Don Weiss had a problem. As the owner of a medium-sized company with backlogged orders for the factory equipment it makes, Weiss needed to step up production. But in the tight labor market in northern New Jersey, he could not find the skilled machinists he needed.
He considered hiring away skilled production workers from other manufacturers but decided that would be too expensive. So he took his largely minority, heavily Latino work force from the gritty inner cities of Newark and Elizabeth and arranged English classes and on-the-job training for them.
Weiss’ effort may offer a blueprint for a solution to a matched pair of vexing national problems: a growing shortage of highly trained workers and a surplus of poorly educated and chronically unemployed Americans in the nation’s inner cities.
With the national unemployment rate at a 14-year low, many economists believe that finding jobs for workers was yesterday’s problem. Increasingly, employers are going to have to find trained workers to fill tomorrow’s jobs.
“Demography and the economy are going to be running in opposite directions,” says Anthony P. Carnevale, a labor market economist with the American Society for Training and Development. “The economy keeps generating higher-quality jobs calling for higher skills, while demography will be giving us fewer workers with lower skills.”
In a study they are drafting for the Labor Department, Carnevale and two associates warn of a “startling demographic reality . . . . The group of 16- to 24-year-olds that is the traditional source of new workers is shrinking, and employers will have to reach into the ranks of the less qualified to get their entry-level work force.”
Shortages of skilled labor are particularly acute here in New Jersey, where unemployment has been holding comfortably below 4%, compared to the current national rate of 5.3%. But there is a growing consensus among economists that Weiss’ problem is soon to confront the country as a whole.
To be sure, unemployment has not been abolished, and nearly 7 million Americans remain without work. This is still the problem that is drawing the attention of the two presidential candidates. Vice President George Bush, in accepting the Republican nomination, promised to add 30 million jobs in the next eight years--nearly twice as many as have been created during the last eight.
That’s probably not possible. After nearly 20 years in which the labor force has been abnormally swollen by the baby-boom generation and the surge of women into the workplace, employers are now having to find new workers among those who were born during the baby-bust years of the late 1960s.
And with increasing frequency, they are going to be looking for highly trained--or at least highly trainable--employees. The Bureau of Labor Statistics projects that jobs with high skill requirements will continue to expand through the end of the century, while lower-skill jobs will continue to decline as a share of the total.
“Occupations requiring the most education and training are projected to grow more rapidly than total employment,” the BLS said in a report late last year.
In a job market projected to expand 19% by the end of the century, demand for technicians and workers with related skills--two-thirds of whom are estimated to need at least some college training--is projected to expand 38%. Demand for professional workers is projected to expand 27%.
Meanwhile, aggregate demand for traditional industrial workers, production workers, repairmen and craftsmen, most of whom need only high school training, is predicted to expand only 15%.
Thus, even in the midst of job shortages, the ill-educated and chronically unemployed are likely to have difficulty moving into the economic mainstream.
Carnevale warns that without deliberate efforts by both government and industry to include the inner-city “underclass,” the economy in coming years could come to resemble “islands of prosperity in a sea of underdeveloped human capital. You can see a real tension building here, with this unskilled oversupply of labor when good jobs are going unfilled. How long can we get away with that?”
Malcolm Lovell, a former top Labor Department official who now teaches at George Washington University, sees an opportunity to bring the American Dream within reach of those who have been left behind.
“There should be more economic motives for people at the bottom to get into the mainstream than at any time in recent years,” he says. “This really should be a good time to address this.”
Lovell says that neither Bush nor Massachusetts Gov. Michael S. Dukakis, his Democratic rival, has seriously come to grips with the issue.
“We in the United States have never really accepted the training of the work force as a responsibility of government,” Lovell says. “We’ve rarely addressed the education and training of people who are already employed or in the labor market. There’s a need now to rethink that.”
Industry is already way out ahead.
Weiss’ company, White Storage & Retrieval Co., which makes industrial storage equipment, manufacturing conveyors and other factory equipment, hardly seems to be the sort that would undertake an ambitious program to prepare its low-skilled workers for more high-powered jobs.
A family-owned company that operates out of a cluster of brick and cinder-block sheds in a light industrial zone near Newark International Airport, White Storage has a total payroll of barely 350. It lacks the resources that a General Motors or an IBM can call on to upgrade its work force.
Most Sign Up
But since the beginning of summer, White Storage has offered after-hours classes in English twice a week, and nearly two-thirds of the 275 production workers have now signed up. Weiss plans to add high school math and is expanding training programs in shop math, blueprint reading and computer skills.
Weiss thinks his problem is licked.
“Our labor market is Newark and Elizabeth, period,” he says. “And everyone here is drawn from that market. So our market is one that provides non-English speaking people. I suppose we could have tried to draw people here from the suburbs for $14 or $15 an hour or more. But then I’d only be hiring ‘smart white guys'--and I’d be in trouble with the government.”
What Weiss has instead is a fairly stable though less well-trained core of workers who, he thinks, are eager to learn the basics of math and English and then master the more sophisticated, computer metal-fabricating equipment that is gradually making its way into White’s three small factories.
“Doing it this way, your people have a chance to grow and get more training,” he says. “And the more modern machinery you have, the more opportunity you have for your people to grow. So this program pays back in many ways.”
At present, the program consists of two twice-weekly, two-hour sessions in English taught as a second language by contract teachers provided by Union County College.
Everyone Has a Chance
“We’re going to keep it up until everybody who wants to has a chance to take the course,” says Roger F. Toth, the company’s plant personnel manager.
In Toth’s eyes, the payoff is a more stable core of workers. White Storage now has an annual turnover rate of just more than one in five, slightly higher than the industrial labor market average in the low-unemployment Northeast.
In Trenton, the state capital, officials recognize what has been going on in a state that still carries the stigma of its heavy-industry past.
“We’re so used to being happy about low unemployment that it’s difficult to realize you’ve almost overshot the mark,” says Borden Putnam, the state’s commissioner for commerce and economic development. “Right now, the supply of trained labor is getting to be a constraint. We may be about at the maximum we can sustain.”
“We’ve been facing the problem for some time now,” adds Carl Golden, a spokesman for Gov. Thomas H. Kean. He says that state officials are worried about estimates “that we’ll have labor shortages of as many as 100,000 workers a few years from now. It’s something we’ll have to address.”
Tony Dighton of Exxon International, headquartered in Florham Park, near the affluent bedroom communities in Morris County, says that Exxon is already facing a shortage of non-professional employees. “Around here,” he says, “most high school kids go on to college, so we don’t get them for those secretarial, clerical and technician jobs.”
Exxon’s solution is to train the available labor pool.
History Is Repeating
AT&T;, the state’s largest employer with 52,000 workers, moved most of its headquarters operations from New York City more than 10 years ago because it found the quality of the local labor pool to be deteriorating. But now history is repeating itself.
“The problem which remains today is that there is a shocking proportion of people with high school credentials who can’t cut it,” says Burke Stinson, an AT&T; headquarters district manager. “A lot of the skills you need aren’t there.”
The answer, long accepted at research-oriented AT&T;, is what Weiss discovered more recently: Businesses must take more responsibility to train the people they need and then try to keep them.
“Almost any forward-looking company these days is doing something to encourage its people to continue their education while they’re with the company,” Stinson says. “It’s an old adage that a company that shows it cares about its people and treats them as whole individuals has an easier time keeping them, which, in turn, makes them more productive and of increased value to the company.”
Stinson says that state government can help by offering incentives to industry to increase the value of the state’s labor pool.
Offer Tax Incentives
Just this summer, the state added a training component to its urban enterprise zone program. Under the program, companies receive state and local tax breaks and local service incentives if they locate in depressed areas, but now they must also provide their workers with on-the-job training.
The Kean Administration is also asking New Jersey voters next month to back the first statewide education bond issue in more than a decade, a $350-million package primarily for higher education in the state.