The U.S. skilled labor crisis is a vexing issue. Employers struggle to find credentialed talent, with 1.2 million open positions in U.S. construction and manufacturing (and more than 10.1 million openings total) as of August 2022.1,2 At the same time, 15.4 million people are either out of the labor force altogether or languishing in part-time, low-skill, or dead-end jobs with dim career prospects.3
In fact, even if every existing skilled worker in America was employed today, 35% of job openings in the durable goods manufacturing sector would remain unfilled.4 Deloitte predicts a shortage of more than 2 million American manufacturing workers by 2030 at an opportunity cost of $1 trillion dollars in annual GDP.5
Opportunity is missed by most people because it is dressed in overalls and looks like work
— Thomas Edison
To grow, you need new workers for your manufacturing lines, even as the pipeline of talent for your industry slows to a trickle. A microcosm of the challenge: Despite demand from 45 area companies employing nearly 8,000 workers in medical device manufacturing, Memphis’s largest community college produced only 10 graduates with machinist skills this year.6,7 You’re dealing with unintended consequences of America’s “college for all” mindset, which often stigmatizes skilled work relative to four year degree attainment even as four year tuition rates grow 2.5x faster than inflation.8
You ask local school leaders, non-profit community organizations, and elected officials for help. A local principal offers dual enrollment credit for high school job shadowing, but you need full-time talent. A non-profit highlights a job skills program, but after a string of no-shows you realize their candidates lack necessary workplace competencies. A state legislator introduces the local workforce development board, but their scope is limited to approved Department of Labor programs with dizzying arrays of multistep eligibility verification.9
As you stare at a stack of compliance paperwork, you realize none of these efforts solves your immediate skilled talent problem. Increasingly, you feel unsupported and overwhelmed.
Inflation has pushed wages up for your job, which now pays $18 per hour and nets around $37,500 annually with limited benefits. You don’t love this job, as there’s not much room for upward mobility. So, you research ways to learn a new skill and earn a credential by enrolling in your local community college. You research the graduation rate, and the worry sets in: In 2021, 12% of enrollees finished within 150% of “normal time”.10
You factor in lost wages with the never-ending responsibilities of rent, groceries, and car payments – not to mention childcare – and weigh it all against the 1-in-10 chance you will actually finish on time. To add to the stress, you realize there’s no guaranteed job waiting for you on the other side.
Several pools of talent can be tapped to expand our labor base. These groups include immigrants, veterans, and recent high school graduates referred to by Harvard Business School’s Managing the Future of Work Project as “hidden workers”.11 Millions of these people exist, united by a common desire to “unstick” their careers by moving from warehouse, retail, or gig jobs into more stable opportunities that unlock upward mobility.
To motivate this untapped talent, we must make career paths more attractive. UpSmith candidates report purpose, pay, and accessibility as three important determinants of career routes. Employers can influence each of these factors by marketing three key levers: higher status, better wages, and paid training.
By branding “builder class” careers in compelling ways, an opportunity exists to elevate their social status. Great appeal exists in producing next generation electric vehicles, biotechnology, and infrastructure. Emphasizing the high purpose nature of these career paths will drive candidate interest.
By boosting entry-level skilled worker pay to rates 20-30% higher than non-skilled alternatives, employers motivate more people to join the field. This is not just good for talent, it’s also good for business: Heating ventilation and air conditioning (HVAC) technicians can generate more than $10,000 per month in revenue, creating more than 50% gross margin on $25 per hour entry level pay rates. Firms capture substantial value by offering premiums over unskilled labor.
By offering paid training to qualify people for these opportunities, employers make them infinitely more accessible to talent. Switching costs are high for people already employed in low-opportunity jobs – borrowing money to return to school creates substantial risk, and the opportunity costs of lost wages exacerbate these negatives. By paying new hires during training, employer-sponsored apprenticeship alleviates downside risk for candidates and significantly boosts appeal for skilled trades.
UpSmith exists to combat the skilled labor crisis. Our core insight: Rather than relying on a traditional model to produce more supply, we empower employers to take control by expanding new talent pools for their needs with our technology platform. We accelerate the process to attract, screen, and qualify people into skilled professions.
It starts with aggregating candidates onto our talent platform, appealing to those underserved by the current system for sourcing and qualifying skilled labor like military veterans, immigrants, high school graduates, and “stuck” workers.
Second, we screen candidates on the basis of mindsets, dispositions, and behavior markers, assessing talent on potential rather than existing degrees. By measuring aptitude, we help employers target the top 20% of any talent pool and focus on those with high propensity for success following training.X
Third, we facilitate hiring by verifying candidate eligibility with automated background checks, drug tests, and right to work in the U.S. verification. Employers rely on our vetting process to pre-qualify candidates and smooth transitions to full-time employment with a focus on industry-leading retention.
Fourth, we broker upskilling by connecting employers with qualified third-party training providers to rapidly train new hires. Some employers have in-house learning and development teams to meet this need, while others use virtual training content or provider partnerships we’ve licensed for their benefit. Regardless, we help employers ready new hires to safely and productively contribute to driving business value as soon as possible.
Finally – and perhaps most importantly – we celebrate those who enter skilled professions. These builders are at the heart of American dynamism, as they are responsible for advancing next generation economic capabilities for our nation. We revere the examples of skilled workers like Darren Green, a former U.S. Marine Corps Scout Sniper who found a new mission as an HVAC technician following his service as a military special operator. Great dignity exists in his work and its impact on society.
Businesses run at full capacity and grow faster, candidates earn more income with greater purpose, consumers get more goods at lower prices, and all Americans benefit from a stronger, more resilient nation prepared to compete and lead in the global economy.
We’re actively looking to expand our platform to more partners. If your company is in need of skilled talent for advanced manufacturing, biotechnology, aerospace and defense, or construction trades, please reach out to us.
References
1 “US job openings by industry and region” https://www.bls.gov/news.release/jolts.t01.htm
2 ”US labor turnover survey” https://www.bls.gov/news.release/jolts.nr0.htm
3 ”Understanding America’s Labor Shortage: The Most Impacted Industries” https://www.bls.gov/news.release/pdf/empsit.pdf
4 ”BLS: The Employment Situation” https://www.uschamber.com/workforce/understanding-americas-labor-shortage-the-most-impacted-industries
5 “Deloitte: Creating pathways for tomorrow’s workforce today” “https://www2.deloitte.com/us/en/insights/industry/manufacturing/manufacturing-industry-diversity.html
6 “Greater Memphis Medical Device Industry 2022 Economic Impact Analysis Overview” https://gmmdc.org/wp-content/uploads/2022/09/Greater-Memphis-Medical-Device-Industry-Overview.pdf
7 “Southwest Tennessee CC Commencement” https://www.southwest.tn.edu/graduation/docs/Commencement%202022%20Program%20FINAL%201.pdf
8 “Trends in College Pricing and Student Aid” https://research.collegeboard.org/media/pdf/trends-college-pricing-student-aid-2021.pdf
9 “Workforce Innovation and Opportunity Act” https://www.dol.gov/agencies/eta/coronavirus#WioaGen
10 “Graduation Rate at Southwest Tennessee Community College ” https://www.collegetuitioncompare.com/edu/221485/southwest-tennessee-community-college/graduation
11 “Hidden Workers: Untapped Talent” https://www.hbs.edu/managing-the-future-of-work/Documents/research/hiddenworkers09032021.pdf
