for the same reasons: stability, good benefits and opportunity for advancement.

"I don't just want a job anymore, I want a career," said Mr. Phillips. "I've had jobs my whole life."

Standing at the front of the room, Ms. Bailey described the deal. As installation technicians, they would earn $21.64 an hour, or close to $48,000 a year for the railroad's regular work schedule. Overtime could add thousand dollars more. If they stuck with it and advanced through union ranks, they could earn more than $68,000 a year before overtime.

She also told them Union Pacific would cover 85% of workers' health-insurance premiums, subsidize college courses they took and pay a traditional pension. "You mean we could actually retire?" Mr. Phillips quipped.

Both men had done related work. Mr. Bouley had climbed utility poles and towers, and Mr. Phillips was certified as a journeyman electrician, an especially hard skill to find. By early afternoon, Ms. Bailey was calling both men to offer them jobs. "It was a great day," she said.

Mr. Phillips accepted the job on the spot. But Mr. Bouley, after initially accepting, turned the job down after his current employer gave him a raise. Union Pacific's health insurance, he said, was a major draw, but the travel was a drawback for the new father. "It's just the consistent travel that kind of threw me off," he said.

Ms. Bailey faced more stiff competition at a job fair the next day, because then she was up against several other employers looking for the same sort skilled people as she was.

"Make $70,000 - $80,000 the first year with FULL BENEFITS," read a sign at a booth right across from Ms. Bailey's at the job fair, put on by the U.S. Army in Fort Carson, Colo., largely to help departing soldiers ease back to civilian life.

The sign belonged to Mile High Energy Solutions, an oil-and-gas recruiting firm. Its recruiter, Jodie Reed, said Mile High was looking to hire 600 people by year-end, especially mechanics, electrical engineers and workers with commercial drivers' licenses. She had a computer at her booth so people could apply right there.

To compete, Ms. Bailey, a former soldier, frequently pointed to an Army pin on her lapel and flaunted military jargon, such as asking "What's your MOS?" (for "military occupational specialty").

When she heard one that was a good fit, she pounced. "Heavy equipment mechanic? How many years? Do you have diesel experience? Oh my God, you better run to that computer and put in an application," she told one prospect.

"Welding is a plus," she told another man, her eyes lighting up. "How many years of welding?"

The welder, Justin Wren, was skeptical. After three years in the military, he said, he was ready to be home in the evening. The benefits package appealed to him, but the travel—"on the road, different hotel every week"—less so.

Standing next to him, his wife, Dara, was firm: "I want him home."

With his welding skills, Mr. Wren, who isn't scheduled to leave the Army until next spring, had the luxury of being picky. Ms. Bailey quickly moved on to the next set of candidates.