A Maddening Labor Mismatch

By George Russell.

In the huge Hanover Room of downtown Atlanta's Hyatt Regency Hotel late last week, the air was filled with hubbub--and a sense of desperation. A total of 31 public and private corporations had set up interviewing tables to try to fill some 2,000 white-collar jobs, ranging from electrical engineer to word processor to bank teller, in the city's central business district. Some of the vacancies had gone unfilled for six months or more.

In Boston, the Burger King fast-food chain, which employs 160,000 people nationwide, took the unusual step of advertising jobs on MTV, the cable rock-music channel, to attract young prospective workers into its management program. In the throes of a rapid expansion, Burger King felt a strong need to try new avenues that might help ease its worker shortage.

In Chicago, Andy Frain Services, a supplier of ushers and ticket takers for concert halls and sports arenas like Comiskey Park, is faced with new recruiting headaches. Says Operations Director James Wronski: "The bonus of * seeing a ball game or hearing a concert used to be enough to attract the workers we needed. We used to sign up half the kids we solicited for jobs. Now it's below 20%."

From shopping malls to corporate computer centers, from fast-food joints to high-tech industrial plants, a common plea is popping up all across the U.S.: HELP WANTED. APPLY WITHIN. Suddenly America is running up against serious labor shortages that are crimping many businesses and forcing corporate headhunters to work overtime. As a result, says Richard Kappus, an analyst at the New York State department of labor, companies are having to "do more, spend more and bend over backward to attract workers." The shortages are most severe in low-paying service jobs and in many positions that require technical skills. The maddening worker deficit has come about in part because of the low birthrate, or "baby bust," of the 1960s and early 1970s, which is causing fewer young Americans to enter the job market. That trend will continue over the next decade.

The labor shortages could worsen considerably this year as the U.S. economy starts to grow with renewed vigor. Government figures released last week showed that the gross national product expanded at a 3.2% annual rate in the first quarter of 1986, nearly five times as fast as in the last quarter of 1985. The sharp pickup in growth may prove to be quirky, but it got an additional boost late in the week when the Federal Reserve Board cut its discount rate, which is the interest charged on loans to member banks, from 7% to 6.5%, its lowest level in eight years.

But the economic statistics contain a striking anomaly. Even as business activity increases and worker shortages grow more troublesome, the number of Americans on the jobless rolls remains high by historical standards. The unemployment rate stands at 7.2%, which is less than the 9.7% registered in 1982 but still well above the 5.6% reached in 1979, near the peak of the last economic expansion.

For many worker-hungry employers, the jobless figures are a major mystery. "Who are these people who make up the unemployment statistics?" asks Thomas Anton, executive vice president of Troy, Mich.-based Kelly Services, the temporary office-help firm. "We're doing our best to find them because we can put them to work. Still, we don't get enough."

Part of the answer to Anton's complaint is that more than ever, the U.S. is suffering from a mismatch between the new jobs that are flooding the labor $ market and the people who are available to fill them. Many of those who are out of work are not in the right place with the right skills to take advantage of the increase in demand for workers.

One cause of the labor mismatch is a spiraling need for employees with new abilities, notably computer and word-processing skills. Kenneth Snyder, a vice president with the Louisville-based Humana hospital chain, faces a three-month delay in finding new computer programmers and systems analysts for the company, where the roster of such professionals has grown from fewer than 40 to about 150 over the past five years. Dewey Sadka, president of Temp Force, an Atlanta office-help firm, says that "word processing is a bottomless pit. I could place 100 people at IBM just like that as trainees."

In many areas the people who need jobs do not live where the openings are. Even as employers beg for workers in America's affluent suburbs, where the labor pool is shallow, unemployment rates among black youth in some inner cities run as high as 50%. Yet little or no mass transit is usually available to ferry the potential workers to the jobs.

Another fundamental force behind labor market mismatches is the shift in hiring demand from manufacturing to service industries. Of the 9.1 million U.S. jobs created in the past four years, 88% were in service categories such as clerical work, financial management and data processing. The Bureau of Labor Statistics projects that by 1995 service jobs in the U.S. will outnumber manufacturing positions by a ratio of 4.3 to 1 (the current ratio: 3.8 to 1). Many blue-collar workers and even some managers from the manufacturing sector appear to have difficulty in crossing over the line to fill new service jobs.

An even more profound cause of the labor drought arises from demographics (see chart). The baby bust shrinkage of the labor force is most marked among Americans 16 to 24 years old, many of whom are now entering the labor market for the first time. The Bureau of Labor Statistics projects that from 1984 to 1990, the number of workers in the 16-to-24 age bracket will decrease by 2.7 million, to 21.3 million; from 1990 to 1995, that group is expected to drop by an additional 1.1 million. Right now the thinning of the ranks of those workers is having its worst effect on low-wage, low-skill service industries, including fast-food and department-store sales. But eventually the impact of the labor shortfall is bound to spread. Warns Walter Cadette, a vice ! president and economist at Morgan Guaranty Trust: "McDonald's and Burger King's shortages today will be General Motors' and IBM's shortages tomorrow."

The dearth of many kinds of workers is putting upward pressure on salaries and making the $3.35-an-hour minimum wage all but obsolete in some areas. Says an Atlanta business development official: "I know places that pay bus boys $8 an hour." Computer programmers who earned about $20,000 a year in 1980 now demand--and get--up to $38,000 annually in some cities, along with 12% to 15% annual raises. For low-level secretarial and data-processing jobs in the suburbs, wages can be 25% higher than elsewhere.

Unable to attract the youthful or specialized workers that they want, some employers are turning to senior citizens or the handicapped, among others. In Atlanta, one burger shop boasts an 80-year-old kitchen worker, while at a school for the deaf an information session on the jobs that deaf workers can effectively perform drew representatives from 20 local companies. Some firms are looking overseas for aid. Last October Grumman, the Long Island, N.Y., aerospace company, hired 28 engineers from Britain for six months to help design U.S. military aircraft. Says Miriam Reid, a Grumman spokeswoman: "We did it as a last resort. There's always been a shortage of engineers, but it is becoming more acute."

Some employers are resorting to giveaways or other inducements to attract new workers. Like a pro baseball club, the Ann & Hope department store in Watertown, Mass., offers signing bonuses--as much as $300--to new employees. Veteran staffers who find new prospects for the payroll can also win up to $100. In Missouri's affluent St. Louis County, McDonald's recently offered free movie tickets to passersby in order to fill a hall with youngsters for a hiring spiel. In Dublin, Ohio, Denny Lynch, a vice president of Wendys International, says that the burger chain is looking into scholarships as a lure to start young people on an up-from-the-bottom career with the company.

Virtually all experts agree that more must be done to train and retrain potential employees. Many companies are instituting expensive in-house education programs to fill their more sophisticated openings. But some manpower specialists see a strong need to reinstate federal job-training funds that have been slashed by 58% during the Reagan Administration's tenure, to $3.3 billion annually. In some congressional circles there is tentative discussion about raising additional revenues to pay for the retraining of workers dislocated by foreign imports. But legislative action is not expected anytime soon.

Still other labor experts point to the doleful performance of the U.S. public education system as an area that badly needs shoring up. Says one job- placement executive in Atlanta: "There is a major gap between the business community and the schools. They need to produce a student who can get a first job." Money for improving education, however, is in short supply. As frustrations mount, the striking fact is that jobs in the U.S. are literally going to waste.

CHART: TEXT NOT AVAILABLE.

With reporting by Lee Griggs/Chicago and Frank S. Washington/Atlanta, with other bureaus