EDGE Labor Pains: With joblessness near historic lows, employers scramble to recruit, retain workers

EDGE Labor Pains: With joblessness near historic lows, employers scramble to recruit, retain workers

2019 Trend #3

January 1st, 2019 by Dave Flessner in EDGE

In the past decade, Dave Baumgartner has built 33 Dunkin' Donuts across East Tennessee and North Georgia and plans on building another 10 next year in Tennessee, Georgia and Alabama.

The Dunkin' franchisee is convinced he has found a sweet spot for Southern success with his coffee, donuts and bagels. But while Bamugartner is succeeding in attracting lots of hungry customers, he still struggles to find enough workers for his growing business.

"The biggest challenge for us, and I think most of us in the restaurant and many other industries, is getting enough qualified and reliable workers," Baumgartner says. "It's a continual problem and I'm afraid it's not going to get any easier anytime soon."

The unemployment rate in metro Chattanooga has remained below 4 percent since the fall of 2017, forcing local employers to expand their search for new workers and to do more to retain those already on their staff.

Economists and economic development specialists expect the tight labor market to continue for at least the next couple of years as the economic recovery continues.

"We expect another good year of economic growth in 2019, as we have seen with the strong growth in the past couple of years, and barring some unforeseen shock we don't anticipate any recession any time soon," says Matt Murray, a University of Tennessee economist who helped author the state's economic forecast for 2019. "Unemployment should remain low, but I don't anticipate the jobless rate going much lower and that may actually be a good thing. We need to draw more of the workers who may have become discouraged and dropped out of the labor force in the past back into the job market and I think we will see some of that."

A survey by the world's largest staffing agency, Manpower, found U.S. employers are approaching 2019 with their strongest hiring plans in 12 years, especially in the South.

"Increased employer optimism tells us employers have jobs to fill, yet we know they are struggling to find the talent they need from production line workers to IT professionals," says Becky Frankiewicz, president of ManpowerGroup North America. "With so many organizations set to hire in an already tight labor market, skilled workers can call the shots."

The Chattanooga chapter of the Society of Human Resource Managers surveyed its 420 members and respondents named "recruitment" of new workers as their biggest challenge.

"With all-time lows in unemployment rates and unprecedented jobs growth, employers have to be creative in their recruitment strategies and especially competitive in their total benefits packages," says Merri Mai Williamson, owner of Application Researchers and president of SHRM Chattanooga.

Wages have begun to creep up, although not significantly, rising about 3 percent year-over-year during most of 2018. Major employers like Unum, BlueCross, First Tennessee Bank and Amazon raised their starting pay last year — most to $15 an hour — and many also added new benefits, such as extended parental leave, child care or improved educational assistance.

Murray forecasts that Tennessee's jobless rate will likely continue to hover at or below 4 percent, especially in urban areas where most of the new jobs are being added.

"The labor market is likely to remain at full employment (where all qualified workers looking for a job are able to find one), for some time," Murray says.

With a relatively low cost of living and attractive outdoor lifestyle, Chattanooga has benefited by drawing more workers to the market in recent years as the second fastest growing major city in the state, behind only Nashville.

"Our pipeline of business prospects looking at investing here remains very strong," says Charles Wood, vice president of economic development for the Chattanooga Area Chamber of Commerce. "Fortunately, we also are an attractive area to live in so we are often able to encourage people to relocate here and help meet the workforce challenges of a growing economy."

The Chamber and other community groups also are pushing initiatives such as Education 2.0 to improve the skills of the local workforce, both in vocational programs and in preparing more high school graduates for college and trade schools to gain the skills needed for 21st century jobs.

"Having a skilled workforce is critical for economic development and getting enough qualified workers is a challenge today for nearly everyone I talk with here and in most cities around the country," Wood says.


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