The South Texas region has an unemployment rate of somewhere between 5.2% and 5.8%, depending on exactly where you are located. Employment in certain highly desirable professional technology occupations is officially over 100%.
Finding entry-level employees in South Texas is challenging. A few local anecdotes:
- A home care agency, after working for years to develop referral relationships with discharge planners, is having to decline new cases for lack of staff. A week of interviewing and background checks culminated in offers to five new workers, all to start the following day. None showed up for orientation.
- A subcontractor was discharged from a large construction project for falling behind schedule. He was unable to find sufficient employees to man the job. The chosen successor was terminated for the same reason after two weeks.
- A manufacturer in the Eagle-Ford (petroleum producing) area receives a report each Monday morning on his no-show employees. If they call the employee’s home and get no answer, they simply assume he found another job.
- A technology company, after conducting a salary survey, gives employees up to a 35% raise to bring them all up to 100% of the industry wage range. Nonetheless, their rapid growth is forcing them to open offices in other cities just to access additional labor pools. They have given up on getting H1B visas for Master’s degreed foreigners to work in this country.
With all this opportunity, why isn’t Texas seeing even more migration from the states that still suffer double-digit unemployment?
I had a recent conversation with an official of the Federal Reserve that shed some light on the problem. According to his analysis, we have all-time high unemployment levels nationally among recent college graduates, while simultaneously tracking a record number of help wanted ads. He has concluded that we are training a workforce that isn’t suited for the jobs being created.
Last year Texas universities bestowed just over 6,000 bachelor’s degrees in psychology. The statewide total number of want ads requiring a BA in Psychology during that year? Four. In the meantime, the average age of a Master plumber or electrician is now in the late 50’s, and is creeping up every year.
In an educational system that rates success by the percentage of students sent on to college, we have moved vocational education to community colleges to keep the statistics shiny. I don’t underestimate the educational requirements of a technical career, but no one really thinks that it requires 14 years of formal schooling to become a trade apprentice or a machine operator. Kids who need to support themselves are being graduated from high school qualified only to wait tables or punch a cash register, when many could be taught skills that would let them be self-supporting. (A current estimate is that about one-third of those under thirty are still living with their parents.)
Eventually some of those psychology majors will take jobs as apprentice electricians. The shame of it all is that they will have borrowed tens of thousands of dollars to pay for an education they won’t use, and the economy will continue to lose their productivity until they figure that out.
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John,
Interesting article, same sort of thing is happening in the UK. Check this book out as it sheds some light on the issue: The case for working with your hands by Mathew Crawford.
This has been happening in Australia for a while John. We have the whole new situation of rising unemployment combined with increasing skills shortages. The new catch cry is that we are ‘warehousing’ our youth in educational facilities that don’t produce workforce-ready employees. To make it worse, out minimum wages here are US $16.37 an hour. Plug that into the payroll of a USA small business and see what happens!!!
Unfortunately, businesses will have to look outside their country and possibly bring in entry level employees. As a small business, you have to find the way to get the work done and this can be accomplished with H-2B Visas, a Visa that was scarce in 2007 when the U.S. had a boom. Large companies have always relied on these Visas, now small businesses are also taking advantage of them. We hate to have to hire outside our country, but, when a business cant find the workers in the U.S., they have no choice.
The Colleges and Universities have an extreme disconnect with the business world. We are looking for programmers and the schools are investing 4 years in these students and they still don’t have the skills. It still takes us 6-12 months of training before they are ready to work on their own. I could probably take an average Joe with no experience and invest a little over 12 months and be in the same position. It is a shame.
You can add this one to your anecdotes, we have been trying to get “decent” workers to offset H2B visa workers. We scaled down to decent as we love to have experienced workers, due to the lack of applicants able to pass a drug screening test or background test. Of all efforts of posting available positions in the “decent” category, we were able to interview 10, hire 6, of which 3 showed for first day of work.
For those of us with children in college, this is a fairly depressing realization. I am not surprised by it. I think that the writing is on the wall. Even Harvard is now offering deals to incoming students because it is getting harder and harder to determine if the price of higher education is really going to pay off in the end. For now, I am hopeful that engineering majors will remain in high demand… somewhere beyond MacDonalds.
Lastly, I read John Dini’s recent post about the challenges SMBs in Texas are having filling jobs in areas like construction and manufacturing. His assumption is it’s because there are too many people with degrees in Psychology and an insufficient number of technically trained people to fill these positions. No where in his, or your, posts do you consider what all emerging middle class societies experience- young people don’t want to perform menial jobs. Our youth are growing up with technologies and conveniences our parents thought was the stuff of science fiction.
I have to contest your response John, unless you replace “menial” with “manual.” I agree that younger folks have little attraction to working in noisy, dirty, hot or cold environments, but I wouldn’t characterize a master electrician’s, plumber’s or machinist’s six-figure income as menial.