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The Workforce Crisis

SBJ Economic Growth Survey: Decision-makers' Outlook

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Conventional wisdom offers a seemingly pat rationale for the current employment crisis: Enhanced unemployment benefits have made it more lucrative for individuals to sit out on work than to remain in the workforce.

It’s an explanation that Sally Payne, the city’s director of Workforce Development, questions.

“I know a lot of people have tried to point to the expanded unemployment, but that ended June 12 in the state of Missouri,” she says.

In his Oct. 6 Economic Growth Survey forum presentation, Matt Morrow, president and CEO of the Springfield Area Chamber of Commerce, gave statistics on the problem. At present, the Springfield metropolitan statistical area has 59% workforce participation, with the largest discrepancy among 35-44 year olds. In the top third of MSAs ranked by labor force participation stands, the rate is at 68%.

As Springfield experiences a growth in available jobs, the workers to fill them are scarce. According to Payne, the most recent labor report finds 134,000 job openings in the state of Missouri.

Payne offers a few possible causes for the employment problem. One is a population decrease caused by younger generations having fewer children.

“I think that was something that we were going to have to address over the next decade, but the pandemic just sped that up,” she says.

Older workers have also chosen to bow out of the workforce with early retirement, she noted.

“A million more people retired during COVID than normally,” she says.

Of course, 740,000 Americans have died from COVID-19, according to Centers for Disease Control and Prevention data, while others are sidelined with the lingering effects of “long COVID,” a sustained version of the illness that can last for months. For some, their caregivers also must ditch the workplace.

But Payne says there is another factor.

“People were reprioritizing their lives,” she says. “There were a lot of people who said, ‘OK, maybe I can work at home; maybe I don’t need two incomes. Maybe I want remote work for various reasons.’”

Jason Flores, senior portfolio manager at Central Trust Co., sees things similarly.

“People that are sub-45 years old – prime working years – suddenly don’t want to work anymore,” he says. “There are other things that are more important to them – like life. They’ve figured out a way to downsize to accommodate that.”

Springfield Business Journal’s 2021 Economic Growth Survey notes that workers ages 35-54 have myriad reasons for leaving the workplace, ranging from sale of their business to finding better opportunities to relocating or changing careers.

While working from home has become a popular option for some, certain sectors, like construction and manufacturing, require workers to show up to fill a shift.

Indeed, the survey asked business leaders to rank their top three concerns; 60% of respondents cited talent acquisition and retention, and 55% named a skilled workforce.

David Mitchell, a professor of economics at Missouri State University, warned that the longer the pandemic continues, the more it will change the economy, and the more those structural changes will be locked into place.

He noted that people can sit at home for two or three weeks and emerge from the experience mostly unchanged.

“People can’t sit at home for two to three years before they start to make some huge changes,” he says.

Those changes include how they spend money, where they work, where they live and more.

Mitchell gave the example of a fast-food restaurant in Ozark that he said is hiring workers at $18 an hour – which means there’s no way they can go back to paying teenagers $10 an hour for the same work.

“Those days are done,” he says. “You’ve now essentially locked in those employees at $18-$20 an hour to flip burgers. This is going to be very problematic for business owners.”

Business owners are going to have to factor in the increased labor expenses from here on out.

“Two years from now, things have gotten better, you can go to $16-$17, but you’re not going back to $10 an hour,” he says.

Missouri’s minimum wage rises to $11.15 in 2022 and to $12 in 2023 as the result of the passage of statewide ballot measure Proposition B.

According to Mitchell, the biggest factor in getting employees back to the workplace is probably inflation. If inflation hits 5%, it’s going to be harder to get by on less, he says.

Those who continue in the workforce expect to spend less time working from home in 2021, according to the survey; 54% said they would be spending more time in the office, and only 26% believed they would be working at home about the same as or more than they did in 2020.

Flores says business owners need to exercise caution with workers.

“You’ve got to be careful not to run your best horses to death,” he says. “The people that you have, you’ve got to take exceptional care of.”

Beyond that, business owners will have to fill in the gaps with technology.

According to Flores, workers currently are in the driver’s seat.

“Workers have a lot of choice and a lot of power right now,” he says.

They don’t need unions to protect them, he says – a good resume and a consistent work record are enough to secure them a job.

According to Payne, there is opportunity for both workers and businesses.

“That’s what we’re trying to focus on,” she says. “This is a time for everybody to slow down and think about where we’re going, and I think sometimes that can be a good thing.”

She noted that the market will adjust, and the culture will, too.

“The service industry has been hurt terribly hard – there’s not enough kitchen staff, not enough servers,” she says. “I know I’ve had to become more patient as a consumer.”

She says at the Missouri Job Center, she is encouraging applicants to be strategic and intentional in their employment hunt. Likewise, employers can take the opportunity to look at traditionally underserved populations, such as people with disabilities or people who have been in prison.

She added that the situation seems to be improving for diverse candidates.

“There’s been considerable work in that area, especially in Springfield,” she says. “We’re seeing a lot of positive changes.”

Payne says a disproportionate number of women have had to step out of the workforce to serve as caregivers, and this has been especially true for minority women.

“Minority women have been hit the hardest. That’s where we need to turn some attention and do some considerable work,” she says.

Diversity is good for employers, according to Payne.

“A diverse workforce is nothing but positive for your company,” she says, adding that diverse perspectives bring new ideas, unique ways of solving problems and improved morale for teams.

“That equates to increased productivity,” she says. “Are we there yet? No, but we’re moving the needle in the right direction.”

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