"Like many business people in the community, you may have received a recent online survey from Commerce Lexington asking, among other things, what factors will limit economic growth in the Bluegrass. My response to that question was sure and swift: the biggest impediment to economic growth will be a continued shortage of qualified workers. This was my experience running a manufacturing business in the area. This is my clients' experience at every level of their organizations. And this comes up in almost every conversation I have with business executives in the Lexington area.
What are the signs of the qualified worker shortage? The unemployment rate in Lexington is under 5 percent (essentially structural unemployment). Referral and signing bonuses are being offered to current and prospective employees. Immigrants from Latin America, Eastern Europe and Asia are increasingly populating local communities and workplaces. Employers are providing ESL and other training to accommodate these employees. Turnover is high among workers from staffing agencies who cannot qualify for direct employment. And it takes at least 90 days to find truly good candidates for high-skill and management positions.
We are not alone. CEOs of small and mid-sized businesses participating in the nationwide Vistage Confidence Index said that finding, hiring, retaining and training people is the most significant issue they face, even more important than rising energy and health care costs. They ought to know. These are the employers who account for 75 percent of all new jobs in this country.
This problem will persist well into the future. The Bureau of Labor Statistics (BLS) reports that total employment will increase by nearly 19 million within the next 10 years. This is a larger increase (by 2.6 million jobs) than experienced over the last 10 years. When you consider that baby-boomers like me will be retired, who will hold these jobs? And how well prepared will they be?
There are proposals at the federal, state and local levels to provide a college education for everyone who wants one. To be sure, we will continue to need more graduate and post-graduate degree holders to maintain a vibrant, growing and globally competitive economy, but not with just any degree. Math, science, engineering, information technology and biomedical disciplines will continue to be important (a prediction from Rice University suggests that by 2010, if current trends continue, more than 90 percent of all scientists and engineers in the world will be living in Asia).
College for everyone? Not so fast. Of the roughly 8 million fastest growing occupations projected by the BLS, only 30 percent will require a college degree. The other 70 percent will need a high school diploma together with some on-the-job training. It seems that our first priority is to do a great job of preparing middle and high school students for employment in the flat world. Hard skills like math, science and English are critically important. Soft skills like self-discipline, socialization, listening, problem-solving, decision-making, tolerance and respect are also vital. How often are people hired for their skills and fired for their behaviors?
Every student who wishes to attend college and has demonstrated the aptitude to succeed should be able to so. A college degree does not ensure success, but it certainly expands the opportunities available. Students and their mentors should take some time to consider the field of study relative to the interests of the student and the needs of the marketplace in terms of the return on investment for the student. It is disappointing to see underemployed college graduates defaulting on student loans or declaring personal bankruptcy because their studies are not relevant to the market.
The good news here in the Bluegrass is that we've got a lot going on to address the needs of tomorrow's economy. I mentioned the Commerce Lexington survey. The chamber plays a leadership role in the Lexington Partnership for Workforce Development, a coalition among industry, education and the community focused on meeting employers' needs for a qualified workforce. The chamber played a key role in organizing last year's Workforce Development Summit and supported the creation of BluegrassWorks.net, the region's one-stop database for employment solutions. In our capital city, the Frankfort Area Chamber of Commerce is launching a Work Ethic Program to address those soft skills that are so important for employability. And back here in Lexington, Superintendent Stu Silberman has focused the Fayette County Public Schools system and the community to prepare students for success in tomorrow's economy.
What is the biggest problem CEO's would like to face in 10 years? Having too many qualified applicants for every open position.
Louis Allegra is president of Allegra Management Consulting, Inc. He chairs CEO advisory boards in affiliation with Vistage, the world's largest CEO membership organization, to help Lexington-area executives improve their performance and enhance their lives. Lou can be reached at Louis@AllegraManagement.com
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