A Workforce Development Perspective on the Recession

By on July 22, 2010

Dr. Roderick Nunn shares his view on what to expect about the post-recession economy, workforce trends that will significantly impact the St. Louis area, and the need to use retraining investments to address skills gaps.

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As we continue to strengthen our economy in hopes of rebounding from the worst economic downturn since the Great Depression, many education and workforce development professionals are continuously bombarded with divergent views on the various pathways to economic recovery. What is clear is that there are many uncertainties in the current economic downturn. However, there is much that we do know when we look through the workforce development lens. In this podcast, we want to share some of what we’ve learned at St. Louis Community College through our various workforce intelligence tools, which includes face to face interactions with company execs, survey research and analytics, and real time LMI.

First of all, most, if not all of the skill shortages that existed before the recession continue. These shortages are masked behind the current surplus of talent readily available in the labor market. It is clear that those soft skills (work ethic, initiative, integrity, etc.), basic skills (reading, math, digital literacy) and advanced competencies in the math and science competencies are still in short supply overall. Remember that in times of high unemployment, we may experience a reduction in labor shortages, but skill shortages continue to be a problem for the population as a whole. This is why it’s good public policy to use retraining investments in a way that moves critical masses of transitional workers to higher skill levels, thereby addressing those skills gaps that existing prior to the recession and fueling economic recovery efforts.

There are also a number of downward pressures in the labor market that are important to be aware of. For the past several months, the data has consistently shown the existence of six unemployed workers for every job opening. The job search process is very competitive with many job seekers finding innovative ways to get ahead (Social Media and YouTube resumes, blogs, unpaid internships, volunteerism).

We are seeing younger, less experienced workers being unemployed in disproportionately higher numbers. For example, the unemployment rates for those under the age of 25 are two and one-half times the rate for the population as a whole.

Hiring managers know all too well that experienced talent is readily available to companies these days. However, this is both a blessing and curse. Companies that rely too heavily on people who are over qualified, will be hard pressed to keep those skilled workers engaged and committed once the labor market loosens.

As companies continue to tighten their belts, training budgets continue to take a hit. Unfortunately, the unintended consequences are problematic. Paradoxically, the companies that are not able to make training investments because of a lack of business are these very same companies who may have trouble increasing production during the economic rebound because of the lack of a highly skilled workforce.

The issue of pending retirements further exacerbates the business life after the economic recession.

A recent PEW study suggested that nationally, 63% of older workers are delaying retirements because of the recession. This is more problematic in St. Louis where the age of the workforce is higher than the national average.

Anecdotally, we can tell you that this is validated by several major employees in the region who – prior to the recession – indicated that up to 50% of their workforce could retire in the next decade.

It is an interesting phenomenon that even after the St. Louis region lost thousands of manufacturing and construction jobs, middle-skill jobs still constitute the largest portion of jobs in our regional economy – 44% and holding steady since December of 2009.

Middle-skill occupations are defined as those jobs that require education beyond high school but less than a four-year degree. They are the allied health and nursing professional that support physicians, the lab technicians that support scientists, the construction workers who build projects designed by architects and engineers, etc.

In a recent Green Jobs Analysis by MERIC where they interviewed over 2,500 employers, it was found that:

  • Missouri boasts 131,103 total green jobs – both primary and support positions – among employers. There are 28,720 primary green jobs and 102,383 green supporting jobs.
  • A majority (71%) of employers surveyed stated that current economic conditions were the largest barrier toward hiring additional green workers. This finding highlights the potential for growth in Missouri’s green economy as national recovery efforts help to mitigate the downward spiral of employment in the next few years.
  • Green building design & construction have largest opportunity for growth. (Source: MERIC, The Missouri Green Jobs Report, 2009)

Let’s look at some of the things we expect to be true about the post-recession economy.

Building design and construction will be more sustainable.

Manufacturing concerns will continue to lean their operations and seek to reduce their carbon footprints.

With the implementation of the federal Health Information Technology for Economic and Clinical Health Act, every US citizen will be required to have a electronic health record by the year 2014.

We expect the retirement exodus to be more pronounced because of the current delays.

Finally, as younger workers replace older workers during the economic rebound, generational differences in the workplace will become more difficult to manage leading impacting team building, change management, employee motivation, and many other dimensions of organizational effectiveness.

About Dr. Roderick Nunn

Rod was the Vice Chancellor for Economic Development and Workforce Solutions at St. Louis Community College through May 2016. He is a nationally recognized thought-leader and administrator with over ten years of experience leading employment and training programs at the highest levels of government and education.

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