SLC Economic Development Workforce Development Manager Jake Maxwell offers this latest blog on how promoting growth, diversity, and your employee’s strengths will minimize workforce turnover. As always, we’d love to hear your feedback.

Something interesting is happening with low unemployment, which is keeping businesses on their feet and trying to make themselves more valuable and attractive to job seekers. They are now hiring folks who, 5 years ago, would not have been considered to have the “skills” necessary to do the job. They are also investing more in training. In turn, when employers invest more in training, this tends to promote retention and reduce turnover. But as economists try to explain unemployment numbers, we often fall into a “skills gap” explanation when this may not actually be true.

In a great article in Forbes by Angela Hanks, she explains many of the attribution problems with how we rationalize the labor situation by blaming it on a “skills gap”, without looking at more ugly truths such as “sluggish wage growth, weak demand, persistent labor market discrimination, workplace fissuring, declining unionization and training investments, broken criminal justice and immigration systems, and runaway corporate power”. Regardless of where your opinions may lie, much of this I am seeing to ring true as I continue to develop data-driven approaches to helping businesses access more of the workforce.

In another great article in the New York Times by Matthew Desmond, a renowned Sociologist who wrote the best selling book “Evicted, Poverty and Profit in an American City”, he reminds us of the “productivity-pay gap”, which highlights that “since 1973, American productivity has increased by 77% , while hourly wage has only increased by 12%. If the Federal minimum wage tracked productivity, it would be more than $20 an hour, not today’s poverty wage of $7.25”.

Both writers in both articles highlight a couple of real truths; Middle to low skills workers are not making enough to live on, and there are fewer incentives to do the less preferred or dangerous jobs with no investment if it does not even help them keep themselves or their families safe.

Locally, if you look at Fair Market Rent (FMR) in Salt Lake County, a 2-bedroom in 2019 costs $1075 per month. Good luck finding a 2 bedroom at that price, especially if you have any credit or criminal background issues. To “afford” this rent at 30% of income, enabling some savings for the future, etc, a person would need to make about $18.50 per hour.

I am always asked how to get more people to come to work for our businesses.  I think the best answer to the question is to ask if one can live off the wage, if employees are seen as a whole person with strengths, and if the employer invests in those strengths. While the competition remains fierce, those who see the greatest success are trying to move away from having “dead-end jobs” and are trying to invest in folks and move them through the ranks. Even if the tables turn in favor of the businesses (from a labor standpoint) and another recession supplies more applicants than they can handle, an enduring adjustment in these human capital investments that promote growth, diversity, and focus on strengths will no doubt see reductions in turnover and training waste, more word of mouth referrals, and a culture that can sustain the kind of productivity needed to make a business more profitable.

To access the referenced articles:

https://www.forbes.com/sites/angelahanks/2018/06/26/the-skills-gap-myth-does-not-explain-whats-happening-to-work/amp/

https://www.nytimes.com/2018/09/11/magazine/americans-jobs-poverty-homeless.html