The economist J.R. McCulloch once quipped that to pass for an economist, a parrot need only learn the phrase: “supply and demand, supply and demand.” In many cases, explaining trends in the economy often comes down to understanding supply and demand.
To this point, consider a recent blog post by Priya Abraham of the Commonwealth Foundation that tells a story about a Bucks County manufacturer named William Marsh, owner of American Bar Products:
William Marsh would like to hire a couple of good workers for his steel bar manufacturing company in Warminster, Pa. But he has a problem: He can't find good workers to join his team of about 10 employees. The high school graduates who ought to qualify, he says, are "almost totally unable" to do the basic math and reading his business requires.
Mr. Marsh isn't just a voice crying in the wilderness: He is one of many manufacturers and business owners in Pennsylvania — and America — suffering from an under-performing educational system. Reporting on the shortage of skilled workers even for small businesses, The Wall Street Journal described one owner whose business installs security alarms and video surveillance. He began giving applicants with no skills a basic alarm manual, and asked them to return when they could operate his alarm panel. None came back.
Make no mistake: greater math literacy should be a high priority for job applicants and the commonwealth. That’s why we think it will damage Pennsylvania’s future competitiveness that school districts across the commonwealth laid off tens of thousands of teachers in 2011 to cope with deep state cuts to education (Bucks County shed 574 education jobs in 2011).
Still, I was struck by Abraham’s attempt to convert this Bucks County example into a story about skill shortages, especially after closely examining manufacturing employment trends in the commonwealth for The State of Working Pennsylvania 2012 report.
Pennsylvania lost 94,528 manufacturing jobs during the recession (December 2007 to December 2009) and regained only 4,527 of those jobs during the first two years of recovery (December 2009 to December 2011). The commonwealth also had a 9.2% unemployment rate among high school graduates in 2011. It seems surprising that a manufacturer can’t find workers to fill entry-level jobs when there are so many laid-off workers with manufacturing experience, as well as many other unemployed workers with a high-school diploma, the most common educational requirement at the entry level.
One possibility, of course, is that demand for manufacturing workers in Bucks County far outstrips that in the rest of the commonwealth. So let’s take a look.
During the recession, Bucks County shed just over 19,000 jobs, with one in five of those job losses — nearly 4,000 — in manufacturing. During the recovery, manufacturing has added back just under 900 jobs. Narrowing our focus to American Bar Products, which is probably in the “primary metal manufacturing” subcategory, we do see that this sector in Bucks has added back more jobs than it lost during the recession. But here again related sectors like fabricated metal product manufacturing remain well short of the pre-recession employment level. (See Table 1 below for more detail.)
Which brings me back to J.R. McCulloch’s joke about trained parrots. If there is no shortage of people willing and able to work in Bucks County — and in fact, the region has a lot of workers with recent manufacturing experience — then maybe American Bar Products needs to rethink its recruitment strategy. If the firm really can’t find workers with the skills it needs when the available data suggest they are widely available, it may be time to consider raising wages or improving working conditions in order to attract higher skilled workers.
To use a more familiar phrase, when it comes to manufacturing workers — as well as with goods, services, consultants or employees — you get what you pay for.