The unemployment rate is a funny thing.
As of October 2018, the national U.S. unemployment rate was 3.7 percent, meaning that more than 96 percent of the U.S. adult workforce that wanted to be was employed, according to the Bureau of Labor Statistics. At the same time, more than 250,000 new jobs were created in the month, employing even more people than held jobs in September.
A 5 percent unemployment rate has long been considered the threshold for full employment, and we’ve been lower than that for months.
We’re seeing this here in Colorado as well. Our local unemployment rate was just 2.7 percent as of June 2018, meaning all of the factors mentioned above are that much more challenging here.
On a national, economic level this is all great news. Jobs are plentiful, and the economy is growing. For employers, however, it’s a different story.
As Wayne Winegarden, an economist and senior fellow at the Pacific Research Institute, told The Washington Post: “If you have less labor, you’re going to have less growth unless it’s compensated by more technology or higher productivity.”
That’s right. Since just about everybody has a job, finding candidates to fill openings has become much more difficult for businesses. Since there’s always another job for them to apply for or accept, the cost of labor is going up, retaining employees is more difficult and the pressure on margins is increasing.
The solution? One good step is to increase the amount of labor available in the local workforce.
As explained by Robert Engelman, president of the Worldwatch Institute, a DC-based research organization: “A vital labor force is an asset, but when its proportion is too high relative to the rest of the population, low wages and unemployment become a risk. Innovative governments and societies can mitigate that risk by fostering sustainable jobs that offer good wages and working conditions.”
Here are just a few ways that regional businesses can help attract more labor to their local workforces, and keep the talent they already have.
Outreach:
One of the lasting impacts of the 2009 Financial Crisis was a broad realignment of the labor force. After getting laid off during the recession, many workers simply gave up and chose to remain out of work, despite the fact that they are otherwise of working age and capable of holding down a job. They are effectively not part of the workforce – that’s one reason why the labor participation rate, either employed or actively looking for work, has been hovering around 62 percent.
We need these people back in the workforce. Businesses should be reaching out and providing opportunities for all, not just experienced hires. Provide training, provide incentives, don’t put up walls to potential hires. That will boost the labor participation rate by getting this much-needed labor off the sidelines.
Training:
For those workers who are ready and willing, but don’t yet have the skills necessary to compete in today’s job market, training is key. Either on-the-job or pre-employment training was for many years a standard feature of many U.S. businesses, and it’s a great time to restart these initiatives.
Technologies are changing fast and the needs of the labor market are vastly different than even a few years ago. Just staying current on the latest skills and tools is an ongoing project for even employed workers. Businesses that provide training on these skills will be well positioned to not only fill their current workforce needs, but also protect themselves from challenges down the road too.
For instance, Arapahoe/Douglas Works! offers a wide range of free workforce development services to businesses in the South Denver area, helping with everything from hiring, to training, to retention and more.
Innovation:
According to the annual Deloitte Millennial Survey, a full 78 percent of younger workers say they are “strongly influenced” by how innovative a company is when considering working for them. For that reason alone, it’s important for businesses to incorporate innovative thinking and practices into their day-to-day work, and make sure they let the community know about what’s available.
Because in today’s economy, innovative companies win vs. the competition. And it turns out they win when it comes to hiring as well.
In fact, Denver South Economic Development Partnership has been hosting a series of innovation-focused events that are designed to bring business leaders in the region together to learn, share and collaborate. Details on the next session in January will be available on our events page once it has been scheduled. Or, reach out to Eric Byington, our Director of Innovation directly by clicking right here.
Career Growth:
When unemployment is low, it’s easy for workers to jump from job to job. And, if they don’t feel a sense of connection to their employer, they’re going to do just that.
According to a MRI Network study, more than half of millennials say that whether or not they remain with an employer long-term is based on the career growth opportunities with the company. Limited growth means ongoing turnover.
Companies must make employee growth a focus of their culture and hiring process. As important as adding new workers is, retaining the talent you have is almost more important. Businesses need to make sure that employees know they have a long-term home with them where they can growth and flourish professionally.
The fact is, these are challenging times for employers given the tight labor market.
But, by working together to attract new talent to the workforce, businesses can survive and thrive in this new economy.
