Employers Ready to Hire Can’t Find Workers Among 9.1% Unemployed

Bill Begal says he has spent almost $2,000 since March on help-wanted ads in newspapers, websites, and state employment services up and down the East Coast to find sales and administrative staff for his Rockville, Maryland-based disaster-cleanup company.

“I want people to come out and work for me,” said Begal, 42, whose teams responded to hurricanes Katrina and Wilma, which struck New Orleans and Florida in 2005. “Where are they? I just don’t see it.”

Behind the highest unemployment levels in more than a quarter century is an unexpected twist: Employers like Begal and Microsoft Corp. (MSFT) are having a difficult time filling some positions, even as 13.9 million Americans remain without work. The problem is especially acute in pockets such as Washington, D.C., and North Dakota, which bucked the worst of the 18-month recession that ended June 2009, and in industries such as technology where competition for recruits remains high.

“It’s a very much across-the-board phenomena,” said Jeffrey Joerres, president and chief executive officer of Milwaukee-based ManpowerGroup, the world’s second-largest provider of temporary workers behind Glattbrugg, Switzerland- based Adecco SA. (ADEN) “Companies are all feeling the pressure of not finding the level of talent their businesses require,” from “entry-level service positions” to “high-end engineers.”

The failure to match willing employers with appropriate workers is contributing to a jobless rate that has stalled around 9 percent or higher since April 2009 and is keeping the unemployed on the sidelines for longer. The rate was 9.1 percent in July, when payrolls rose by 117,000 workers after an increase of 46,000 a month earlier, the Labor Department said Aug. 5.

Eroding Skills

More than 40 percent of people out of work have been without a job for 27 weeks or more, according to the Bureau of Labor Statistics, making it more difficult for them to re-enter the workforce later as their skills erode.

U.S. central-bank researchers are trying to determine how much of the elevated unemployment rate is caused by permanent labor-market changes that monetary policy can’t fix and what share reflects cyclical trends that correspond with demand and give officials more room to respond.

“The more this drags on, the more concerned we should all be getting that a lot of human capital is being lost and therefore more structural problems are developing,” said Daniel Aaronson, director of microeconomic research for the Federal Reserve Bank of Chicago.

‘Skills Mismatch’

“You do have a skills mismatch out there and a significant one,” said Brian Barish, Denver-based president of Cambiar Investors LLC, which oversees about $8 billion in mostly U.S. stocks. While Barish said he doesn’t have a strong idea what Federal Reserve Chairman Ben S. Bernanke and his colleagues will do at their meeting tomorrow, “there’s a reasonable likelihood they would hint at additional policy action,” including a change to the wording of their pledge to keep interest rates near zero for “an extended period.”

The Fed cut the target for the benchmark federal funds rate to between zero and 0.25 percent in December 2008. Low rates over a longer period will ultimately help the U.S. stock market, in spite of last week’s declines, Barish said. The Standard & Poor’s 500 Index dropped 7.2 percent between July 29 and August 5, the biggest weekly slump since November 2008.

“For investors, this is one of those hold-your-nose moments when you buy into the panic and buy into the uncertainty of world equity markets,” he said, recommending shares of energy company Apache Corp. (APA), Devon Energy Corp. (DVN), retailer Target Corp. (TGT) and agricultural-commodities processor Archer-Daniels- Midland Co. Cambiar owns those shares on behalf of its clients.

Frustrated Entrepreneurs

Begal, founder of Begal Enterprises Inc., is among a half dozen entrepreneurs who said during interviews that they are having a hard time landing new employees in the Washington, D.C. area, which has an unemployment rate of 6.2 percent, the second- lowest for a large U.S. metro area after Oklahoma City.

Some candidates lack the “right set of skills”; others fail to meet the “most basic of qualifications,” such as proper spelling on their applications, the business owners said. So even though the pool of potential employees “has gotten deeper,” the “top talent searches remain as challenging as they were before the recent market conditions,” said Julie Rakes, a spokeswoman for bank and credit-card issuer Capital One Financial Corp. (COF) in McLean, Virginia.

The recession that began in December 2007 accelerated existing labor-market trends in the U.S., from increased global competition for talent to companies becoming more efficient and exacting in their requirements for new workers, said Manpower’s Joerres. With demand for goods and services now sagging, “these things are driving the latency in hiring,” he said. “Companies can wait” and have “raised the bar.”

‘Dart’ Job Search

Divya Gugnani, chief executive of fashion-accessory Internet site Send the Trend in New York, said she has filled only one of five openings, even though she’s received more than 1,000 applications. Candidates are using a “dart” approach -- submitting lots of resumes in hopes one will attract attention - - and sometimes fail to specify even which position they want.

Getting the right people is “brutal,” like “finding a needle in a haystack,” said the 34-year-old business woman.

The hiring struggle crosses regions and industries, according to the Fed’s Beige Book survey of economic conditions released on July 27. Advertising and consulting companies in the Northeast say their inability to land qualified people is hurting sales growth. Truckers in the Midwest are coming up short on drivers, and manufacturers in the Chicago Fed’s five- state area aren’t getting “appropriately skilled workers,” the report said.

‘Rippling’ Through Economy

Eastern Montana and western North Dakota’s strong oil production is “rippling throughout the whole economy” and “sucking a lot of people” into that industry and related fields such as accounting and food services, said Toby Madden, a regional economist at the Federal Reserve Bank of Minneapolis.

With unemployment at 3.2 percent in North Dakota, the lowest of any state, businesses of all types -- including fast- food restaurants -- are struggling to find enough workers. Some McDonald’s Corp. (MCD) locations are “offering signing bonuses,” said company spokeswoman Danya Proud. “This is a franchisee decision.”

People also are making an “economic decision that the benefits of staying unemployed in their local area, where unemployment rates are high, outweigh the benefits of being employed in the oil patch,” Madden said.

A lack of mobility -- particularly for homeowners who owe more than their dwellings are worth -- is hindering the ability to move to places where jobs are available, said Scott Paul, executive director of the Alliance for American Manufacturing in Washington. While enough talent exists to fill jobs currently being offered, there’s a “geographical mismatch,” as well as a strong employers’ bias against hiring the long-term unemployed, he said.

Long-Term Challenge

Over time, his industry faces the challenge of not having enough skilled workers because vocational education has been “decimated” in many parts of the U.S. and young people aren’t interested in manufacturing jobs, Paul added.

Redmond, Washington-based Microsoft, the world’s largest software maker by sales, has lobbied Congress for years to boost the number of H-1B visas available to employ foreign workers in the U.S., even as the company cut jobs there.

The U.S. is “falling short” on education, creating a situation where “jobs move in search of the right people” rather than the other way around, the company’s General Counsel Brad Smith said in testimony to a Senate subcommittee on immigration last month.

“We will not bring unemployment down to the extent desired until we ‘skill up’ the population to attract the jobs that otherwise will be located elsewhere,” Smith said.

Microsoft had 4,551 openings as of May and has taken an average of 65 days to fill core U.S. technology positions with experienced candidates this year, he said.

‘Steelworker for the Future’

Some companies, such as Luxembourg-based ArcelorMittal (MT), are taking it upon themselves to mold prospective employees. The world’s biggest steelmaker by production has a “Steelworker for the Future” program that pays U.S. high-school graduates for 2.5 years of training, with the chance to earn $17.39 an hour with the company upon completion.

Begal said he began posting ads five months ago in places like the Washington Post, Craigslist.com and Monster.com to fill three to five sales positions with annual pay that could exceed $100,000 apiece and two office jobs offering at least $40,000 annually.

He initially required sales candidates to have experience in marketing disaster-restoration services, which generated just a few responses. Begal re-wrote the ads asking for two years of experience in any field, which also produced little result, he said. He’s now on the fourth rewrite, has dropped the requirement of two years’ experience and is seeking applicants who are simply “hungry.”

“I keep tweaking the ads to appeal to more people,” he said. “The results are disappointing: zip, zilch, de minimis, pathetic, horrible.”

To contact the reporters on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net Jillian Berman in Washington at jberman13@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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