Rising unemployment—it can happen in the blink of an eye.
Just over a year ago, Utah was boasting an unemployment rate of 3.5 percent, well below the national average of 6.1 percent during that time. And, even with a climb of 0.7 points from the previous year, the state’s unemployment growth rate was half the national average.
But then the consequences of the Wall Street financial debacle began to hit home, and in a New York minute, literally, the Beehive State also found itself heading for what could be its highest unemployment rate since the post dot-com collapse of 2003.
Amid all the doom and gloom is the reality: Utah’s pool of unemployed is deepening. And, many of those unemployed workers are highly-skilled and multi-talented workers, spanning blue collar and white collar job titles. Though this talent pool would normally be a huge attraction to the state’s employers, many companies simply don’t have the jobs to fill.
“Two or three years ago, companies would have given anything to have some of the options they have today for employees,” says Mark Knold, chief economist for Utah’s Department of Workforce Services (DWS). “Whenever the labor pool begins to broaden, the better the talent is for employers at their doors.”
As 2008 drew to a close, Knold says employers were still trying to figure out the best way to handle the effects of a sagging economy.
“We were overwhelmed [at DWS] with calls from businesses seeking advice on what they should do,” he says. “They were faced with either laying off employees or cutting hours, or perhaps both. For many, they’d never had to face making a decision like that before, much less two decisions.”
What they weren’t calling about in most cases was hiring new people.
“If you look at the past three years and keep things in perspective, we’ve undoubtedly had a significant increase in the supply of seasoned employees,” says Dr. Kelly Matthews, executive vice president and economist at Wells Fargo. “The question is if there are enough companies in the current economic environment that have any capacity to increase their labor costs. In the past, employers were able to take advantage of having those experienced employees available, but not currently.”
A Big Hit
No where is that more true than in the construction industry, which took the biggest hit over the 12-month period of November 2007 to November 2008 [the last period reported], losing nearly 16,000 jobs. In construction alone, there was a 15.3 percent negative change in the number of jobs from the same periods of 2007 and 2008. Most of those losses were in residential construction, a fact that led to the December closure of cabinet maker Kraft Maid in West Jordan after just two years of operation. Today, Utah’s unemployment rate is 4.6 percent.
“Blue collar workers always take a beating in an economic downturn,” Knold says, adding that the worst is likely yet to come on the state employment front. Over the next 12 to 18 months, Knold expects Utah’s unemployment rate to approach 6 percent, just a fraction under the 6.1 percent of 2003.
Both Knold and Matthews say that a downturn could bleed over into the service sector as well this year. Even with budget cuts of some governmental programs, other industries will be affected due to the effects of the economic downturn.
“In our offices at Workforce Services, we’re dealing with more people filing claims and looking for employment,” Knold says. “So we need to add staff.”
Knold adds that the three safest sectors are health care, education and government, despite budget cuts in all sectors.
Matthews differs a little in his opinion, saying that the health care sector has been affected negatively because elective procedures are down sharply. “There is still high demand for preventative procedures and treatments, but people are putting off procedures that they can delay because of the economy,” he says. “That in turn affects the health care sector overall.”
In the past, the number of registered nurses in the country has been traditionally lower than the demand for them and hospitals and medical centers have aggressively recruited RNs, at least until recently. Even that has now changed, Matthews says.
“Everybody’s tightening their belts,” says Alan Rindlisbacher, director of corporate marketing for Sandy-based Layton Construction, one of the top-rated and busiest construction companies in the west. “As an organization, we’re doing very well and surviving the economic storm. But the challenge we do face, even though we have the staff and resources we need today, is that we aren’t growing as quickly as we have in the past. No one is, really.”
He says many businesses are settling in now with the workforce they have, and not hiring. “We get a number of calls, primarily from residential builders who’ve been laid off or had projects completed, that would like to transition over to the commercial side, and there are some great candidates out there, but just not enough work.”
Three years ago, his company was on the opposite end of that spectrum.
“Everyone was busy and we were concerned that we couldn’t find enough good people to do all of the work we had,” he says. “But that was then, and this is now. Somewhere there has to be some sort of period of equilibrium.”
That period appears to be here. Almost every facet of non-farm employment has seen a downturn in the past 12 months in Utah.
So are there still opportunities out there for experienced, educated workers looking to hook on with a solid company?
Matthews sees reason to be optimistic, at least in the relatively near future. He calls the federal government’s decision in December to virtually lower interest rates to near zero “a huge plus.” That, along with President Obama’s economic stimulus package, could lead to changes in the job market later this year.
Just before Christmas, Utah Gov. Jon Huntsman Jr. sent Obama a list of potential infrastructure jobs in the state that could create as many as 124,000 jobs, starting as early as mid-year. Among those were potential road, rail, water, energy and building projects totaling $14.4 billion. While Utah is unlikely to get everything it asked for, any of those projects would create a need for more skilled employees.
“It’s hard to know who might be facing increased demand for workers in the future,” Matthews says. “For an employer who has applicants knocking at their door, there’s always the task of finding that delicate balance between resumes and expenses.”
One online recruiter who specializes with technology positions says he has seen the frustration with his clients as well.
“They have advanced degrees, many have a lot of years of experience in their areas of expertise, and yet they send letters and emails and lists of references and don’t get a sniff,” he says. “They feel like maybe they’re doing something wrong, and it doesn’t make them feel any better when we tell them it’s just the nature of the economy. Often, they don’t even receive ding letters—just nothing.”
“We’ve been stuck in this mess for over a year, but that’s a far cry from what Japan went through when its economy collapsed a few years ago,” Matthews says. “It took more than a decade for the Japanese to really right their economy. As bad as the federal bailouts and fears of bankruptcies were last fall, if we had done nothing, the result would have been much worse. We’ve backed away from the edge, and I don’t see a collapse.”
He feels the United States can start to pull out of the quagmire by the third quarter. In the meantime, he sees some who are unemployed as changing directions, perhaps taking one or two classes to fill the niche in their resumes while working at jobs outside their areas of expertise to make ends meet. And those who’ve been fiscally conservative in their personal lives and are surviving the economic downturn will also become more appealing to employers once they start to hire again.
“Employers look at all aspects of a potential employee’s personal management skills,” he says.
The high tech recruiter agrees. His clients are not only taking classes to embellish their education and perhaps make themselves more attractive to potential employers—they are in some cases reinventing themselves.
“It’s more than just a change of course, it’s a quantum leap in a totally new direction for some of them,” he says. “I’ve had a few admit that when they lost their jobs, they stepped back, took a look at what they’d been doing for years and decided it was the logical time to shift gears. I doubt unemployment could ever be considered a blessing, but for a few of them, it was a wake up call.”
Knold says that much like the recession itself, which deepened and worsened over time, “it will take awhile to reverse [the unemployment] trend. When the economy rights itself, it doesn’t translate into a wealth of jobs immediately. But I believe there will come a time when we more or less bottom out. That’s when things start heading in the right direction.”
In the meantime, many people from Utah’s workforce, which has been considered one of the best educated in the nation and praised for its work ethic, wait, hopeful that employers will soon be in position to benefit from the opportunity that a large labor pool can provide them.