Unqualified Mess : Firms Fear Lack of Competent Workers Will Affect Survival

From Bloomberg News Service

It seems you just can't find good help these days if you're a small-business owner.

Take the new employee Ken Heller asked to arrange a batch of files in chronological order. She couldn't. "She didn't know what 'chronological' meant," said Heller, the owner of a Denver environmental services firm.

Plenty of small businesses have similar problems, according to a survey released recently by National Small Business United, a Washington-based group Heller chairs, and consulting firm Arthur Andersen's Enterprise Group, which works with small and mid-size firms.

The survey of 966 small-business owners found that 24% thought a lack of qualified workers was a threat to their firms' growth and survival. That's up from 13% three years ago.

"It's a really mega-issue," said Nancy Pechloff, managing director of the Enterprise Group. "I see this as the limitation to the growth of this sector."

The economy's steady growth, with unemployment at 5.6% in May, doesn't make matters easier, Heller said. Several regions of the country have reported localized labor shortages, including Colorado and Michigan.

The heart of the problem is the fact that many workers lack the basic English and math skills to handle their jobs, Heller said.

"It's a problem with the educational system," he said. "You're talking about training at a basic level."

Businesses should get involved with their local public schools as a way of addressing the problem, said Robert Tate, a policy analyst for the National Education Assn., the nation's largest teachers union.

"We're interested in working with business and other sectors to help improve student achievement," he said.

"We do take exception to the unqualified bashing of public schools as failures. The evidence is just not there to support it," Tate said, adding that that's not meant to deny the need for improvement.

Small businesses often find it hard to compete for more qualified workers, Heller said. "Small business gets the leftovers in the work force. We don't have the benefits big business has."

Yet among small businesses--which the survey defined as those with fewer than 500 employees--the smallest were less likely to complain of a lack of qualified workers.

The typical firm complaining of that problem had an average of 30 workers, and the firms for which it wasn't a concern had an average of 20.

The larger firms were also growing faster, which may explain why they run up against the issue of quality labor more often.

The firms complaining of the quality of their work force had average annual revenue growth of 5.4%, compared with average growth of 4.2% at those that did not complain about their workers.

Of those that complained about workers' qualifications, 88% planned to invest in worker training, compared with 71% at the other firms.

Small businesses haven't traditionally been enthusiastic about spending on training, Heller said, but "as reluctant as they are, and as much as it costs, who else is going to do it?"

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