A coming wave of jobs - no, really - will mean 'help wanted' across a range of professions. How American firms and workers can prepare for the ride.
HOLYOKE, MASS. — It's small comfort to people who need a job now, but experts say there's a dramatic labor shortage looming in the United States.
In 10 years, available jobs could outnumber workers by 6.7 million, according to a new analysis by the nonprofit Employment Policy Foundation in Washington. By 2030, the gap could widen to 35 million.
Shortages are already visible in certain occupations - nursing, for example - but across the board, employers could start to feel a pinch in the next few years. Whether they need people with basic literacy and computer skills or a flair for management, they may just find that they're competing for a piece of a shrinking pie.
Some of the explanation is pure demographics. As baby boomers start to transition out of the labor market, even if they work beyond traditional retirement age, there simply aren't as many younger workers to replace them.
The gap is wider when one takes into account the education level needed for the types of jobs being created. There will be 30.7 million job openings for people with at least a two-year college degree in the next 10 years, the EPF estimates. But only 23.3 million people are expected to earn those degrees.
"If the economy really starts to heat up ... companies are going to start scrambling," says Michael Zey, futurist and professor of management at Montclair State University in Mt. Freedom, N.J. "The first thing they'll try to do is get back some workers that they let go, but many of those people have already taken career turns.... Companies are being very shortsighted at this point."
When it comes to bridging the skills gap, some people have become visionary out of necessity. For more than a decade, Holyoke, Mass., has been facing the paradox that could soon land on others' doorsteps: Employers struggle to fill job openings while residents unqualified for the positions sit idle.
The city of 42,000 has hired workers from surrounding towns for professional and manufacturing jobs, partly because of a lack of English proficiency among some of the Latinos who make up nearly half of Holyoke's population.
Ask Bob Fowler about the skills gap in Holyoke and the first thing he'll tell you is that it's not a matter of people having any less of a work ethic now than when the "Paper City" first built up its blocks of factories along the Connecticut River in the 19th century.
As chairman and chief executive officer of Hampden Papers Inc., Mr. Fowler employs 160 people to create specialty paper products - a tradition handed down from his great grandfather, George Fowler, who cofounded the company in 1880. (The present-day Fowler, white beard and all, bears a striking resemblance to the man in the black-and-white photo on the wall.)
But the changes inside the factory verge on revolutionary. To illustrate, Fowler displays a scuffed-up square flint stone with beveled edges - heavy, but small enough to hold in one palm. For nearly a century, machines swung these stones over the paper as it rolled through, buffing a wax coating until it shined.
The machines moved slowly enough that an operator could monitor four or five at once. It was almost as simple as pushing a green button at the beginning of the shift and a red button at the end.
When new immigrants arrived, "you could find someone [on staff] who spoke their language and give them instructions for their entire career in about an hour," Fowler says. "I don't mean to demean it, because learning a machine like this was really an art. But you didn't need complex mathematical and linguistic skills to make a union wage and put your kids through college."
The company "got out of the stone age" in 1973, he says, installing faster and more complicated machines. Employees needed more training, and their mistakes got costlier. If something is set up improperly, "you can make enough bad paper in an eight-hour shift to stretch from here to Boston and back again," Fowler says.
As job requirements changed, he was determined not to leave any employees behind. For seven years, an in-house teacher offered English and math classes on company time. Now, Hampden reimburses for academic courses that employees opt to take on their own.
Making his way through the plant's ground floor, Fowler talks over the rhythmic whir of a giant laminator about how he wanted to require an associate's degree for the people who operate it. The union blocked that move, but some of the operators have earned their degrees anyway. On a nearby machine, two employees pace back and forth, scrutinizing rolls of gold paper and periodically reaching a finger up to an attached touch-screen computer.
Fowler looks beyond his own company, too. He participates in local workforce-development initiatives and advocates for everything from education reform to more government funding for training. He worries about all the people still being left behind. One day a young Latino came in and asked the receptionist if he could take an application home. She asked him to fill it out in an adjacent room, because the company uses the form as a literacy screen. When he came out, two hours later, he left it with her and scurried out. He had written only his name. Fowler heard the story when he happened by the receptionist's desk and noticed she had been crying.
Such skills gaps are showing up nationwide - and at all levels of hiring and employment. About 60 percent of employers test job applicants in some form, and 38 percent are deficient in basic reading and math, according to the American Management Association. At the management level, the AMA also reports shortcomings in conceptual skills, communication, and problem solving.
That's of particular concern, because by 2013, the EPF report says, nearly 40 percent of US jobs will be professional or managerial.
"When I speak to audiences of senior executives, I ask how many companies are experiencing difficulty right now in filling critical positions, and between 70 and 80 percent of the hands go up," says Roger Herman, lead author of "Impending Crisis: Too Many Jobs, Too Few People" and CEO of the Herman Group consulting firm in Greensboro, N.C.
But with some executives struggling to keep their companies afloat in a rocky economy, it's not easy to get them to think strategically about the future workforce crunch.
Training and development of employees are often the first areas to be cut, and companies rarely measure how that might be hurting their bottom line, according to a recent study by Accenture, a New York consulting firm.
It's also difficult to project more than a few years ahead. No one knows for sure if technological advances will create more jobs than they make obsolete. And, of course, if the economy unexpectedly nosedives, a labor shortage won't be the problem.
But barring such dramatic events, closing the skills gap will require a combination of educational gains, more immigration, increased productivity, and higher participation in the workforce, the EPF report concludes.
Everyone's standard of living is on the line. One measure is the growth in per capita personal income (all income divided by the total population). Currently it's about $31,000. By 2033, that could double to $63,000 after adjusting for inflation, the EPF forecasts. But if a labor and skills gap persists, it might reach only $50,000.
A call for more immigration may raise eyebrows, because this period of higher unemployment has caused resentment to rise. But to say that immigrants are "taking jobs" is misleading, Dr. Zey says. "We're not filling them."
At the same time, he says, it's important to change cultural attitudes in the US that discourage people from learning math and technical skills - areas in which firms have sought special visas for foreign employees. "You have to correct the system, not just go for a global brain drain," Zey says.
To attract and retain workers and develop their skills, experts say firms will probably turn to a range of solutions including more on-the-job training and mentoring, better child-care assistance, a return to incentives such as signing bonuses, and more openness to hiring people with disabilities.
In the late 1980s, with companies like Fowler's clamoring for better- educated workers, representatives of local government, businesses, and schools formed the Holyoke Employment Partnership. It's facilitated by the city's Chamber of Commerce and has been cited as a national model.
"I've been in this business for 25 years, and I have never seen this level of collaboration," says David Gadaire, director of CareerPoint, a career- development center set up by the HEP.
In addition to helping match people up with jobs and adult education, the center runs programs with business partners to improve workers' or applicants' skills. Fowler's company and other factories, for instance, developed a curriculum known as Manufacturing 101. Most participants went on to work successfully in those companies, Mr. Gadaire says. The HEP has also developed ways for healthcare workers to advance in their careers, which should reduce turnover in the many local hospitals and nursing homes.
Because of these collaborations, Gadaire says, "we give the companies and the workers here in Holyoke a fighting chance."
Still, preparing the workforce of tomorrow often comes down to individuals doing what it takes to make the transition. Consider Carole Barnaby, a Holyoke native who worked at an A&P grocery store for 32 years before losing her job when the store was bought out in April. Now, she's familiarizing herself with Microsoft Windows, thanks to CareerPoint's computer lab, and preparing to start an office-assistant course at Holyoke Community College."Without this schooling, I'd have to stay at a level I don't want to be at," she says. "I want to progress to something - probably management."
Up to half of American employees are ready to pounce on better job opportunities if they come along in the next two years. The average replacement cost for each: $50,000.
If 30 percent of Americans act on that desire for change, employers could face collective turnover costs of $590 billion, according to Spherion, a recruiting and outsourcing company in Fort Lauderdale, Fla.
High unemployment figures make it difficult for companies to prepare for a future talent war, but experts say such competition could be just around the corner, if the economy picks up as predicted.
"Employers need to recognize they're going to be in a sellers' market again, but a lot are locked into buyers' market attitudes," says Roger Herman, lead author of "Impending Crisis: Too Many Jobs, Too Few People."
Two recent studies offer some warning signs. Walker Information, a research and consulting firm in Indianapolis, just released its 2003 workplace loyalty report. The national survey of employees in businesses, nonprofits, and government found that 34 percent do not plan to stay in their jobs for the next two years. Another 31 percent are characterized as "trapped": They'll stay, but only because they don't believe they have any good alternative.
Showing genuine concern for employees and offering opportunities for long-term career development are key to building loyalty, the survey found. But less than half the respondents said their employers do so.
The 2003 Emerging Workforce Study conducted by Harris Interactive for Spherion found that work-life balance is the No. 1 career priority for 86 percent of employees.
But even if companies can entice people to stay longer with family-friendly benefits, they also have to adapt to a new breed of worker - one who's inclined to want a change every few years.
Since the late 1990s, Spherion has been tracking the growth of a group it calls "emergent workers" - people who feel in control of their career and want to be rewarded on the basis of performance rather than traditional measures such as seniority. A third of Americans fit in this category. Another 50 percent are shifting away from the traditional mind-set.
It may surprise some people to know that "emergent workers" include older Americans, not just Gen-Xers.
"We as employers have [said] 'Take charge of your career; we're going to be less paternalistic, we're not going to have the retirement benefits, the work-life benefits. You're going to have to have more flexibility,' " says Robert Morgan, president of Spherion's employment solutions group. "At the same time, we're laying people off - so we've conditioned workers to be loyal to themselves and loyal to their career versus being blindly loyal to the company."
Rather than clinging to the security of their jobs during this period of unemployment, 51 percent said they were very or extremely likely to look for a new work situation within the next year. And 54 percent were confident they could earn a stable income outside the traditional corporate structure.
Workplaces that offer training, mentoring, and a management culture that involves employees in decisionmaking are likely to come out ahead in this new labor landscape, consultants say.
One model cited by Mr. Herman is Baptist Health Care in Pensacola, Fla.
In five years, it reduced employee turnover by 50 percent. All new hires have at least one interview with a peer from the department they'll be working in; employees go through 60 hours of training and development yearly; and 90 percent of the staff shows up for quarterly forums with top executives - sometimes held in the middle of the night for the late shift.
"It's much more expensive to continually hire new people and orient them ... than it is to work with the people who have experience and the knowledge of your customers, and keep them in the fold," Herman says. "But unfortunately a lot of senior [executives] aren't seeing that yet."