EDGE Finding workers for today's jobs is biggest challenge for most employers

EDGE Finding workers for today's jobs is biggest challenge for most employers

January 1st, 2018 by Dave Flessner in EDGE

Carey Ellis works on her resume as Justin Washington, an adult career specialist, assists Charles Reed during a job fair event at the American Job Center in Chattanooga, Tenn., Thursday, Sept. 14, 2017. Ellis is hoping to find a job in customer service while Reed is looking for some type of truck driver job.

Photo by Erin O. Smith

Outlook 2018

The new year begins with the strongest economy in Chattanooga in more than a decade.

A year-end survey found small businesses owners across America to be as optimistic in their business outlook as any time since the 1980s. Last year, the Chattanooga area added jobs at three times the pace of the country as a whole and the local economy is poised for another year of expansion.

As the economic recovery enters its eighth year, sustaining the the same pace of economic growth and momentum is getting tougher, especially in a tight labor market with interest rates expected to edge higher through 2018.

Nonetheless, the Chattanooga region is poised for growth this year from more road building, new battery-powered vehicles, additional apartment and subdivision development and continued growth in the region's changing entertainment and dining landscape.

In the heyday of the post-World War II industrial expansion, Chattanooga billed itself as "the Dynamo of Dixie" and boasted it was one of the top 10 cities in America in the share of workers employed in manufacturing.

Such factory jobs comprise only a fourth the share of local jobs that they did a half-century ago, but Chattanooga was still among the top 10 cities in the South for job growth over the past year.

Despite job cuts during 2017 by such major local employers at the Tennessee Valley Authority, Resolute Forest Products, Norfolk Southern Corp., U.S. Xpress Enterprises, Invista and Kmart, overall employment in metropolitan Chattanooga grew last year three times as fast as the United States as a whole.

Employers in the six-county Chattanooga metropolitan area added nearly 10,000 jobs last year across nearly all industries and Chattanooga ranked among the top 25 metro markets in the United States — and among the top 10 in the South — for job growth in 2017.

Unemployment in metro Chattanooga fell during 2017 to its lowest level in 17 years and the jobless rate plunged across all of Tennessee to its lowest rate on record.

Workers unpack items shipped from affiliates to the Amazon Fulfillment Center in Enterprise South Industrial Park on Wednesday, Aug. 2, 2017, in Chattanooga, Tenn. Amazon held nationwide job fairs Wednesday to fill 50,000 positions as the company sees a surge in growth.

Workers unpack items shipped from affiliates to the...

Photo by Doug Strickland /Times Free Press.

That's good news for those trying to find a job. But employers trying to fill job vacancies are having a tougher time.

Mark Campbell, owner of the Manpower franchise in Chattanooga, said Chattanooga's labor market is as tight as he has seen in his 25 years in the business.

"It's difficult to find enough workers for the available jobs, especially with more employers doing drug screens and background and employment checks," he says.

Rosemarie Thomas, who manages the Chattanooga staffing agency Total Resource Inc., said demand for workers in Chattanooga, both seasonal and those hired for permanent jobs, continues to grow.

"With unemployment so low, we don't see as many people as we once did coming in the door looking for jobs," she says. "But so far, we're still doing very well despite the relatively tight market for labor."

Surveys by the Tennessee Chamber of Commerce and Industry show that the labor shortage is now the biggest business concern and likely to remain so for years to come.

"As I travel across the state, different regions have different needs," says Denise Rice, director of the Tennessee Manufacturers Association. "But the one thing that I hear that is consistent everywhere is the concern over the skills gap and the challenge of getting a qualified workforce. I think this problem is at an all-time high and this is not a short-term problem."

Unemployment in metro Chattanooga peaked at 10.2 percent in June 2009 but fell to as low as 3.2 percent by last fall, according to the U.S. Bureau of Labor Statistics.

Historically, normal unemployment is around 5 percent. Economists have generally considered 4 percent or so to be "full employment" when nearly all workers looking for a job can find one.

But the jobless rate across much of Tennessee has fallen below that level and demographic shifts restrict the prospects for a major influx of workers to fill the job vacancies.

Chattanooga employers did benefit last year by an influx of more than 6,000 workers into the local labor force. But the growth of the working-age population is slowing according to Census Bureau estimates and forecasts. The working age population grew very slowly from 2010 through 2015, and will grow even slower in the coming decade as aging baby boomers retire. Foreign immigration into the United States has also declined, as if that famous wall that President Trump wants along the Southern border was already erected.

In such a tight labor market, employers typically bid against one another for workers, pushing up wages for employees who are able during good times to take better paying jobs elsewhere if their current employers don't keep pace.

So far, however, there hasn't been much such wage inflation, to the surprise of labor analysts and economists.

"This is biggest puzzle of the expansion," says Dr. William Fox, director of the Center for Business and Economic Research at the University of Tennessee. "We've seen so many jobs created and the unemployment so low — only 3 percent in Tennessee — and yet we're not seeing wages grow but only about 0.75 percent more than inflation. It does appear that companies simply aren't willing to pay much more for workers even though they have a harder time finding them."

The federal minimum wage hasn't been changed since June 2009 when it was raised to its current level of $7.25 an hour.

But the average Chattanooga worker is paid nearly three times that minimum hourly rate and even the starting pay at most basic entry-level jobs has risen above the federal minimum.

The minimum starting wage at Walmart is $9 an hour and the average hourly worker at Walmart was paid $13.85 an hour at the end of 2017. To recruit workers, Target boosted its minimum pay to $11 an hour last fall and said it will boost starting pay to $15 an hour by 2020. Costco boosted its starting pay to $13 an hour last year. During the holiday hiring crunch for workers, Amazon boosted the starting pay for some temporary jobs to $17 an hour.

"We're starting to see a bigger increase in wages, but ultimately for wages to increase significantly you need to boost worker skills and productivity," Fox says. "Tennessee is making progress, but we still have a ways to go which is why our wages remain lower than in the U.S. as a whole and why it will likely remain a real challenge to many employers needing higher-skilled and specialty skilled workers."