Firms mull shrinking labor force in booming economy

Associated Press

PITTSBURGH

It should be open season for job-hunting workers in the Pittsburgh region.

The region’s unemployment rate, at 4.7 percent, is the lowest in nine years. Education, health care, technology and financial-services sectors report steady hiring.

Business leaders say the city has a shot at winning Amazon’s second headquarters and the promise of 50,000 jobs and a $5 billion investment. In September, the Brookings Institution described Pittsburgh’s economy as the “future.”

Still, the pool of people who say they are looking for a job is on the decline.

“The job-seekers are a little bit more depressed here, or less hopeful,” said Vera Krekanova Krofcheck, chief strategy officer for Partner4Work, a publicly funded workforce development agency that connects job-seekers with employers. “All the great things happening in the economy cannot be denied, but people do not feel like they’re a part of it.”

Especially mystifying is the data that show among those giving up are those of prime working age: white men aged 25 to 54.

The shrinking workforce has been a phenomenon across the country, but one that is especially concentrated in southwestern Pennsylvania, where officials say technological advances and the rust-to-robots transition have left people behind.

The hunt for missing pieces of the puzzle has driven Krofcheck to embark on research remarkable for a workforce board. Such organizations are known for arranging job skills training and crafting high-level policies in the background of a region’s economy.

But with a new team of researchers, Krofcheck is tapping big data and listening to discouraged workers themselves – and publishing conclusions that may challenge long-held beliefs espoused by business leaders and politicians.

“Any kind of labor market data out there – people do not necessarily factor into the equation,” she explained. “It’s always ‘where are the jobs’ and ‘how much do that pay,’ but not how people behave.”

The quest for answers will likely keep her busy for a long time, but her early conclusion is that employers are as much to blame for the discouragement as workers.

Hundreds of people file through the PA CareerLink offices in Downtown each year, where job-seekers can find state-funded computer labs and classrooms with programs to connect them with employers.

Over a period of several weeks earlier this year, Krofcheck and a researcher, Edgar Largaespada, stopped by to find people who had quit their jobs without having another lined up.

The researchers asked a simple question: Why?

Gathering about 400 anonymous responses from 30 focus groups, they published a report in October that peeled back answers to a trend that takes people out of the labor force in large numbers.

People who quit their job with nothing else lined up – roughly 87,000 in Pittsburgh every quarter, according to Partner4Work – talked about high-stress environments, getting injured and being unable to return, getting fed up with long bus rides, family members getting sick.

Krofcheck saw Pittsburgh with fresh eyes when she joined Partner4Work in 2006, then known as the Three Rivers Workforce Investment Board.

Arriving from her native Czech Republic, where she had been a management consultant for nonprofits, she heard the stories of adoration: the city’s post-steel rebirth, the transition into the service economy, the tech-driven innovation with world-class universities as the engine.

But there was an undercurrent to the story.

After the Great Recession hit in 2008, economists focused on job growth and unemployment rolls. Politicians celebrated the post-recession recovery in this region, marking the decline of joblessness from a peak of 102,000 people in February 2010 to 56,100 in October 2017, according to the U.S. Bureau of Labor Statistics.

A deeper analysis of the same data show just one of every 10 people who left the unemployment rolls in the past seven years actually held a job in the region in October. The rest left the labor force altogether.

In the big picture, the region’s workforce shortages can be seen as tied to demographics, with older workers retiring faster than younger people can replace them. Pittsburgh’s population has declined in recent years, with people moving to other metro areas, and university graduates are likely to move away for jobs.

In the past four years, the majority of government-tracked job classifications in the Pittsburgh region showed modest to high growth: computer systems, services for the elderly, highway construction among them, according to a Post-Gazette analysis of employment across nearly 200 largest professions. At the same time, industries such as metals manufacturing, dry cleaners, oil and gas pipeline construction and grocery stores shed workers.