Local biz leaders not feeling US labor market slowdown

While recently released data shows a weaker U.S. labor market than previously reported, local business leaders say the national job numbers don’t reflect what they’re seeing in their companies.

U.S. job gains over the 12 months ending in March were revised downward Aug. 21 by 818,000, according to the Labor Department. The revision, an annual action by the U.S. Bureau of Labor Statistics, indicated roughly 2.1 million jobs were created in the U.S., as opposed to 2.9 million previously estimated. It marked the largest negative revision since 2009.

Economic analysts expect the data will further bolster sentiment that the Federal Reserve will cut its key interest rate by at least 25 basis points in September. Additionally, Federal Reserve Chair Jerome Powell signaled plans for a rate cut at the Fed’s annual economic conference held in Wyoming in late August.

The labor market revision followed a weak July employment report that showed the U.S. economy added just 114,000 jobs that month. It marked the second-weakest monthly job additions since 2020 and bumped the national unemployment rate to 4.3%, its highest mark in nearly three years. Locally, the Springfield metropolitan statistical area’s unemployment rate increased in June to 3.8% from 3.6% the previous month.

Job sectors that saw downward revisions included leisure and hospitality, manufacturing and construction. The latter industry had 45,000 fewer jobs created than previously estimated, but Mary Beth Hartman, president at Hartman & Co. Inc., said her family’s heavy civil construction business has recently kept its workforce stable. She said the company employs around 90, adding the workforce has hovered between 85 and 95 people over the past couple of years.

Still, she acknowledged there’s strong competition for workers in her industry, particularly with larger companies such as St. Louis-based KCI Construction Co. and Columbia-based Emery Sapp & Sons Inc. expanding into the Springfield market.

“With the workforce shortage, it’s been a little bit of a trick to stay up because until very recently, everybody was poaching everybody’s employees,” she said. “We didn’t have a lot of that going on, but we just tried to stay competitive with salaries and benefits.”

Hartman said her company has worked to get its employee wages in the top 10% of its industry peers, noting it pays $57.41 per hour for skilled labor and $62.04 for a heavy equipment operator.

“We can find foremen and leads, but the superintendent level is pretty hard,” she said, noting the 40-year company has several employees that have been on staff for 25 years.

The company has no shortage of projects, she said, noting a backlog of close to $50 million for this year. Among its current projects is Sunshine Towne Center, the 23-acre site at the intersection of West Sunshine Street and West Bypass, which will include the city’s second Target. Among the company’s recently completed jobs was a $4.7 million widening of Division Street and a nearly $1.9 million roundabout construction at Route ZZ and Farm Road near Wilson’s Creek National Battlefield.

A different view
In the jobs gain revision, the biggest employment markdowns were in the professional and business services sector, which added 358,000 fewer jobs than initially reported in the 12 months through March. That sector includes a range of white-collar office jobs, such as those in the architecture and engineering industries.

Still, hiring is up at Dake Wells Architecture Inc., said co-owner Brandon Dake. Of the company’s 38 employees, 27 work at its Springfield office and the remainder out of its Kansas City location. It has added four full-time employees this year.

However, Dake is quick to note the firm still has hiring challenges, as most of its newer hires are recent college graduates, such as from Drury University and Kansas State University. He said starting salaries at the firm for those out of college generally range $52,000-$58,000, adding the company also offers a sign-on bonus and profit sharing.

“We’re seeking experienced architects that want to come to Springfield, and that’s been hard,” he said, adding the Great Recession in 2008 and 2009 led many young architects to exit the profession – a problem when seeking those with a decade or more of experience. “But we can get graduates to come to Springfield when they’re looking for a job and they can’t find one in the Kansas City area or in St. Louis or other places. It’s easy for us to attract them here because they’re trying to find a first-time job.”

The 20-year-old company has managed to keep some longtime employees, Dake said, adding it has seven on staff who have worked with the firm for 10 years or more. He estimated annual turnover is about 5% per year.

Measured growth
Manufacturing added 115,000 fewer jobs in the 12-month period ending in March, according to BLS data. But industry demand is still high, according to a recent report from Deloitte and The Manufacturing Institute. The report said up to 3.8 million new jobs in the U.S. manufacturing industry could be needed between 2024 and 2033, but half could go unfilled due to workforce challenges.

In Missouri, nonfarm payroll employment for manufacturing was down 2,600 jobs, while construction was up 8,500 jobs and professional and business services increased by 700 jobs for the 12-month period ending in July, according to Missouri Economic Research and Information Center data.

Employment has stayed “pretty consistent” over the past year at SRC Holdings Corp., said Krisi Schell, the company’s executive vice president of human resources. While its head count is down around 100 people year over year, the company’s local workforce of 1,750 stayed the same from a year prior when Springfield Business Journal’s list of the area’s largest manufacturing employers was published in June. SRC employs 2,000 companywide among its facilities in Springfield, Kentucky and Illinois.

“That’s all just based on attrition, and we’ve seen some softening in some of the markets throughout this year,” Schell said of the nearly 5% year-over-year companywide employee dip.

However, the company has plans to add at least 400 jobs over the next five years based on current growth projections, she said. The manufacturer in 2021 announced a $100 million investment initiative over a 10-year period.

“We absolutely anticipate growth in our workforce, but it’ll continue to be measured growth, so that way we’re known for creating jobs and not having layoffs,” she said, adding the company currently has 34 openings, which falls right in between its normal range of 30-50 available jobs. “That’s a part of our story we want to continue. We want to be very thoughtful in adding positions.”

While hiring struggles have recently avoided her construction company, Hartman said that wasn’t the case very long ago.

“If you would’ve called me three, four or five years ago, I would’ve given you a different story,” she said, adding building a business filled with dedicated and talented workers is a challenge but makes the day-to-day work a lot easier. “The last two years have been a very positive season for us.”

As the company looks to be among bidders for Interstate 44 work set to begin next year, with projects such as widening the stretch between Kansas Expressway and Highway 65, Hartman said her company’s staff size can handle the workload.

“We’re pretty well staffed,” she said. “But we never walk away from a good person. If you have somebody walk in that was a good project manager estimator, a heavy equipment mechanic or at a superintendent level, we would make a place for them.”