The Economy' Help Wanted But Not DesperatelyBy
An insurance company in Des Moines is scrambling to find systems analysts. A suburban Denver computer-parts maker can't get the welders it needs. Contractors in Atlanta are offering signing bonuses to skilled construction workers. Motorola Inc. is struggling to find enough qualified workers for its factories in Illinois. Here and there, like dandelions marring a suburban lawn, labor shortages are popping up around the country.
That doesn't come as a complete surprise to bond traders, economists, and top Clinton Administration officials, who have been peering through the statistical haze for signs of labor bottlenecks--the first sure indication that inflation is on the way. Indeed, when the Labor Dept. announced on June 3 that the May unemployment rate unexpectedly tumbled to 6%, the search for rising wages took on added urgency.
But hold on, inflationphobes. Even though a smartly growing economy created more than a million jobs since January, there are enough scarred veterans of corporate downsizings still out of work to keep cost pressures under control. That's why spot shortages haven't led to the kind of wage boosts that have sparked inflation in the past.
Most companies still have little trouble filling slots. Indeed, some businesses are slashing their total workforce even as they scramble to find employees with the right set of highly specialized skills. Demand for some low-skill labor remains slack, but the need for other, usually more sophisticated, workers is growing rapidly. Says Gail Fosler, chief economist of the Conference Board: "People are still restructuring and downsizing, but they are also hiring. There is very real concern about not getting the people you need."
Just ask Judith A. Eyerdom, human resource manager for Engineered Data Products Inc., a Broomfield (Colo.) manufacturer of components for computer storage gear. Since March, the company has been trying to staff up two new shifts in the face of a big pickup in orders. Despite bumping pay to as much as $11 an hour and rolling out a big local ad campaign, the outfit still needs a dozen welders. "We're still not getting as many as we need," says Eyerdom. Motorola, likewise, is still 1,700 workers short of its overall staffing target. Turning away 90% of applicants, it simply can't find enough hires with the math and communications skills to handle the work.
Many of the spot shortages around the U.S. are for computer-related jobs, such as programmers. Managers needed to run sophisticated client-server networks are in demand as well. Georgia-Pacific Corp. has been turning over rocks to find experienced information systems people. Says recruiting chief Clark Handy: "It's a very challenging market. Everybody is competing for the same people."
BOUNTIES. But you don't have to wear a pocket protector to be sought after. Atlanta is enjoying a huge building boom--for residential housing and the 1996 Olympic Games--that puts construction workers at a premium. One big homebuilder, John Wieland Homes, is offering $100 signing bonuses for concrete laborers and $250 bounties to employees who enlist experienced framers.
Another reason for shortages: geography. Sometimes the market dislocation is a matter of a few miles. Other times, available jobs and hungry workers can find themselves on opposite coasts. At the low end of the wage scale, help-wanted signs are popping up at suburban malls in much of the country, where retailers are struggling to keep up with consumer demand.
The trouble is, many of the low-skilled workers who could fill those jobs live in cities and lack easy access to the 'burbs. "If jobs are not within commuting range, you can simultaneously have unfilled jobs and high unemployment," says John D. Kasarda, a University of North Carolina specialist in labor markets for low-skilled workers. At the opposite end of the corporate food chain, executive search firms say they can't fill slots in many markets. Qualified managers resist California, for example, because they fear the high cost of living and the threat of earthquakes.
Principal Financial Group, a fast-growing Des Moines insurance company, has a different problem. It's looking to increase headquarters hiring by 24% over last year, or 1,400 jobs. But with an unemployment rate of about 3%, Des Moines doesn't have the labor pool Principal needs, especially for financial analysts and others with solid experience. So the firm is spreading its net throughout the Midwest and beyond, hiring headhunters and throwing job fairs. The challenge: making outsiders aware of the city's growing financial service industry and cultural activities.
While such shortages haven't begun to show up on the government's statistical radar screen, they have the inflation-obsessed bond market worried. If demand for workers starts to outstrip supply, can wage gains be far behind?
"NEGLIGIBLE EFFECT." The Clinton Administration has been watching the situation closely but so far sees little to worry about. Labor Secretary Robert B. Reich says he has picked up hints of spot shortages--among skilled technicians, for instance--but sees no sign of widespread bottlenecks or wage pressures. "There's a negligible effect on wages," Reich says.
Most private economists agree. David Resler, chief economist at Nomura Securities International Inc., says he hasn't found much evidence that shortages are putting upward pressure on wages, either. Despite the spot shortages, the overall supply of labor exceeds available jobs, and in many occupations, workers still seem reticent about asking for big wage hikes. Nonetheless, Resler and others see growing demand for high-skilled workers and figure that wages for those people will rise. But that doesn't signal troublesome inflation. "It's exactly what you want a dynamic economy to do," Resler says. "Build up those wages. Send a signal that certain occupations are in greater demand and get more people to enter them."
For all the hand-wringing about potential inflation, labor markets seem to be on solid footing. Spot shortages are a small price to pay for strong gains in employment and scant wage pressure. Besides, if the idea of the odd shortage is too troublesome, just think back two years, to the days of 7.7% unemployment. It could be a lot worse.