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Labor shortages? Blame corporate America

Rick Newman
Columnist

Kristin Charlton, a manufacturing salesperson in Eau Claire, Wis., hears from recruiters all the time, about jobs all over the country—usually with deep skepticism. “I hear about these labor shortages, and I think, that’s a crock,” she says. “When I compare salaries to what they were 10 years ago, they’re not significantly higher. It’s not enough for me to move across the country.”

The US economy is in a peculiar phase in which millions of Americans remain out of work, even as employers report the most job openings in at least 16 years. Some companies are losing business because they can’t find enough workers. Businesses complain about job applicants who can’t pass a drug test or don’t want to work hard, along with new hires who turn out to be unreliable. Data shows Americans are far less willing to move for a job than they were in the past. And President Trump’s vow to “bring back” lost American jobs resonated so strongly among voters last year that it helped him get elected.

But there’s another important factor contributing to labor shortages: workers’ distrust of companies, driven by punishing trends in the labor market for more than a decade. In a recent online poll, Yahoo Finance asked more than 9,000 people whether they trust American businesses. More than 54% said no. Of those, 69% said employers care more about profits than anything else. Those findings reflect a long-term erosion of trust in American institutions, including business. According to Gallup, for instance, the portion of Americans saying they have confidence in big business has dropped from 30% in the late 1990s to 18% today.

Below are some of the findings from the Yahoo Finance poll, which we conducted on
SurveyMonkey from June 9-12. (Full results are available here.)

 

It’s not news that American workers have become jaded after years of offshoring, outsourcing, stagnant wages and doing more with less. Globalization, digital technology and other factors have given employers more tools than ever for moving work to lowest-cost locales and streamlining operations. Since employers can control labor costs more easily than commodity prices or other factors they must contend with, it’s no surprise they’ve squeezed workers.

But the distrust that behavior has engendered may now be limiting some companies’ ability to get workers, amid a relatively strong economy and tight labor markets in some areas. “Companies don’t value skills,” says Art Wheaton of the Worker Institute at Cornell University. “They post jobs with unrealistic expectations. They require 5 years’ experience but won’t pay a reasonable rate. There are a lot of incentives for them to be less than honorable.”

Many workers think that if they move for a better job, they’re likely to end up laid off or discarded anyway—after bearing the cost and hassle of a move. Yahoo Finance conducted a separate poll in May, asking respondents why they’re not willing to move for a job, among other questions. Here’s a roundup of answers:

“The jobs I’ve moved for don’t last long enough to have made the move worthwhile.”

“I have seen that you can move and still be laid off.”

“A new job offers no stable career, just a temporary paycheck until the next layoff.”

“No security in jobs. Makes it a constant-move mentality.”

“Why move when the job you move for may disappear as quickly as it appeared?”

“Why should I move just so you can lay me off whenever you want?”

“If a job is secure for at least 5 years, I definitely will move.”

“Companies treat you like a throwaway. When things slow down you are gone!”

No confidence the job will last

There are other reasons people won’t move for a job—they can’t afford it, don’t want to leave family or refuse to uproot their kids from school, for instance. About 2.4% of respondents in our poll said they don’t need to move for work because they draw enough money from government benefits (which is probably lower than some critics of welfare might have expected). In general, however, distrust of employers and worries about job security are among the top reasons workers aren’t willing to go where the work is.

One 56-year-old pharmaceutical worker in the Northeast told Yahoo Finance he’d love to relocate to the South, and has received job offers there. But he’s turned them all down because he doubts the work will last. He said one of his friends moved recently for a pharmaceutical project that was shut down within a year. And pharmaceutical firms are increasingly moving work to India, Turkey and other places where costs are lower and regulation looser. “I’d relocate if somebody gave me a firm offer with a company I thought was stable,” says the worker, who asked that his name not be used, to protect his job prospects. “I don’t have confidence it will last. They offer you contract work for 6 months, maybe with benefits, maybe without. They’re addicted to cheap labor.”

Some workers, such as Kristin Charlton, doubt there are labor shortages, because they don’t see pay shooting up. But sometimes pay goes up and there’s still nobody to take the job. Nicholas Parks owns a Ford/Dodge/Chrysler/Jeep dealership in Jasper, Ala., that he says has “perpetual openings” for salespeople and mechanics. He’s running ads guaranteeing $10,000 per month in pay for salespeople who can sell 20 cars per month, a target most of his salespeople hit. No takers. And he has enough work for 5 diesel technicians—who can earn $70,000 per year, or more—but can only find 2. So he’s losing sales each month and referring mechanical work to other shops. “Nobody is showing up from anywhere else,” he says. “I think the labor exists. But unfortunately, there’s not a good education program that helps people understand you can have a labor job that pays well.”

Trump’s plan to “bring back” jobs lost during the last several decades focuses on lower-paid manufacturing work displaced by new technology and cheaper factories overseas. Economists think there’s little chance the jobs of the past will return. But if Trump could bring back trust between workers and employers, he might not have to worry about that, because the jobs are there, and both sides need each other more than they may realize.

Confidential tip line: rickjnewman@yahoo.com

Read more:
· Trump’s grade on the economy rises to B+
· Americans who need jobs aren’t going where the jobs are
· The message from Trump’s budget: Get a job!
· If Obamacare fails, it’ll be bad news for Trump

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman