What you can do about labor shortages, part 1

LIKE A NEVER-ENDING doomsday story, the pending labor shortage is theoretically lurking just on the other side of the horizon, waiting to attack and cripple our industry as we know it today. It seems that everyone is aware of it. Some tend to ignore it, hoping it will go away by itself like a bad dream. Some are living the nightmare right now in their small corners of the world. Some are taking a

LIKE A NEVER-ENDING doomsday story, the pending labor shortage is theoretically lurking just on the other side of the horizon, waiting to attack and cripple our industry as we know it today. It seems that everyone is aware of it.

Some tend to ignore it, hoping it will go away by itself like a bad dream. Some are living the nightmare right now in their small corners of the world. Some are taking a proactive stance and attempting to stem the outward flow of labor by changing their hiring practices from what they have typically done over the years. One thing is for certain — no one is denying that what is inevitable won't happen. It's not a matter of if, but a matter of when.

Over the course of the next few months, we'll attempt to help you plan for this pending shortage and, I hope, help you keep your boat afloat during rough times ahead.

How bad is this shortage going to be? According to the Bureau of Labor Statistics, there will be a shortfall of 10 million workers in the skilled labor sectors in the next six years. This is primarily due to more workers leaving the sector to retire. The stock of available bodies to replace them is waning because many young people are trying to ride the coattails of the dot-com programs, working more with their brains (smarter) and less with their hands (harder).

Between the years 2000 and 2010, the number of Americans between the ages of 55 and 64 will jump 47.2%, while those aged 25 to 34 will increase only 2.8%. The number of workers aged 35 to 45 will actually drop 13.7%. The 47.2% are baby boomers, migrating toward retirement. The boomers represent the largest single generation in American history. Their numbers are estimated at 76 million people.

The shrinking numbers of workers between 35 and 45 indicate the severity of the shortage of "prime" replacement personnel. There simply isn't a large pool of labor from which we can draw upon coming up through the ranks. Not here in the United States in any case.

None of the above numbers takes into consideration the growth of the industrial sector as a whole. This is just assuming that we plod along at our current pace, attempting to replace retiring workers. Throw in even single-digit growth factors, opening up new jobs, and the severity hits home. Competition for skilled labor has yet to become heated.

As recently as last year, I had the opportunity to employ a couple of high school-aged men during their summer vacations. I coached them in plying their skills on my jobs. They both liked the work that they were doing. I asked them if they would consider the possibility of going to work for me full time once they had graduated from high school.

They asked me what the starting pay for a person of their skill would be. I explained our company's pay policy, and told them that they both had a ground-floor opportunity with no limit on how fast they could go from apprentice tube setters to lead technicians. I explained that it would depend upon their applying themselves, and if properly applied, they could be making upwards of $30 per hour in less than five years.

That's when they explained to me that they had already made plans. One of them was planning to attend a local automotive school. He was guaranteed job placement at the end if his education. His education took less than a year, and he started out making as much as I pay my lead installers. That places a lot of pressure on us as an industry to try to entice talent.

His friend entered a two-year community college and plans on getting a job as a CAD draftsman at the end, again, making nearly as much to start as I pay my lead technicians. We're experiencing stiff competition from other industries requiring skilled labor in a limited labor pool. The bottom line to all this is that we must understand that we, as consumers, are the ones who have to pay for these highly paid technicians. Their cost is passed through to the consumer in the form of higher maintenance costs.

It is apparent that if our industry is to entertain the possibility of enticing and keeping prime talent, we're going to have to raise the stakes, the stakes being the amount of money we're willing to pay to our personnel. We will need to raise our rates in order to satisfy this need. Get ready to raise your rates or else find yourself unable to attract and keep good help.

Tune in next month as we continue to look at this issue that will certainly affect us all. Until then, Happy Hydronicing and Happy New Year.

Mark Eatherton is a Denver-based hydronics contractor. He can be reached via e-mail at [email protected] or by phone at 303/778-7772.

TAGS: Hydronics