Where Are All The Blue-Collar Workers?

April 15, 2019

PREMISE

The economy is humming along. The United States is experiencing the longest economic expansion and the lowest unemployment in decades.” Consequently, there are more jobs and not enough people to fill them. This is especially true for construction, production, logistics and transportation that hire manual labor roles, informally known as “blue-collar” jobs.

During community evaluations, NKF consultants have found that employers report great difficulty in finding and retaining workers. The problem was found to be even more dire in small towns and rural areas.

LABOR TRENDS

1. The rural and small-town millennial generation is comparatively less interested in jobs requiring physical effort. A significant number of millennials are moving to major and secondary cities to work in the services sector. Also, more high school graduates are now choosing to go to college and are then taking up service jobs upon graduation. This is shrinking rural and small-town workforce, thereby exacerbating the perceived and real shortage of workers.

2. Drug addiction and related disabilities are affecting rural communities and small towns disproportionately when compared to major and secondary cities. This trend has not only reduced labor supply for new growth but has also made it difficult for some available workers to pass drug tests or qualify for existing blue-collar jobs.

5% Proportion of U.S. workforce addicted to prescription and other drugs, mostly in rural counties

Quest Diagnostics, 2015 - 2017

3. It is expected that nearly half of all manufacturing jobs as they exist today will be obsolete in ten years. Jobs of the future will require individuals to have technical skills, knowledge of technology and critical thinking capabilities. Academic institutions and technical schools in the US may not be able to develop this talent in time to meet the demand.

4. In the next ten years the economy will need nearly 2 million blue-collar workers to support the expected economic growth. More than 2.5 million Baby Boom generation workers will retire in the next decade. This will create a demand for over 4 million blue-collar workers.

53/100 manufacturing positions already go unfilled due to skills gap

5. Companies are either moving their manufacturing to geographies where labor is abundant, or they are automating tasks to cope with the short supply of labor in the US. However, automated environments also need blue-collar workers trained to maintain and program robots. Technical schools in the US are not producing enough of these workers either.

6. Rural counties in the US, especially farming counties of the Midwest, have consistently decreased in population since 2000. The mediate age of these communities are rising as youth move to urban centers in the South and West. This population shift will compel industrial employers to either automate faster or to move or expand operations to suburban and urban counties, further exacerbating the flight of youth from rural counties.

7. Nearly 3.5 million youth have finished high school but are neither in college nor working. They live in communities with high unemployment rates in the deindustrialized cities and rural counties of the Midwest, Northeast and the South. There is an opportunity to train high school graduates for the jobs of tomorrow and break the cycle of poverty for their families.

Rural counties in people move to in population, 2016-2017

US Census Bure the Midwest, Northeast and the Appalachian South are decreasing in population as the Western part of the country. This pattern has been observed since the year 2000.

THE FACTS

Population Loss in Rural Counties

Total international migration by county type, 2000 – 2016, in millions

Total domestic migration by county type, 2000 – 2016, in millions

Net international and domestic migration by countytype, 2000 – 2016, in millions

• Most of the population gain has been captured by suburban areas where schools are good and amenities plentiful.

• International migrants overwhelmingly prefer cities and have not replaced rural population loss. Domestic migration is decisively out of rural counties.

• Rural counties in the Northeast and Midwest are likely to have more deaths than

• More rural youth are now opting to go to college and subsequently move to cities, resulting in “brain drain” from rural communities.

The share of adults who are college-educated has increased in each community type.

% of population 25 and older by education

POINT OF VIEW

How could companies and communities respond to this looming skills gap and worker shortage?

1. Corporations have pushed the responsibility of workforce development onto communities and the public sector in the last three decades. Companies need to have internal training programs and career paths that will allow them to create unique skills resulting in greater worker retention.

2. Public-private partnerships to develop, organize, and manage apprenticeship programs will make blue-collar jobs more accessible to graduates from technical schools and would result in greater adoption of vocational education among rural youth.

3. Offering flexible work hours to the retiring generation will allow companies to tap into their knowledge and retain experienced workers for a few more years. More women would enter the blue-collar workforce if flexible work arrangements and targeted benefits such as child day-care were to be made available to them.

4. Faster adoption of automation by companies may be needed to relieve worker demand. Aggressive investment by communities and corporations will be needed to transform education for the digital and automation age with technology and critical thinking skills.

5. Manufacturing and industrial environments will have to be designed as workplaces that enhance the workers’ experience and support their emotional and physical well-being. There is a great deal that industrial employers could learn from workplace design of office environments to improve worker attraction and retention.

6. Treat the unemployed “opportunity youth” as potential workers and train them for jobs of tomorrow. Align this program with qualified Opportunity Zone initiatives.

BIBLIOGRAPHY

1. Newmark Knight Frank, Global Strategy. Confidential field interviews with clients and communities in the United States.

2. Bureau of Labor Statistics. “Manufacturing: NAICS 31-33”. Bureau of Labor Statistics: Industries at a Glance. Data extracted on April 12, 2019. Available at: https://www.bls.gov/iag/tgs/iag31-33.htm.

3. United States Census Bureau. “NAICS 31-33: Manufacturing”. United States Census Bureau: Manufacturing. Available at: https://www.census.gov/econ/ manufacturing.html.

4. Leefeldt, Ed. “Does America’s workforce have a drug problem?”. CBS News. Aired December 24, 2018. Available at: https://www.cbsnews.com/news/doesamericas-workforce-have-a-drug-problem/.

5. Rapoza, Kenneth. “In 2019, Blue-Collar Workers Disappearing and In Hot Demand”. Forbes. December 16, 2018. Available at: https://www.forbes.com/ sites/kenrapoza/2018/12/16/in-2019-blue-collar-workers-disappearing-andin-hot-demand/#3da7fa8d441b.

6. Levanon, Gad and Frank Steemers. “Blue-Collar Worker Shortages: Navigating a Business Environment of Higher Labor Cost.” The Conference Board. December 2018. Available at: https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=8248.

7. Baker, Dean and Nick Buffie. “Decline of Blue-Collar Jobs, In Graphs”. Center for Economic and Policy Research. February 22, 2017. Available at: http://cepr. net/blogs/cepr-blog/the-decline-of-blue-collar-jobs-in-graphs.

8. Giffi, Craig, et al. “The jobs are here, but where are the people?”. Deloitte and Manufacturing Institute. 2018. Available at: https://www2.deloitte.com/us/en/ pages/manufacturing/articles/future-of-manufacturing-skills-gap-study.html.

9. Parker, Kim, Juliana Menasce Horowitz, Anna Brown, Richard Fry, D’Vera Cohn and Ruth Igielnik. “Demographic and economic trends in urban, suburban and rural communities”. Pew Research Center. May 22, 2018. Available at: https://www.pewsocialtrends.org/2018/05/22/demographic-and-economic-trends-in-urban-suburban-and-rural-communities/.

10. Ross, Martha and Nicole Bateman. “Millions of young adults have entered the workforce with nothing more than a high school diploma”. Brookings Institute. January 31, 2019. Available at: https://www.brookings.edu/blog/ the-avenue/2018/01/31/millions-of-young-adults-have-entered-the-workforcewith-no-more-than-a-high-school-diploma/.