Economic Development in a Tight Labor Market

John M. Bacheller

Empire State Development Corporation

NGA Workforce Development Policy Forum

Dearborn, Michigan

November 30, 2000

What ESD Does

• Primary mission -- create and retain jobs

• Traditional focus on employers -- Service and manufacturing companies with regional or national markets.

Traditional Approaches

• Marketing: – Build positive perceptions.

• Incentives: – Offset location disadvantages.

Changes since 1995

• Initial concern: lingering recession of early 1990’s– Business climate concerns– Labor availability not a major concern

• Current concerns: – Tight labor market– Limited number of available sites

Changes in agency strategy

• Fewer incentive dollars

• Focus on marketing “distressed areas”

• New strategies to respond to labor availability concerns

Labor availability issues

• Information Technology Industry:– Nearly half report “high” or “very high” impact

from shortage of:• Technicians

• B. S. level programmers

• B. S. level systems analysts

• Computer scientists

New Media Companies -- Difficult to Fill Positions

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Research Staff

Finance and Admin

Other

Creative Staff

Creative Management

Project Management

Marketing/Sales Staff

New Media Business Management

Technical Support

Engineering/Technology Management

Programming Staff

1997

1999

41%32%

38%30%

34%15%

23%19%

23%17%

20%18%

19%10%

15%13%

7%8%

5%5%

5%

Labor availability issues

• Overall:– Nearly 1/3 report “high” or “very high”

shortage of employees with IT skills, scientists, engineers and managers.

– 20%- 25% report -- “high” or “very high” need for basic literacy and non-IT production skills.

Respondents Indicating that Employee Shortages in Specific Areas Limit Business Success

source: New York Regional Council Surveys, 1999

ALL RESPONDENTS MANUFACTURERS NON-MANUFACTURERS

29%30%

22%

31%

34%

23%

31%

27%

23%

38%

8%

33%

0%

5%

10%

15%

20%

25%

30%

35%

40%

High Shortages ofEmployees with Basic

Skills

High Shortages ofEmployees with IT

Skills

High Shortages ofEmployees with Non-IT

Production Skills

High Shortages ofScientists, Engineers,

Mgrs.

Perc

ent

of Respo

ndents

Response:Market NYS to Graduates

• NYS not perceived as technology center– Graduates driven by perceived opportunities

• Sell job availability

– Quality of life • NYS as vibrant center

Marketing to Graduates

• TV and college media campaign with NYS Dept of Labor

• Web site with customized interface to America’s Job Bank

• Recruitment Incentive

Response: Company assistance

• Availability an explicit element of location decision– Economic development agencies address

availability concerns:• Provide labor data

• Support recruitment assistance

• Facilitate training

Company preferences

• Currently employed workers

• Flexibility in recruitment– Often use temporary agencies.– Job fairs, etc.

• Training: focus on specific company needs

• Simple assistance processes -- no “red tape”

Most Important Labor Dept. Services

• Regional reps work closely with DOL on:– Job fairs– Job seeking announcements

• Labor Department less useful for training needs because of eligibility requirements, red tape.

Training Focus

• New hires – Often not ready for work environment

• Need basic and technical skills– Provide pre-employment training

• Once hired, companies use OJT– Machinery, technology, workflow

Issues

• Responsiveness of service providers to company realities.– Need for evening/weekend training.– Pre-employment courses meeting specific

needs.– Public agencies seen as less responsive than

private providers in NYS

Issues

• Unsettled nature of WIA/WIB funding.– WIB’s are still developing plans.– Progress is varied

• Need for $$ not tied to specific populations.– JTPA funds were too inflexible.– Jury still out on WIA

Issues

• Employer preferences often work against use of public training sources:– Preference for less red tape

• ESD will fund other expansion costs.

– Preference for short courses at convenient times.

• Community colleges not always flexible.

Training Focus

• Current employees:– New equipment– Leadership/supervision/project management– Industry standards (ISO 9000 - ISO 14000)

Issues

• Availability of WIA dollars uncertain

• Red tape issues

• Flexibility of providers

Capacity Development (Industry Strategies)

• Work with industry groups to meet needs:– Regional consortia

• Long Island:– Pharmaceutical Industry

– Machine shops

• Albany area– Distribution industry

– Medical devices companies

Issues

• Night/weekend programs for employed workers

• Specific programs for industry needs

• Providers need seed dollars to develop programs – not specifically tied to individual trainees

Lessons

• “Work first” is consistent with employer preferences– Employers value a record of employment.

Lessons

• Developing effective programs:• Economic development agency as catalyst

– Identify industry needs– Work with provider consortia– Provide seed dollars for pre-employment

programs

Lessons

– Keys to success:• Employers as customers• Work with industries that are:

– Growing– Modernizing

• Make programs accessible– Nights and weekends– Locations

Lessons

– Program funding should be flexible -- should reach broad range of workers.• Employers as customers• Programs for narrowly targeted populations

create funding obstacles for– Employers– Providers