The Widening Skills Gap: Why Are US Factories Desperate for Workers?
As life begins to return to normal in the wake of the covid-19 pandemic, demand for goods is surging across the United States. This is great news for American manufacturers, but there’s just one problem: factories up and down the country are struggling to hire enough people to keep their production lines running.
In March 2021, US manufacturing hit a 37-year high, following a downturn in 2020 caused by the pandemic. Employment in the industry fell by around 1.4 million last year, which was a less severe drop than in many other industries.
Now, however, with the economy on the upswing, the sheer speed of the recovery has left many companies reeling and scrambling for workers. There are now more than half a million vacant job openings across the sector.
Many manufacturers struggle to hire workers trained in specialized skills, such as machinists and welders. In addition, many factories are even struggling to hire recruits for entry-level positions that require zero expertise or experience. Even as unemployment in remains high in America, US factories are growing increasingly desperate for workers.
For example, an April 2021 Reuters report on the situation detailed the struggles of Look Trailers, a company that operates five trailer factories scattered from Utah to Pennsylvania. The CEO noted that he just spent $5,000 on job advertising, which only yielded two people hired as a result — a fraction of the 125 skilled workers the company needs to return to its full complement of 650+ staff. Some 50% of the company’s welding jobs are unfilled, creating a crippling bottleneck in operations.
The CEO told Reuters that he had never seen it so bad. The lack of skilled workers is not only costing his company, but also his business customers. One of his dealers, who usually has about $2 million in inventory, currently has just $200,000.
Similarly, in a New York Times article, Matt Guse, owner of MRS Machining in rural Wisconsin, says that he would hire 12 new machinists, if only he could find them. He explained that his company, a manufacturer of precision metal parts, has rebounded so quickly, he had to turn down $1 million in work in the last fortnight alone. Guse told the Times he finds it hard to sleep at night with so much potential, but such a glaring lack of skilled people.
Manufacturers have long complained about a shortage in skilled labor, but over the past year, the problem has intensified. The pandemic caused millions of redundancies, largely in service industries such as restaurants and hotels, but consumer demand continued to thrive, pushing many factories into overdrive. Unfortunately for management, prevailing high unemployment rates have not translated into an influx of new recruits on assembly lines.
In March 2021, 916,000 American jobs were created according to Labor Department figures, representing the highest increase since the previous August. This figure included 53,000 factory jobs, the highest number of new manufacturing jobs in half a year.
Implications
Disruption in one area of industry creates a ripple effect, impacting supply chains, with the potential to affect other sectors. Take, for example, shortages in vital parts like semiconductors, which the electronics industry depends on. In the manufacturing industry, shortages of skilled staff are nothing new, but the fact that the problem is getting worse could have far-reaching implications.
According to a recent study published by The Manufacturing Institute and Deloitte, by 2030, somewhere in the region of 2.1 million manufacturing jobs will remain unfilled in the United States. The report warns that staff shortages will have a significant impact on production, reducing revenue and ultimately costing the US economy as much as $1 trillion by 2030.
President Joe Biden recently pledged to ramp up US manufacturing as part of his administration’s broader economic revival plan geared towards creating more blue-collar jobs. He has said that if his plan passes, it will create 19 million blue collar jobs: good jobs, that pay well.
Nevertheless, right now factories across the United States are floundering, with many vacancies remaining unfilled.
How can manufacturers attract employees?
Carolyn Lee is the Manufacturing Institute’s Executive Director. She explained to CNN that the industry is currently experiencing a perception problem: people either do not know that manufacturing jobs are available, or that these are jobs that they want.
The report published by The Manufacturing Institute and Deloitte makes several recommendations on how manufacturers can attract more talent to the industry, such as increasing inclusion and diversity, considering flexible schedules to improve workers’ work/life balance, and holding recruiting drives in high schools.
For those who do venture into the manufacturing industry, the compensation can be worthwhile. Look Trailers, the company in the Reuters article mentioned above, provides wages far above federal and state minimum wages, with average starting pay at $19 an hour and skilled workers like welders earning $24 an hour or more.
As the nation wakes up after the pandemic, the manufacturing industry is booming. Unfortunately, the grim reality is that, right now, the workers simply are not coming.
