By Nell Henderson Washington Post Staff Writer Wednesday, August 25, 2004; Page E01
David L. Hurley is eager to hire new workers at his Florida surveying company and isn't asking for much: Only a dozen or so people with enough basic math to learn the software he uses to make blueprints, and enough basic sense to show up on time.
But after weeks of want ads and recruiting, he has drawn a conclusion: The workers aren't out there. While there are plenty of people who "can fog a mirror" and might be able to do grunt work on a survey crew for $8.50 an hour, Hurley said the economy has run short of people with the types of basic skills he could mold into a $20-per-hour survey crew chief.
"I would add 15 people tomorrow if I could find them," said Hurley, president of Landmark Engineering & Surveying Corp. of Tampa. "We need people with some knowledge of trigonometry and geometry. It's really just arithmetic. We're turning down work because we don't have the people."
To explain why wage and job growth has remained weak during a nearly three-year period of economic expansion, economists point to a complicated set of dynamics.
Developing countries like India have become increasingly competitive in global markets, offering well-trained workers at comparatively cut-rate prices. American workers have become steadily more productive -- a two-edged sword that makes each employee more valuable but which has largely boosted company profits instead of wages and hiring. The decline of organized labor and the stagnation of the federal minimum wage have helped suppress what workers are paid, say analysts like Harry Holzer, a Georgetown University professor and former chief Labor Department economist during the Clinton administration.
But an important and potentially worrisome piece of the puzzle can be seen through the experience of employers like Hurley, who contend that low-cost labor in India, China and elsewhere is far from the only thing inhibiting job growth in the United States.
Whether it is in expanding areas like health care or in the beleaguered manufacturing sector, employers say that once they are ready to add to their payrolls, it is often so difficult to find capable workers that positions are left unfilled. Those who have the required skills typically already have jobs, said representatives in a number of industries, while those who are available often aren't qualified. Trade groups and business owners say employers are begging for engineers, machinists, information technology workers, radiology technicians, nurses, health care finance administrators, and even, in an age of computer diagnostics, auto mechanics.
Faced with the task of hiring a specialty aluminum welder in Michigan, where troubles in the auto industry have left thousands of blue-collar factory employees out of work, Diane Dearing came up empty.
"It's hard to find skilled people," said Dearing, president of Display Structures Inc., of Troy, Mich., which makes metal parts for trade-show displays.
Economists and sociologists have long recognized the dual nature of the American economy -- an $11 trillion behemoth that leads the world in technology, research and innovation, yet with a population that lags nearly a dozen other developed countries in basic literacy and science. American adults rank 12th in literacy among those of 20 high-income, industrialized countries, according to a 2002 study by the private Educational Testing Service; American 12th-graders ranked below the average of their international counterparts in math and science, according to the 1999 Third International Math and Science Study, a project of the Lynch School of Education at Boston College.
That may not have mattered for much of the last century. As the economy's growth engine shifted from agriculture to heavy industry to electronics, workers with a high school diploma could still reasonably hope for a long-tenured, relatively well-paying job on the local assembly line, performing largely repetitive tasks on equipment that changed little over the years.
For most of the post-World War II period, moreover, the inflation-adjusted wages of highly educated workers rose at about the average pace for all workers, while wages also rose for the less educated.
But about two decades ago, many workers started falling behind. As wages for the more highly educated workers took off at an above-average rate, wages for low-skilled workers stagnated, according to Federal Reserve Chairman Alan Greenspan, who has noted with concern in frequent public statements the widening difference in earning power between higher- and lesser-skilled employees.
Those with a college degree now make about 74 percent more than those who have only a high school education, a figure that has nearly doubled since 1979, Labor Department figures show. The unemployment rate for those who hold at least a bachelor's degree is 2.7 percent, compared with 8.3 percent for those without a high school diploma.
Increasingly, employers say, a college degree has become a proxy for a host of basic qualities -- good communication skills, analytic ability and the capacity to keep learning on the job -- that are critical in the modern workplace.
"High school grads are not ready for prime time in modern manufacturing," said Ron Bullock, chairman and chief executive of Bison Gear & Engineering Corp., of St. Charles, Ill., which makes motorized gears for restaurant rotisseries, kidney dialysis equipment and other machines. He said about one in seven of his employees has some kind of engineering degree.
The company is "looking for people who can be group leaders," show up for work reliably and exercise initiative, Bullock said. "We don't get what we need from the public schools."
Modern auto manufacturing involves computer systems and global satellite positioning equipment. Automatic flush toilets in public restrooms require maintenance of electronic systems. Janitors have traded in their mops and buckets for more complicated machines and need basic math to dilute industrial chemicals properly.
"The basic skills have changed. . . . It's not just about brawn in manufacturing anymore. It's brains," said Phyllis Eisen, vice president of the Manufacturing Institute, the educational and research arm of the National Association of Manufacturers, whose members are grappling with the skills shortage. "The pressure of the global economy has made it impossible to have ordinary workers anymore. Businesses can't afford it. They can't afford the defects, the waste of time. . . . You've got to have a different kind of worker."
As it becomes harder to find the right workers here, entrepreneurs like Hurley say they begin looking for options, whether it's outsourcing work to another country or navigating the immigration bureaucracy to hire a foreign employee. The other alternative -- bidding up the price of labor to attract qualified applicants -- often isn't realistic, many business owners say, because it would make them uncompetitive.
But sometimes that is the only choice. In the health care industry, labor shortages have become acute as baby boomers age, life expectancy increases and Americans expect to be cared for with ever more sophisticated drugs and equipment.
Statewide, California projects a need for 10,000 new registered nurses every year for the next 10 years. But the state's educational institutions are producing only about 5,000 a year, a figure unlikely to grow in an era of budget deficits and cuts to the college and university system.
To stay competitive, San Jose Medical Center in California pays starting salaries of $70,000 a year and signing bonuses of up to $7,500 for nurses right out of school, said assistant administrator Leslie Kelsay. The hospital also has trouble hiring the technicians who do lab work and run X-ray and ultrasound machines.
Health care-related jobs account for more than half of the 30 occupations forecast to grow the fastest nationally in the next 10 years, according to the Labor Department.
President Bush, citing the need to train Americans "to fill the jobs of the 21st century," has proposed reorganizing federal worker retraining programs to help community colleges prepare workers for jobs in industries with identified labor shortages.
Job-training advocates welcome Bush's support after years of proposed federal cuts. But they complain that his initiative would reduce other training programs. In addition, they note that the focus also needs to be on education: Better-educated workers, research has found, are easier to retrain if they become unemployed.
The alternative, said Eisen of the manufacturing association, is for the economy to drift even further toward "a dual economy, an economy of haves and have-nots determined in terms of skills."