The skill-set shortage: Understanding the problems and solutions

For years, communities across the United States – large and small – have been experiencing a skill-set shortage. There simply are not enough skilled professionals to support the needs of growing and changing industries around the country.

A broad range of factors have contributed to this issue, including economic volatility, more remote work options, lingering supply chain issues, the mass retirement of baby boomers, and The Great Resignation. In some industries, a skill shortage does not necessarily stem from a lack of interest in education and training, but from a deficit of available training courses. Economic developers and public officials need to be aware of the skill-shortage issue, including the importance of addressing it and the ways they can get help with creating solutions.   

Economic developers should be concerned

For economic developers, the skill-set shortage is just the tip of the iceberg. The issue is part of a cycle that affects businesses, residents, governments and a community’s overall economic development.

When a community experiences a workforce shortage due to lack of skilled labor, it threatens the community’s ability to attract new businesses and to retain existing businesses. The size and skill level of the local workforce is a growing concern for companies when they are considering locations for expansion or relocation.

Staffing issues can significantly delay or potentially derail the opening of a new business. Additionally, existing businesses may be forced to scale back operations or consider relocation to a new community if they are unable to meet their staffing needs with the local workforce. In both scenarios, there is a significant impact on the local economy and the quality of life of residents. The key to mitigating this issue is through an effective workforce development strategy with robust training programs that specifically meet the needs of existing and target industries.

Economic developers should be concerned about the skill-set shortage and workforce development processes in their communities. Workforce development has become a core tenant of economic development across the nation and the world. Workforce is no longer secondary to incentive discussions or located in a “separate bucket” from economic development services. It is one of the most important tools in an economic developer’s toolbox and, without it, you cannot get the job done. The ultimate responsibility of an economic developer is to grow the economy. Without the availability of a skilled labor shed and local workforce partners to continue to close the skills-gap, economic growth cannot be realized.

Economic developers must work with community stakeholders to fill the gaps between the needs of local businesses and the training providers who will supply a highly skilled workforce. If efforts are not already in place to better connect workforce training providers to employers, it is time to put those efforts into motion. This process can be as simple as convening a meeting to begin the open discussion process of what is needed from the employers, what is currently available from the workforce training providers and what training resources can be made available to ready the local workforce pool for high-skill, high-paying jobs. Action plans should be developed from discussion findings and teams should be assembled to execute the plans. The time is now for economic developers to be facilitators of public-private partnerships to enhance and grow communities from the ground up through intentional workforce development.

Skill-set shortage: Complicating factors

Perhaps the biggest complicating factor in evaluating a skill-set shortage is the recent change to the way we evaluate the labor shed in relation to jobs that can be worked remotely.

Traditionally, labor sheds are made up of the people who comprise a regional workforce and are available for and willing to work. The primary metrics used to determine the geographical area of a labor shed are distance lived from a community and length of commute. This continues to be the case for in-person work environments where physical attendance is required.

However, since the start of the pandemic, the way in which we define “labor shed” is becoming more complex for those jobs where physical attendance is not necessary. This has created a workforce with fewer physical boundary requirements for a multitude of industries and positions and has created a shake-up in competition nationwide. It also has caused an increase in availability of workforce for remote positions, expanded recruitment to nationwide instead of a regional focus, and created a footloose applicant pool who can live where they please, under most conditions.

As previously mentioned, some industries are essentially immune to the shift to remote work. Manufacturing, for instance, is dependent on workers being physically present for the large majority of the industry’s workforce. With professional services, on the other hand, the labor shed can quite easily become blurred.

Additionally, The Great Resignation took the country by storm during the height of the pandemic and is continuing to affect national workforce trends. The Great Resignation is the term used to describe the high rate in which Americans quit their jobs during the pandemic, when people opted by the millions to leave the workforce entirely rather than continue in their current role. Some of those people who quit their jobs during this time have since found work, but a percentage retired completely or have not yet gone back to work.

According to the Bureau of Labor Statistics, the civilian labor force participation rate was 63.4% in February 2020 at the beginning of the pandemic and by April 2020, that percentage dropped to a 10-year low of 60.2%. The labor force participation rate has risen to 62.4% as of August 2022, a disparity of approximately 755,000 American workers when compared to February 2020 counts. That’s 755,000 people who are not actively seeking employment, leading to the staffing shortages and supply chain problems we are all facing on a daily basis. This has resulted in a shrinking labor force as well as the loss of valuable skills from experienced workers.

Baker Tilly can assist with a skill-set analysis

With these complicating issues in mind, Baker Tilly’s public sector specialists are available to assist communities of every size with a comprehensive skill-set analysis. We have been conducting analyses like these for more than 25 years.

As part of a skill-set analysis, Baker Tilly closely examines specific industry segments within a community. Our team then develops primary source and secondary source data about the current state of the workforce and the future state of the labor force required to meet the community’s economic goals.

Using this information, we uncover problems and facilitate solutions.

As an example, Baker Tilly recently conducted a skill-set analysis with a client in Florida. The local economic development organization hired Baker Tilly to examine six different industry segments.

For each of those industries, we acquired primary and secondary source information to identify the necessary skill sets required in each industry – and the degree to which employees with those skills are already in place, or at least readily available. In short, we discovered where the gaps in skills are within each of the six industry segments.

As part of our analysis, we gathered information that is both quantitative and qualitative. There is clear value in knowing the quantitative data surrounding commute times, wage breakdowns and education levels throughout the region. Yet, sometimes the most valuable information we learn comes through qualitative examinations, typically through surveys and one-on-one interviews with stakeholders and business owners.

After the quantitative and qualitative information is gathered, it is compiled into the report which allows the business community and the workforce community to collaborate using standardized information as they create solutions to their labor shortage challenges and skill-set advancement opportunities.

Of course, these challenges and opportunities cannot be addressed until they are identified, and Baker Tilly’s skill-set analysis can lead your community through this identification process. We reveal the full picture from the programs that are working well to those that need significant improvement. Then, using our decades of experience and our knowledge of best practices, we illustrate a set of solutions and a long-term plan for economic growth.

Some of the topics explored in a skill-set analysis include examining how other communities are tackling workforce development efforts, programs that have a proven track record of positive results, and talent attraction and retention through a benchmarking process. As a national firm with deep industry experience, we have the ability to delve into these topics, and we use our findings to facilitate specific solutions which help create a more resilient, growing and dependable economy.

During this process, our clients are educated on how to harness and secure the necessary skill sets for their community. How do you fill your needs? Where do you find people with those skills? These questions, along with data-driven workforce statistics, lead us to answers used to produce a gap analysis, which will provide immense value to the workforce planning process. We help you connect the community’s workforce demand to the workforce supply, which often comes from local colleges, workforce training courses, small business development and entrepreneurial programs.

Perhaps above all, Baker Tilly offers the comfort of a third-party consultant that will provide knowledgeable, unbiased assistance with a history of proven results. Under many circumstances, an outside, unbiased opinion is the critical piece to local and regional economic and workforce development.

The Baker Tilly team understands every community stakeholder has a slightly different take on how to carry out economic and workforce development processes and procedures. Although everyone’s goals tend to align on the creation of a prosperous community with top-notch services, high-paying jobs and outstanding quality of life, there is often a difference of opinions on how to get there. As a team, we gather the ideas and priorities of every stakeholder and work to create consensus among groups and a workforce development plan that all stakeholders can support.

The Baker Tilly team is ready to discuss how we can help your community illustrate opportunities, illuminate solutions and get your local workforce and economy on a path to long-term success.