What causes the skilled worker shortage?

Two large employers in Minnesota can’t find enough workers. Why?

MPR News reporter John Enger reports today that Polaris is flying in about a dozen “skilled” workers from Mexico to its plant in Roseau. The company has struggled finding enough workers for years and there are 200 jobs available.

Between 150 and 200 workers are holed up in hotels, because housing is hard to find.

Polaris wouldn’t comment on the story so it’s difficult getting an answer to the question: Is there a shortage of skilled workers or is the money not enough for skilled workers to want to work in Roseau?

On its website today, Polaris lists only seven job openings in Roseau.

In Rochester, the answer is a little clearer on the question of supply and demand.

There’s a nurse shortage at Mayo Clinic, so the medical organization is turning to nurses with associates degrees, citing a large number of retirements.

The Rochester Post Bulletin says there’s a reason for the openings: Retirement benefits are being changed.

The situation comes to light five years after Mayo announced that it planned several changes to its retirement benefits program that would all become effective by Jan. 1, 2015.

In 2009, Mayo’s chief human-resources officer at the time told the Post-Bulletin that, starting in 2015, Mayo would begin calculating retirement investments based on a “career-pay” formula instead of a “final-average-pay” formula. That was intended to avoid market volatility.

The idea was that Mayo’s new approach will allow the clinic to invest based on employees’ actual earnings instead of estimated earnings.The goal was to infuse long-term sustainability into the clinic’s employee-retirement and benefits plan.

That remains true today.

“Mayo Clinic has made changes to our benefit plan to maintain a competitive benefits packages that will ensure Mayo’s long-term sustainability so we can continue to offer world-class benefits to our employees,” said David J. Schuitema, director of Benefits and Allied Health Compensation for Mayo Clinic Human Resources.

Schuitema said as of Jan. 1, “employee-pension benefits will be calculated using an annual-accumulation formula.”

“Pension benefits accrued until that time will be calculated under the current final-average pay formula and will be frozen as of Dec. 31, 2014,” he said. “Mayo will add employer match to the 401(k) and 403 (b) plans.”

That last point — employer match — is something Mayo indicated in 2009 that clinic employees had asked to have added to their benefits program.

In a commentary earlier this year, Heidi Shierholz at the Economic Policy Institute rejected the idea of a skilled worker shortage.

Despite the clear consensus among researchers that the unambiguous problem is a shortfall of aggregate demand, there is a strong public narrative that today’s jobs recovery is weak because workers don’t have the right skills. Why? One reason may be psychological – it’s easier to blame workers for lack of skills rather than face the fact that millions cannot find work no matter what they do because the jobs simply are not there. That in turn makes it easy for stories and anecdotes about employers who cannot find workers with the skills they need to circulate unscrutinized.

Another reason is political, since the cause of high unemployment is vitally important for policy. If high unemployment is due to workers not having the right skills, then the correct policy prescription is to focus on education and training, and macroeconomic policy to boost aggregate demand will not reduce unemployment. Policymakers and commentators who are against fiscal stimulus have a strong incentive to accept and propagate the myth that today’s high unemployment is because workers lack the right skills.

Shierholz says if there really is a “skilled worker shortage”, the number of hours would be increasing for the skilled workers companies already have. But she said the average workweek hours statistic is barely at pre-recession levels.

  • Oddly enough, I had a discussion with a friend along these lines the other day.

    We were discussing the fact that not everyone coming out of high school needs, or even should, go to a “traditional” college and were lamenting the fact that someone working a “blue collar” job is sometimes looked down upon by “college educated” folks.

  • Robert Moffitt

    Too often the discussion of this topic comes only from the industry sources, which is free to describe the situation as it pleases. Glad to see someone peeking behind the corporate curtain to see what the score really is.

  • jon

    There was a time that there were “entry level” jobs.
    Companies would train people, with the expectation that they would stay there and work for a period of time, something about loyalty or job stability.

    Then companies laid every one off, and refused to hire people to train them expecting instead that people could come in fully trained and just step into any role they posted.

    As Job stability and company loyalty flew out the window, so did on the job training (cause why train some one just so they can leave and get a better job once you are done teaching them how to do a better job?)

    The lack of skilled workers comes from the lack of giving workers skills… expecting them to find the exact set of skills you want on their own with no notification of what skills will be needed by the time they finish getting them is probably a bit insane…

  • Matt Black

    Regarding the number of jobs posted, it may also be that they are hiring multiple people for those seven positions. I know our company will post the title/position once but we’ll really have openings for eight or nine people that would have that role.

  • MikeB

    Hours worked has not increased, but neither has wages, which would be expected in a true labor shortage environment

  • Veronica

    I was talking to someone who is a regional manager for a large retail chain, and he’s supposed to have 35 employees in one store, but he has 8. Eight. The problem? The wages corporate wants to pay are simply too low to get people to apply.

    I suspect that’s the issue for Polaris, too.

  • Gary F

    Part of the reason is we aren’t sending kids to vo-tech schools. We think every kid is supposed to go to college. We have reduced the number of industrial arts classes in high school. We don’t stress to kids that you need geometry to be in fabrication or algebra to figure electrical loads. We don’t teach enough Autocad and Revit in our computer classes.

    Right now the building trades are short skilled workers too, it’s only going to get worse.

    • I wonder if part of the reason is some jobs are more recession-sensitive than others? I wouldn’t be in homebuilding, for example, for anything, based on the experience in the last half dozen years. Are these jobs more unstable and maybe people are trying to find more stability. Maybe not.

      I also wonder if one-company towns have more worker shortages because people leave so they have some chance at opportunity. If you move to, say, Roseau (or stay as the case may be) and your company starts laying people off, now you’re stuck in Roseau with no place to go for work.

      • Tim

        In the case of Polaris, it’s important to note that they almost did close their plant in Osceola, WI several years ago. They ended up keeping it open, but laid off most of the workers. They’ve hired people since then, but I don’t think they are quite back up to what they were before. I’m not sure how much of that was due to the recession and how much of that was due to shifting production to their facility in Mexico. But your point that these jobs might not be around in the future, despite their current hiring woes, is spot-on, especially when that job is producing something that is mostly a luxury product.

    • John O.

      Completely agree! In many cases Gary, Industrial Arts no longer exist in many school districts (and this is not limited or unique to Minnesota). The cost of the tools, space requirements, finding and retaining a qualified teacher (or teachers), insurance costs, injuries and the threat of litigation, etc. have all contributed to the decision to significantly reduce or eliminate “shop classes.”

      Kids have no exposure to metalworking or woodworking (or other “shop” classes) like you and I did back in the day. They have no idea that this can be a lucrative option for a career. Businesses are crying for welders who have specific skill sets (like welding stainless steel, for instance).

      • Gary F

        That’s why First Robotics in our high schools is BEST DAMN THING, that our schools are doing right now. Hands down. Kids think out the machine, draw up plans and production drawings on Autocad or Solidworks, kids build it, wire it, program it with wireless routers.Then they learn marketing and fundraising for the program. THEN THEY COMPETE. Teams win and lose, machines function properly some fail. ALL REAL WORLD stuff. It doesn’t matter if your machine wins or loses, this is the real world.

        Looking to volunteer or be a mentor? Check your local high school, they all need help of some kind with the program. They need donors. Some need shop production space.

        Just YouTube “First Robotics” and you’ll have a day wasted at work watching and being amazed at what schools are doing these days.

        • Jay T. Berken

          This is great. Where will the money come from for this expensive software and shop equipment?

          • Gary F

            Schools budget for some, most of the money comes from the kids fundraising. Their t-shirts, robots, and pit crew area look like NASCAR. 3M, Ecolab, Medtronic, JC Penny, the neighborhood hardware store or pizza joint, you name it.

            Part of the program is the kids make up color literature and make appointments with key people the business community. They get an appointment, sell the program and ask for donation. Real word experience.

            Jay, your local high school or Alma mater has a team and can use your help either financially or technically. I’ve been a “build team” mentor for 4 years.

          • Jay T. Berken

            Did you fundraise for shop class? Did you fundraise for any class except for a fieldtrip?

    • Exactly.

      As I mentioned above, not all HS graduates need to (or are ready) to go to a “traditional” college (66% of the “Millenials” won’t earn a college degree).

      There should be no social stigma towards those students who want to work in the “trades.”

  • John O.

    Last week, I listened in on a panel discussion that included a representative from the Mayo Clinic. The real reason they are changing up their nursing model? The Affordable Care Act. LPNs earn much less than RNs.

    • And that’s ACA’s fault?

      • John O.

        The person’s claim is that they are “changing their medical model” at Mayo in response to ACA. He danced around it very eloquently, but the unspoken message was clear, they are trying walk the tightrope between cutting costs without reducing patient care.

    • And PAs make considerably less than MDs and I’ve been going to a PA for about a decade now. Is the ACA is being blamed for that as well?

      • John O.

        I’m only reporting what the person from Mayo said. In addition, I spend way too much time inside exam rooms and waiting rooms these days and unless the nametag says “RN” or “LPN” after the person’s name, I would defy you to be able to tell the two apart.

        • Keep in mind two-year associates are RNs too.

          • John O.

            Correct. My point is that most patients/visitors would not necessarily know the difference, unless the name tag/ID badge says otherwise. Or the whiteboard in the hospital room.

        • Anna

          There is a world of difference between an RN and an LPN. I challenge you to give a new grad, licensed practical nurse the national licensing exam for a registered nurse and they would fail, hands down. Their education is not as broad as the RN education whether it is an ADN or a BSN.

          Yes LPN’s are very good at procedures like venipuncture, IV insertion, and hanging IV drugs but they gain this expertise through years of experience and institutional training. If they had to explain the physiological reasons for high blood pressure or why a patient’s pulse must be taken each time digoxin is administered, the great majority of them could not do it.

          Patients often want to know the why of their disease and LPN’s simply do not have the breadth of knowledge to educate the patient in these matters.

          I take umbrage with your assertion that a nurse is a nurse is a nurse. I am a registered nurse, both an ADN and a BSN.

          Your ignorance is showing.

          • John O.

            Where did I say that? I never said the two are identical in skill sets. What I *did* say is that in a clinic, it is often difficult to distinguish which nurse is an RN and which one is an LPN, unless they have an ID badge or name badge that you can see and read. Scrub suits come in many colors and styles.

  • tboom

    I was out-sourced and “H1-B’d” out of my math intensive career in 2001. The short version of my story is that the H1-B replacement workers were all less skilled than the workers they replaced and worked for about half our salary. The out-source work was even cheaper.

    Interesting, this discussion about technical vs. college education. After my job was eliminated I went to a Technical College and trained for a job that can’t be out-sourced. But as this story shows, H1-B’s aren’t just for replacing highly technical college educated workers. Clearly H1-B’s will soon be used for blue collar replacements, if that isn’t what’s already happening at Polaris.