The economy in America is going through some pretty significant changes, that much we know. Technology, globalization and many other factors are affecting what type of and how many jobs are available. But today, there’s not enough skilled workers to fill many positions.
So why are rates increasing? And what should HR managers know to take advantage of this kind of employment environment?
Supply and demand
Technology has revolutionized the way we live and has created a new sector of jobs which requires much different skill sets than five or ten years ago. But the numbers are showing that Americans aren’t updating their skills enough to fill all the open positions. That’s why the increasing rate of open jobs is mostly a function of simple supply and demand. Employers need highly skilled and tech-savvy workers, and there’s not enough of them to go around. In fact, America has more open jobs at any time since the year 2000, so the fact that they’re not being filled points to a simple lack of supply.
The “Middle-Skill” job gap
While many of the jobs going unfilled right now require high levels of education, there’s still a “middle-skill” gap that is driving up rates in the job market. Middle skills are typically jobs that require more experience than a high school diploma, but less than a four-year college degree. Welders and production supervisors are two great examples of middle-skill jobs in demand. The fact is, there are fewer people than ever who are available for middle-skill employment. More people are choosing to finish their college degree with hopes of better prospects, leaving fewer middle-skilled workers and driving up compensation for these jobs as employers compete for scarce talent.
What does it all mean?
Depending on the skillsets you’re looking for, these increasing rates could mean higher acquisition costs per employee. Job seekers with in-demand skills can afford to be picky. Especially those with middle or in-demand high-tech skills, they’re able to negotiate even better compensation packages. And that’s not just concerning dollar figures. Companies are also increasing the value of benefits packages and perks they provide. They might even offer paid relocation to an area with a shorter commute time, for example. Companies are more flexible than ever to attract talent, even “making things up as they go” regarding compensation. The bottom line is that for HR departments, it’s taking longer and longer to fill the positions they need. Some positions may even remain unfilled over a more extended period.
Not everything about the economy needs to be doom and gloom. In fact, it’s an excellent time for companies that are leveraging technology to grow in innovative ways. The flip side for human resources departments is that many jobs in the new economy require skills that are hard to find. Until this skills gap closes, recruiters and managers need to realize that competition for the perfect candidate will be fierce.