Workforce Trends and Their Impact on Businesses

Workforce Trends and Their Impact on Businesses

 

Source: Fifth Third Bank

For any company, there are a variety of factors affecting the bottom line—sales, inflation, the political climate, the economy, and even the availability of great workers. For all leaders, it’s important to recognize what’s happening in the culture at large and how it influences the microcosm of your organization.

The more you know about the greater workforce, the more you can do on a company level to influence change, and position your company for success.

What’s affecting businesses?

Among other things, the biggest challenge facing businesses today is a shortage of labor, says Jeffrey Korzenik, Fifth Third’s chief investment strategist. The economy is seeing record levels of job openings compared to job seekers, across many industries. That’s due to a variety of factors, including the retirement of Baby Boomers as they age out of the workforce. From 2015 to 2035, the biggest group of working-age adults—those born in the U.S. whose parents were born in the U.S.—is expected to drop by 8%, or 8.2 million workers, according to PEW Research.

There’s also the fact that fewer Millennials are turning toward trade jobs. Of 18- to 25-year-olds who say they know what field they’d like to be in, only 3% are interested in the construction trades. And 82% of those working in home building’s top companies say labor is their top concern, according to the NAHB.

“I can’t tell you how many times I’ve talked to manufacturers who’ve said, ‘I could generate more product, revenue and profits if I could find the workers I need,’” Korzenik says. “It has a dampening effect on growth in general.”

But job openings—with no takers—aren’t just about an aging workforce or a generation that’s less interested in industrial and manufacturing positions.

Why is labor harder to find?

In September 2017, there were a record 6.17 million jobs open in the U.S., according to the BLS, with companies taking an average of 31 days to fill vacant positions. Here's what's affecting labor:

Opioid use: As an issue widely labeled as a crisis, opioid use has a number of effects on the workforce. Drug testing—required in many businesses, but certainly common in manufacturing—eliminates workers who test positive for opioids. “Relative to history, they’re reporting a high level of failures,” Korzenik says.

In other words, record numbers of people—11.5 million, according to the Department of Health and Human Services—are abusing opioids, and that eliminates a huge swath of workers from a labor market that tests for drugs. One paper found that labor force participation has decreased more over the last 15 years in places where higher levels of opioids were prescribed.

Certainly, too, if you’re using opioids, your work productivity will suffer. “If you are an illicit user of opioids, it is highly unlikely that you are performing to your potential,” Korzenik says.

It’s a particular problem for manufacturing, because opioid use is often centered in areas where manufacturing jobs are found. “The geography of the opioid epidemic lines up closely with the geography of manufacturing,” Korzenik says.

Marijuana use: Although it’s a smaller issue, as legalization rolls forward across the U.S., drug testing is also snaring marijuana users. “Legalization doesn’t necessarily change the requirements that employers have,” Korzenik says. “And no one is bothering to tell young people that even occasional recreational pot use may disqualify them for any number of jobs.” 

It’s enough of a problem that employers in some states that have legalized marijuana have considered dropping cannabis testing for new employees. One survey found that 7% of Colorado’s employers nixed cannabis testing from pre-employment tests and 3% eliminated it from all employment tests.

Incarceration rates: Starting in the 1990s, incarceration rates in the U.S. started to rise, and now the jobs market is seeing the effect of so many people with a criminal record. “Those people have had great difficulty reentering the workforce,” Korzenik says.

What are the opportunities for solving these issues?

Although the opioid epidemic is arguably the biggest problem facing manufacturing and the workforce in general, finding ways to fold ex-offenders back into the workforce provides the biggest opportunity, Korzenik says.

That’s because second-chancers, as he calls them, have difficulty finding work to begin with, and when they do, they’re often underemployed. So, they’re either not working, or not working at capacity or at their capability. One study found that having any lifetime arrest on a worker’s record affects employment prospects more than any other employment-related characteristic.

How would a business incorporate second-chancers?

Companies would ideally partner with a workforce development nonprofit that can help employers identify who’s ready for employment and provide ongoing support for those workers after they join a firm. Firms might view it as an extension of an already existing EAP—or employee assistance program.

For instance, a company might partner with a workforce preparation nonprofit, such as the Safer Foundation in Chicago, which helps people with criminal records secure and maintain jobs. There’s also 70x7 Life Recovery in Michigan, which provides a church-based program connecting former inmates with community and job opportunities. The organization offers job readiness training, interview prep, mentor relationships and job placement.

This kind of accommodation shouldn’t be seen as anything extraordinary, Korzenik believes. “Up on our 32nd floor, there are a number of rooms that are marked off for new mothers who might be nursing,” he says. “In our Cincinnati headquarters, we have a maternity concierge. We’re talking about other kinds of accommodations that you use to attract talent.”

Korzenik has seen a number of successful models that incorporate second chancers. “If we’re not at full employment, we’re darn close,” he says. “We think second chancers are your best opportunity to bring people into the labor force and extend economic expansion.”

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever.