Barkey on Dealing with Montana’s Labor Shortage
The current labor shortage in Montana carries with it some surprises that haven’t been seen before, but reaction to them should be much the same as it has been for any labor shortage, according to Patrick Barkey, Director of the Bureau of Labor and Industry.
“To say that the balance of power in the give and take between workers and employers has swung toward workers in recent months would be an understatement, and that is just one of many surprises,” writes Barkey in the most recent issue of the Montana Business Quarterly.
“In past recessions, employment growth lags economic growth, as employers hire back laid-off workers only after all other measures to boost output” …but … “The brief but severe 2020 pandemic recession has been a completely different animal. Not only did the resumption of job growth occur in April 2020, barely two months after the February 2020 date considered to be the pre-recession peak, but the growth was strong.”
Barkey reminds that prior to the COVID-19 mandated business closures there were already concerns about a shrinking labor market.
At the same time, employers and employees alike, expected the shutdowns to be longer, which prompted different responses by both than what might have happened had the realized the short duration.
Many employees used the time to look around for new options and different career opportunities, which because it was a strong market there were many. And, many employers deeply regretted breaking ties with experienced and trained employees.
While some of the circumstances impacting this labor shortage are not unique, some are:
—The reopening was strongest in industries previously hurt the most, notably the highly seasonal and labor-intensive accommodations, restaurant and personal services industries.
—With a new interest in domestic travel – “The Bozeman Yellowstone International Airport enplanements were almost 90% higher in June than pre-pandemic, the second highest increase of any airport in the country.”
—Many former workers withdrew from the labor market permanently for “a variety of reasons, including financial security from stock market and housing wealth increases, government support payments, spousal income and COVID-related concerns.”
Also, “One last factor contributing to pressure on Montana labor markets is the seasonal nature of our economy. During the summer months of any year, employment generally surges by 25,000 jobs or more as tourist volume ramps up and labor-intensive industries that serve that demand expand. The timing of the reopening of the state economy in 2021 coincided almost exactly with that seasonal peak.”
All these events contributed to tightening an already tight labor market.
“By almost any measure, the scarcity of labor is apparent, particularly for entry level jobs, where increases in starting wages have been the strongest. There has been a marked increase in voluntary quits by workers, a sign of their confidence in future job availability. And speaking of availability, the 62% increase in job openings experienced in Montana since before the pandemic began was higher than any state.”
Despite the pandemic, the factors contributing to an already tight labor market in Montana have not changed. Things like: “Demographic events like falling birth rates and the retirement of baby boomers, coupled with huge disruptions in international migration, are stagnating the growth of the working-age population. And the shift in the interests and desires of Generation Z workers just entering the labor market continues to work against the needs of employers in less desired trades and construction occupations.”
Since these factors existed prior to the COVID shutdowns, the recommended responses remain the same:
— Raising wages. …which is already being done, but its impacts on growing the entire labor force have been limited.
—Searching more broadly for workers, relaxing requirements, looking at nontraditional workers. Looking outside local areas for a broader category of jobs.
—Investing more in training, hiring less qualified workers and training them up to acceptable skill levels.
—Reconfiguring job roles to find ways to make existing staff more productive, covering needed functions with the existing workforce.
—Recruiting future workers by connecting with middle- school-aged students to give them exposure to the nature of jobs they may otherwise know nothing about.
“Other actions, such as automation and outsourcing of work, has been underway when feasible for decades, but recent shortages have pushed the envelope further. The lack of available workers, while not a pleasant challenge for employers, nonetheless may prod them to take steps to eliminate the “bad jobs” in their workplaces. These may be jobs with high physical burdens, long or inconvenient working hours and other aspects that make them less competitive in a seller’s market for labor services.”
Policy makers could also make changes, notes Barkey – which although unpopular would improve the situation.
—Boosting the retirement age, which effectively means resetting the age at which individuals become eligible for Social Security and Medicare.
—Increasing female labor force participation by helping to increase child care availability.
— Fixing immigration policy. This traditional strength of the U.S. labor market has foundered on the rocks of political storms for almost a decade.
— Raising teenage labor force participation, currently at rates that are 20 percentage points lower than 40 years ago.
— Rethinking drug testing policies. Legalized cannabis is just one of many factors that are causing attitudes and policies to change.
—Reconsider occupational licensing requirements, which limit the ability of two-earner couples to relocate to Montana.