Help Wanted: Workforce Participation, Wages, Job Desirability, and Skills Gaps

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Web GraphicIn a December 2015 Utah Foundation Report, 71% of 151 major local employers reported some level of difficulty finding enough skilled or qualified employees. One-third claimed the worker shortage was the single greatest factor impeding their growth, and an overlapping but not identical third reported the scarcity of skilled workers as the worst quality of Utah’s labor pool. More recent data indicate the trend has not changed.

An analysis of Utah’s worker shortage identifies four principal contributing issues: a tight labor market, low wages, job desirability, and skills gaps. With unemployment near record lows, employers can either recruit from outside Utah or convince more Utahns to participate in the labor force. Women and young Utahns are possible targets. One way to convince higher participation levels is through higher wages. After accounting for inflation, there has been little to moderate wage increase in recent years.

Certain occupations are considered less desirable, such as those in construction, manufacturing and trades. Often these jobs offer living wages, and are available earlier in life because they do not require four-year degrees. Public awareness campaigns targeting graduating students and their parents hold promise.

Finally, there is the potential problem of skills gaps – when the workers available are missing the skills
employers need. There are may solutions and they often depend on better collaboration between
businesses and educational institutions.

In many ways, economic theory would indicate that a worker shortage should be self-correcting. As employers become more eager to find talented workers they would be expected to offer higher wages for difficult-to-fill occupations. Higher wages would convince more Utahns to participate in the labor force, convince students to gain the skills needed for those occupations, and even convince others working in different industries to seek training for required skills. Additionally, one business’ problem is merely another’s opportunity. Companies specializing in recruitment, consulting, staffing, and training benefit from worker shortages as they market their services to companies with difficult-to-fill positions.

 

Key Findings:

• Utah’s current labor force participation rate of 69% is still substantially lower than the 71-72% of the nineties and early aughts.
• A 2015 survey of Utah businesses found the majority were offering lower wages than they were already paying current employees in difficult-to-fill positions.
• Despite experiencing below-average unemployment rates for the past four years, wages have not increased as expected in a tight labor market.
• While 63% of parents expect their children to earn four-year degrees, only 32% of Utahns historically do and only 29% of jobs in 2020 will require one.
• Governments, educational institutions, non-profits, trade organizations, private companies, and others are all working both independently and collaboratively to solve the skills gap through different methods.

 

Read the report here.

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