In 2019, unemployment remained below 4%, representing the strongest annual performance since 1969. This is positive news as a robust jobs market is good for our economy. However, this strength has made it increasingly difficult to attract qualified employees across many sectors. In fact, as a result of a very competitive market for businesses looking to hire, job-seekers and employees have naturally gained an upper hand in assessing and comparing compensation and benefits packages.
This environment has been particularly difficult for small and medium size businesses (SMBs) as they search for qualified employees to support growth. Consider that there are more than 30 million SMBs in the U.S. representing 99.9% of total businesses. These companies employ nearly 59 million employees or 47.5% of the total U.S. workforce.
Many SMBs are local or regional organizations that are still owner-operated, high-touch and very personalized in their service delivery. These companies thrive on repeat business from a select set of customers - relationships built upon the continued delivery of quality goods and services. This is simply not possible without dedicated people.
This is especially true for a wide range of small and medium size businesses spanning skilled trades, retail, manufacturing and construction. Consider that demand for plumbers, pipefitters and steamfitters is expected to grow by 14% between now and 2028, nearly three times the average growth rate for all occupations. And, the need for carpenters is expected to grow by 8% over that same period. This growth is adding to a tremendous demand for labor.
While demand for employees with select skills is growing, the number of candidates is shrinking. For the first time since the Department of Labor began tracking job turnover almost two decades ago, the number of open jobs exceeds the number of people seeking jobs. This is not expected to change in the foreseeable future.
Compounding the problem, the number of students attending vocational schools in the past two decades has fallen considerably. This has only added to the reduction of candidates who have the necessary trade skills to fill specific positions. In 2018, almost 69.1% of high school graduates chose to attend a college or university, up from 66.7% in 2017. While this is great for meeting the market demands in industries such as technology, financial services and life sciences, statistically it leaves fewer than one-third of high school age adults available for classic trades such as construction or manufacturing.
This is a core reason why the U.S. Department of Education reports there will be 68% more job openings in transportation-related fields than there are people willing to fill them. The manufacturing industry faces a similar outlook. According to a recent study by Deloitte, it is projected that almost half of the 2.4 million open manufacturing jobs could remain unfilled in 2028 because of shifting skillsets, retirements and misperceptions about the job.
The bottom line is unfilled labor positions at SMBs can have a real impact leading to longer project timelines, inability to respond to opportunities, reduced quality of service or product and, ultimately, lost revenue. While this is an industry-wide problem, smaller businesses are often the hardest hit as they have limited funding to devote to recruiting and retention tactics compared to larger firms. As a result of this environment, there’s added pressure on Main Street businesses to invest in the right HR programs and approaches to better compete for job candidates.
Through TriNet’s recently released eGuide on the jobs market, we’ve addressed how Main Street SMBs can better recruit and retain the skilled employees they need to maintain the quality and timely delivery of goods and services. The comprehensive report covers both the demand and supply side of the equation, reviews the implications of recent trends and outlines tactics to combat the challenging hiring market. In our next blog, we’ll highlight some of the strategies SMBs are utilizing to pursue job candidates, along with examples of organizations that are seeing results.
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