“I can’t find workers!”
It’s something heard from businesses and human resources managers even during the high unemployment rates in recent years. Now that Montana’s unemployment rate is down to normal levels, concerns about worker shortages are becoming even more common.
From an economist’s perspective, hearing anecdotal employer concerns about hiring certain professions isn’t enough to diagnose a worker shortage. Perhaps the employer is not offering competitive wages, possibly because wages vary in different areas of the state or may be changing rapidly. The Montana Department of Labor and Industry can help in this scenario by providing employers with the average wage rates for each occupation in every region and city in the state, even giving suggestions on how the wage differs for experienced workers versus entry-level workers. Perhaps the employer has not been advertising the job to all available workers – also something that Labor and Industry can help with by putting the opening on the statewide job boards.
A worker shortage exists when it is not just one employer or one industry having a hard time finding workers, but all industries and employers struggle to fill job openings. Worker shortages can exist because of a lack of people, such as the worker shortage in the Bakken where there are simply not enough people to fill jobs, or because of a lack of people who have the skills or training for a specific job, such as not having enough accountants or computer programmers.
The first type of worker shortage is easy to diagnose because the area or region will have a very low unemployment rate, and wages for all occupations are rising rapidly.
The second type of worker shortage – that there are not enough workers trained for a specific occupation – is more difficult to diagnose.
The reason why worker shortages for a specific occupation are difficult to diagnose because of a lack of data about the worker supply, or the number of workers with the skills and experience needed to fill specific jobs. Information on worker demand is available.
The Labor and Industry Department produces forecasts of the expected demand for workers by industry and occupation, thus providing education and workforce training organizations with guidelines on what occupations will be rapidly growing in the future.
For example, we expect there to be job openings for roughly 90 registered nurses in northwestern Montana (including Missoula, Ravalli, Kalispell, and the Flathead area) each year for the next 10 years. We also expect there to be openings for 45 accountants each year.
These employment projections are available for five regions in Montana and for the state as a whole, and can be downloaded as either the raw data or with an explanatory report from lmi.mt.gov.
However, there is not information on the number of workers with degrees, experience, or skills to fill the open positions.
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For example, in order to evaluate whether a worker shortage exists for accountants in the Northwest, one could compare the expected openings - 45 per year - to the number of students expected to graduate in accounting or related fields each year. But there may also be unemployed accountants who would be willing to fill an opening, or someone currently not working or working in a different field who would be willing to fill an accountant opening if the salary and job were right. Data on these workers is not available.
Further, how many workers trained in accounting will be moving to Montana in the next 10 years? The potential supply of workers is not completely known, and therefore it is difficult to predict what occupations and areas will be experiencing a skills-based worker shortage in the future.
In the absence of perfect data, economists use other signals to determine whether a worker shortage exists or is likely to exist in the future. Anecdotal comments from employers are one of the first signals, which then cause data analysts to look at projections, the limited data on worker supply, and any available data on the number of unfilled job openings to determine the potential for worker shortages.
Another signal is if wages are rapidly increasing for a particular occupation in a region as employers compete for a limited supply of skilled workers. Unfortunately, the evaluation of a skills shortage, and the associated evaluation of the potential worker supply, can be fairly time-consuming process and usually only conducted in response to specific problems reported by a community of employers.
As the unemployment rate in Montana continues to decline, worker shortages are expected to continue. In response to requests from businesses, economic developers, and workforce professionals, the Labor and Industry Department is working to organize available data on worker supply to be distributed on a more regular basis.
In the meantime, there are some things employers can do to recruit workers more quickly.
First, use the tools mentioned in this article – competitive wage rates, the statewide job board, and employment projections – to ensure your job posting is competitive and broadly advertised.
Second, review your job posting considering that your ideal candidate is likely currently employed by a different business in a similar position. Complicated applications that require transcripts, very-specific writing samples, or repetitive forms may be too time-consuming for an applicant who is currently working a full-time job. Consider including a wage range in your job postings so that currently employed workers can quickly determine whether the opening would advance their career or be a lateral move. Review the required skills needed by applicants and remove any that can be learned by on-the-job training.
Finally, get involved with local community colleges, educational institutions, and workforce training organizations and communicate your need for workers with specific training or specific skills. These organizations can adapt their training programs to ensure they are training workers in the skills needed by employers. These positive actions can help employers find the employees they need to continue to grow their business and Montana’s economy, regardless of whether or not a worker shortage exists.
Barbara Wagner is chief economist for the Montana Department of Labor and Industry.