A Work Force in Transition
Some of it is cyclical, experts say, and some of it is structural. But the numbers suggest Kansas City's labor force is quite different today than it was just five years ago.
by Dennis Boone
When Scott Anglemyer does the math on work-force trends, something’s not adding up.
As executive director of the Workforce Partnership on the Kansas side of the metropolitan area, he deals with work-force dynamics every day. And recent developments make him wonder not whether the work force is undergoing a major realignment, but how profound the change might be.
“When I hear about structural unemployment or changes in employment patterns, I think a growing mismatch is between available work force and the available jobs,” Anglemyer said. “In fact, one of the things I’m seeing, borne out by statistics, is that ordinarily, job vacancies and the unemployment rate are inversely related; as one goes up, the other goes down.”
But since the dawn of the 2007-09 recession, he said, the rate of increase in unemployment has been much more significant than the rate of decline in job vacancies. “We’re starting to see vacancies rise at a faster rate than the unemployment decline,” he said. “For whatever reason, the skills of the available work force aren’t matching the jobs that are being created.”
Some have argued that the disconnect could be remedied by employers offering better wages, to draw more qualified applicants back into the labor pool. The obvious problem with such simplistic views, work-force specialists counter, is that money alone can’t plug a highly skilled carpenter into a job in medical records technology, no matter what salary is offered. There’s a training disconnect out there.
That disconnect plays into changes that are reshaping the regional work force in Kansas City, experts in the field say. The question becomes: Are those changes temporary, or do they suggest long-term structural change in the employment economy here?
Inside the Numbers
Any discussion about bridging the skills gap starts with an understanding of how the make-up of the labor force has changed over the past five years. The federal Bureau of Labor Statistics breaks employment down into 10 broad categories to assess various elements of the work force, and, like most of the nation, the Kansas City region has seen declines in employment in a majority of those sectors. Six of the 10, in fact, show fewer workers today than was the case in 2007.
Where Kansas City differs from much of the rest of Kansas, Missouri and the nation overall lies in chiefly in two sectors: information services and construction. Look no further than the largest corporate presences in each of those sectors to see what has happened in regional employment.
At the start of 2007, Sprint Corp. had 12,340 employees at its campus in Overland Park, and was considered the biggest employer in the region. Overall employment at retail giants like Wal-Mart may have aggregated to higher levels, but there’s no doubting the regional impact that Sprint had as a single-site employer. Today, fewer than 7,000 work for the company on that sprawling campus, much of which is now being rented out as office space to other Johnson County companies.
J.E. Dunn Construction Company, as well, was a sector-leader in employment in 2007, when it carried 1,650 people on the local payroll. With the construction sector hammered by the most pronounced downturn in generations, that figure has fallen to less than 1,100—a decrease of more than one-third, in line with what many other construction companies in the greater Kansas City area and around the nation have experienced.
Among the 10 BLS employment classes, Sprint’s category of Information Services and J.E. Dunn’s place, Construction, are the only two in the region to experience double-digit employment declines since 2007, according to the labor department officials. On the Kansas side alone, information services, skewed by Sprint’s enormous presence, showed a decline of 31.4 percent, while construction was down 29.4 percent.
Financial Services, Leisure and Hospitality, Manufacturing, and Trade-Transportation-Utilities all posted single-digit declines of less than 7.5 percent, figures more in line with a cyclical change than structural one.
On the flip side, three of those BLS categories showed increases during that same period, led by a single, though broad, sector—Education and Health Services, up 20.4 percent. The only others showing increases were Other Services, up 5.7 percent, and Government, up 5.6 percent. One sector, Professional Services, showed zero change.
A Search for Meaning
Jeff Pinkerton, a senior researcher for the Mid-America Regional Council, says that despite the similar rates of decline seen in the Information Services and Construction supersectors, there remain significant differences between them for the regional employment outlook.
“There is a structural change that has been going on for the last decade, before the recession began, in information, particularly in telecommunications nationally, and with Sprint here, that impacts us a little more,” Pinkerton said. “I’m not surprised by that change that we’re seeing, which is still going on.”
There is more hope, he suggesed, with prospects for the construction sector.
“Obviously, that’s a big one,” he said, “but I believe that’s more a temporary phenomenon, given the housing market decline. Most recently, year over year, we’re really down in construction, whereas the rest of the nation is starting to trend up.”
That may be a statistical anomaly, though, because the Kansas City region had multiple nine-figure projects already in the works before the recession started, and they kept thousands employed through the national downturn. From LiveStrong Sporting Park in Kansas City, Kan., to the Kauffman Center for the Performing Arts, workers were on site right up through last summer.
Even if the change here is just a prolonged down stroke on the traditional business cycle, rather than a long-term realignment, those involved in construction say that the work force is nonetheless changing in ways that could be painfully apparent when recovery arrives. Older workers unable to ride out the cycle have opted instead to retire early, figuring that even a reduction in benefits beats longs stretches of unemployment with no assurance of being called back to work.
But Dan Euston, president of J.E. Dunn Construction Midwest, is keeping a wary watch on the opposite end of the labor force. “I’m sure there’s a lot of instances where the older guys went ahead and took retirement, but the bigger concern to me is how the construction industry attracts younger people to get into the trades,” he said.
“After three years of downturn in the economy, have we turned that younger group away and are they losing interest?” He answered his own question by saying, “I hope not; we’re doing a lot of educational things with younger workers, starting with high school levels, trying to introduce them to construction to gain interest for them in the industry.”
Longer term, though, he says technological and operational changes will allow the sector to rebound, even with a smaller work force.
“The industry is really changing how they do business,” he said. “We’re looking at labor-saving techniques, and a lot of that has to do with taking advantage of the work force not being as strong or abundant as it was in the past. We have to build smarter, with prefabrication and Building Information Management, to do more construction off-site and bring it to the job sites. Right now, we haven’t seen the shortage of labor because everything’s so far down.”
Searching for positives, Pinkerton noted that manufacturing activity, tho-ugh down for the five-year period, had risen recently.
“We’ve done a really good job holding onto manufacturing jobs we’ve had,” Pinkerton said, “but in the last couple of years, manufacturing has grown over 4 percent in Kansas City,” roughly twice the rate of growth nationwide.
“We have two very strong automobile plants that General Motors and Ford are committing to, expanding employment there,” he said. “The work ethic, the manufacturing ethic, is still very strong.”
Solving the Riddle
After roughly five years of stagnation, Anglemyer says there is good evidence that job growth is starting to return to levels that could produce a sustained economic recovery. “But job growth is not the same as employment growth, and a lot of those jobs don’t seem to be getting filled,” he said.
That is the dichotomy confronting employers, work-force professionals, educators and others in the region: Statistics that say more and more jobs are going unfilled, while at same time, significant numbers of people are still unable to find the job they need, Anglemyer said.
“In some sense, it’s across the board,” he said. “It varies from industry to industry, but I do think we’re seeing that in most industries. Manufacturing is a good example; employment has been relatively strong nationally and in the region, but we have manufacturers all the time tell us they have very specific needs they can’t fill. It’s a combination of technical skills and work habits, the soft skills.”
In general, he said, industries that demand higher levels of education are more likely to experience that mismatch. “Increasing numbers of engineering jobs
are going unfilled for longer periods of time,” he said, a concern for an engineering-heavy economy like Kansas City’s.
“And I think you’re going to start seeing that in information technology, but IT doesn’t fit well into those 10 BLS categories,” he said. “Any one of those 10 has a significant IT role.”