A Shortage of Qualified Applicants?

A recent post on the New York Times Economix blog reports that the latest Small Business Optimism Index data for December showed that businesses feel about as negative as they did during the recession. The data also showed that hiring plans weakened.

The report featured one bright spot: the share of businesses who found few or no qualified applicants for open positions fell for the third month in a row. In December, about 3 in 10 firms said they had trouble finding qualified workers, down from about 4 in 10 in September.

The New York Times notes that, while lower, the number of employers unable to find qualified workers remained bafflingly high, given that more than 12 million workers were unemployed during the month. That translated to about three unemployed persons per job opening, and some employed workers also undoubtedly applied for jobs as well.

The share of small businesses who were unable to find the talent they wanted generally rose from December 2009 until September 2012, when it reached its highest point since the recession began five years earlier. The New York Times noted that when employers have trouble finding qualified workers, they'd expect wages to rise in an effort to attract the few qualified workers who are out there. 

But that’s not what the data show.  Private-sector average hourly earnings fell over the period that businesses reported increased trouble finding qualified workers (December 2009 to September 2012). There could be many reasons behind this. Perhaps businesses had trouble finding qualified workers because they’re either unwilling or unable to pay new hires enough money. The Times also offered up the alternative explanation that relatively few new workers are joining the pool of unemployed — layoffs are near record lows — so employers could have already considered and rejected all the existing applicants for their latest job openings.


The Oregon Employment Department also explored this topic in a previous post. Manufacturers in particular seem to be struggling to find workers. After cutting millions of jobs nationwide during the recession, some manufacturers who are hiring again report difficulty finding enough workers, especially those with specialized skills. Nationally, the number of hires in manufacturing was running at about the same level as openings in 2011, suggesting a relative shortage of manufacturing workers.

Employers with difficulty finding qualified workers can take steps to attract more skilled applicants. Suggestions offered by Dr. Peter Cappelli of Wharton's Center for Human Resources and others include: increase recruiting intensity; expand employee training; increase wages and benefits; and partner with education providers. More information about Oregon businesses' struggle to find skilled workers is available in the Employment Department's full article, from the August edition of Oregon Labor Trends.