Northeast U.S. Frustrated by Acute Labor Shortage

The Christmas season began in early September this year in Hartford, Conn., or at least, that’s when retailers around the labor-hungry city began running newspaper ads for seasonal help, and posting plaintive signs announcing “Help Wanted--All Positions.”

These days some fast-food restaurants around Hartford advertise counter jobs offering vacations, fringe benefits and starting salaries that have been raised to $6 an hour from the long-standard minimum wage of $3.35. Word-processor operators in the area get an average of about $11 an hour, up from about $7.50 in early 1985.

And still jobs go begging. “We’re at wit’s end,” said Dan Lieblich, district manager of Norrell Temporary Services in Hartford. “You hate to tell your salesmen not to line up new business, but that’s what we’ve had to do. We can’t find people to do the work.”

Hartford and other parts of the Northeast are facing acute labor shortages that have cast doubt on the growth prospects of a region that for three years has basked in a glorious economic resurgence. As the region’s economy has boomed, employers in many areas have found it harder and harder to fill many service and technical jobs, though they improved wages and benefits, bused employees from long distances and trained low-skilled workers who in years past would not have been considered for jobs.

While the shortages have naturally benefited many employees, experts fear the problem will soon restrain the region’s growth, hurting the work force as well as employers. “You can’t stick around forever with unfilled jobs,” said Gary Snow, president of Wheatstone Corp., a small high-tech firm that has just moved to labor-plentiful Syracuse, in Upstate New York, from the central Connecticut town of Bethany.

The shortages are a side-effect of economic growth that has roared since 1983. After decades of losing manufacturing jobs to the South and West, the Northeast was primed to take off with the first stirrings of a national economic recovery.

Decades of job losses had reduced the Northeast’s wages to competitive levels; falling oil prices gave the Northeast a special boost because the region’s oil costs had always been particularly high. The region has a highly educated work force, and, importantly, a wealth of the industries that exploded during the early years of the recovery--high-technology, defense and financial services.

New England, with the richest mix of these industries, shone brightest of all.

Per-capita income in New England--the states of Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine--has grown about 9% a year for most of the last four years. That is twice the national rate.

Slower Expansion Seen

But New England has seen slower expansion of its work force than other fast-growing regions, such as those in the South and West. Since 1982, the region’s job pool has grown more than 13.2%, but its work force has grown only 5.8%, say economists at Chase Econometrics, the forecasting firm in Bala Cynwyd, Pa.

New England continues to lose workers--80,000 since 1980--and among the portion of the population that is capable of working, a high percentage are already employed.

“Around here, it’s a historical pattern that more wives work, and more elderly and young people hold part-time jobs,” said Ben Chinitz, dean of the School of Management at the University of Lowell, near Boston. With this so-called labor participation rate already high, “there are just fewer people around to take the extra jobs when they are created,” he said.

This combination of fast job growth and slow work force expansion has held New England’s unemployment rate to 3.8%, compared to a national rate of 7%. The rate is a mere 2% in some areas near Boston, Hartford, and in the Connecticut suburbs of New York City.

Citing the labor shortages, Data Resources Inc., a Lexington, Mass., forecasting concern, recently predicted New England’s employment growth rate will have slowed to about 1% by the last quarter of 1988, down from a 4% growth rate in the first quarter of this year--and half the expected rate for the nation as a whole.

Second in Growth

To be sure, although its expansion is slowing, the Northeast is still the nation’s second-fastest growing region, after California and states on its eastern border. California’s job growth rate--perhaps the best measure of a region’s health--is expected to be 2.3% this year, compared to a national 1.9%, says Chase Econometrics.

New England’s rate will be 2.1%, while the other Northeast states--the Middle Atlantic group that includes New Jersey, New York and Pennsylvania--are expected to have a rate of 1.9%, Chase says.

California, like the Northeast, has benefited from expansion of its financial services, defense, high-tech and retail-trade businesses. But while the state’s job pool has grown 14% since the recovery began, its work force, swelled by heavy immigration from other U.S. regions and from abroad, has kept up better, expanding 8%.

The state’s ample labor supply, its bustling trade with the Pacific Basin and its strength in every major economic sector are reasons California will continue to be the fastest-growing region well into the next century, economists say. While California has 11% of the nation’s jobs, it is expected to capture 20% of the new ones over the next 10 years, says the Center for the Continuing Study of the California Economy.

The Northeast’s worker shortages have resulted in part from problems that region shares with most of the country. Jobs have gone unfilled partly because it is difficult to retrain unemployed workers from declining manufacturing industries for service and technical jobs.

Housing Not Affordable

Also, many employers are located in areas where housing and other living costs are so high that their potential employees cannot afford to live nearby.

Labor shortages have also appeared this year in metropolitan New York and in New Jersey, which is undergoing booming growth with the rapid expansion of service and high-technology employment in the corridor between New York and Philadelphia. The need for additional help has been acute among retail businesses, and for a variety of jobs in the expensive suburbs where many lower-paid employees could not afford to live.

The Regional Plan Assn., a New York-area civic planning group, has estimated that the New York and Connecticut suburbs face a shortfall of 170,000 workers by the end of the century unless they add low-cost housing nearby and retrain unemployed workers for the new jobs.

As the labor market has tightened, employers and government agencies and other groups have begun looking for ways to ease the problem.

At a seminar on the labor shortage held recently in Burlington, Mass., a personnel official from one New England company rose to say that his firm’s hiring practices were increasingly like those of the U.S. Army.

“We don’t go through applications to pick the most qualified people any more,” said the official. “Now we hire anybody, and say, ‘Be all that you can be.’ ”

15% More Jobs Expected

A group called Jobs for Connecticut’s Future has predicted that while that the state’s work force will grow 10% over the next decade, it will have 15% more jobs to fill. The job surplus is expected largely because Connecticut’s service sector, including its banking, insurance and retail-trade industries, will generate another 200,000 jobs.

The organization has decided Connecticut must fill jobs from the portion of the labor pool that remains--the welfare recipients, single mothers and others who often have problems finding and keeping jobs.

The group is studying the job-seeking efforts of 30 welfare recipients to try to identify their difficulties. Another group, the Connecticut Business and Industry Assn., is arranging a course that will teach minority women the basics of electro-mechanical machinery to help prepare them for service jobs that involve the repair of office equipment.

There are signs that the labor shortage is helping some of those most often left out of the work force. In Massachusetts, as the market has tightened in the last year, unemployment among black teens has dropped to less than 20% this year from around 40% in 1985, said Paul Harrington, economist at the Center for Labor Market Studies at Northeastern University in Boston.

Some employers are willing to go to some expense to reach the untapped end of the labor pool. Waring Products, the kitchen appliance maker, buses about 100 employees a day from central-city Hartford to its manufacturing plant 25 miles away in New Hartford.

Church Leaders Courted

Personnel officials at Brigham and Women’s Hospital, a big teaching hospital straddling the border of Boston and Roxbury, has courted church and community leaders in its poor neighborhood in an effort to fill more food-service, housekeeping and secretarial jobs.

The hospital began the effort after its inventory of unfilled jobs rose to 325, “and some were going for weeks without being filled,” said Sarah Herman, an employment official. “We’ve been down to the real hard-core unemployed.”

Some of the big financial services firms in the Hartford area have taken special steps to help satisfy their enormous demand for service and technical employees.

Aetna Life & Casualty two years ago opened an education and training center intended to retrain employees for the new jobs it expected would develop in the fast-changing financial services business. Since it opened, the center has also become Aetna’s special tool in coping with the difficult job market.

The center helps employees earn academic degrees but also allows others to improve their basic skills enough to fill secretarial, data-entry and other lower-skill jobs. Its operations cost the company more than $40 million a year, not counting the salaries paid students while they are in class.

Worse Shortage Predicted

That expense makes the program “a risk, but we think it’s one worth taking,” said Badi G. Foster, president of the Aetna Institute for Corporate Education. “From everthing we see, the shortage is going to get worse.”

The Travelers Companies, another of Hartford’s major insurance and financial services firms, has begun paying cash awards of up to $3,000 to employees who bring new employees to the corporation. To fill many temporary clerical, secretarial and data-processing jobs, the company is also relying on a 700-person “retiree job bank” made up of former Travelers employees.

Also to help ease the crisis, the company has begun experimenting with “telecommuters” who punch data into the company’s computer system from home.

Other businesses have had a harder time coping. Lieblich, of Norrell Temporary Services, said he has been unable to fill many jobs that pay nearly twice the minimum wage and require no skill. Among them are jobs for proofreaders and collators that offer $6 an hour.

In 1982 Lieblich spent $600 to buy a newspaper ad for salaried sales jobs, and got 150 resumes and another 50 telephone responses. He took out an ad for similar jobs recently “and I got five or six responses,” he said. “It’s incredible.”

Classifieds Still Popular

Despite such experiences, employers continue to turn to help-wanted advertising in their hungry pursuit of workers--a key reason classified sections of newspapers have swelled throughout the Northeast.

In what has been an indifferent year for such advertising elsewhere, the Boston Globe’s classified ad lineage was up 16.5% through October, while the Hartford Courant’s rose 11% and classified lineage at Newsday, the New York area newspaper, increased 14%.

As they worry about the present, the Northeast’s employers look warily at another trend. Over the next 10 years, the number of young people entering the job market is expected to decline steadily throughout the country.

Labor-market specialists note that New England enjoyed a net immigration of 4,600 workers in 1984 and 1985, the first such net gain in decades. But most hold out little chance of a reversal in the historical pattern of emigration.

New England’s appeal to job-seekers has not been helped by a run-up in housing prices that has recently made Boston homes among the most expensive in the nation. The median price for a single-family home in the Boston area had climbed to $156,000 by the middle of this year, from $82,600 in mid-1983.

Immigration Held Unlikely

Some experts are skeptical that job-seekers could ever begin moving to New England in large numbers, as they have to such states as Florida, Texas and California.

“There’s a calculation people make on a decision to move that takes into account cost of living, climate, job opportunities and other factors,” said George Masnick, researcher with the Harvard-MIT Joint Housing Project. “For most people, New England just isn’t someplace they’d consider.”

In 1984 and 1985, there was a net migration of a piddling 233 people from Texas to Massachusetts--though Texas was sinking into an oil recession and Massachusetts’ high-technology and service industries were exploding.

“Given the situation, there should have been a lot more than that,” Masnick said.