If you’ve read my columns over the last couple of years, you know that one of the reasons our homebuilders can’t build houses fast enough for the demand is because of a shortage of skilled workers. Well, as this last month’s employment numbers show, Atlanta’s housing industry could be a microcosm of the greater U.S. economy.
The first Friday of each month, the U.S. Bureau of Labor Statistics releases its Employment Situation Report. This is a summation of a survey of U.S. companies about their hiring for the previous month. It gets a lot of attention because it is one of the most respected gauges on the health of our economy.
The two most watched numbers in this report are the unemployment rate and the number of new hires. In May, the unemployment rate fell to the lowest level in 16 years. That rate sits at 4.3 percent.
Most economists believe that there is a ‘natural’ unemployment rate, which serves as kind of a target rate believed to be low enough where jobs are available to those seeking them, and high enough so that U.S. economic growth is not stalled by companies’ inability to find skilled workers. If the unemployment rate is too high and there are too many unemployed Americans, then U.S. businesses will have to charge less for goods and services, but they also have the luxury of paying their employees less.
Conversely, if the rate is too low, companies will have to pay higher wages to compete for the fewer available skilled workers, and will thus have to charge more for goods and services. So inflation is typically too low when the unemployment rate is too high, and too high when the rate is too low.
Right now, the unemployment rate appears to be below the natural rate. Conventional thinking is that you want to be at 0 percent unemployment, because then everyone has a job. But the problem is that if you are a company that wants to grow, and there are no unemployed workers, there are three things you can do: 1) steal employees from other companies; 2) automate your work so machines can do it; or 3) move your company to a place with more skilled workers.
With that in mind, it’s easy to see how competitive the environment is right now between metro areas in our country. If we can’t provide enough skilled workers here in Atlanta, then new companies won’t move here, and existing companies will move somewhere else.
I sit on the Greater North Fulton Chamber of Commerce’s steering committee on workforce development called the Talent Coalition. It’s headed by Gary Campbell, director of Community Affairs for Hire Dynamics, and Bethany Usry, vice president of Economic and Talent Development at the chamber.
This group represents the chamber’s effort to ensure that North Fulton is providing its businesses with the skilled labor force that they need. They learn from the North Fulton businesses and then work with the technical colleges and K-12 schools to make sure that students are graduating with skills they can use day one in their new jobs. They have made a lot of progress in this regard and are always on the lookout to learn more from the North Fulton businesses.
This is a major piece in a much larger puzzle. We can provide the skills, but we also have to make sure the employees with those skills want to stay here. We have to make sure our communities are places those employees want to live in. That’s why there is such a large effort to have live-work-play communities and mass transit because that is what today and tomorrow’s employees seem to want.
And with the unemployment rate so low, metro areas around the country are going to have to get more and more competitive to draw in the shrinking labor pool. So if you like it here, be nice to your fellow employees – they are in demand.