A Stitch in Time

Through the long, painful decline of Big Steel and the subsequent efforts of Pittsburgh to remake itself and regain economic viability, observers echoed a consistent theme: Pittsburgh will rise again because of the industriousness and talent of its workforce. Indeed, that committed workforce helped the region shape a multifaceted economy that grew supple and strong.

But what if there aren’t enough of those workers to sustain the momentum? What if the region, thanks to the mass exodus of young people and talent through the last several decades, comes up, say, 144,000 short of the workers it needs to replace retiring baby boomers? Unthinkable? It’s among the possibilities projected by the Allegheny Conference on Community Development in a new study of the region’s population.

A shortfall of that size could produce substantial business failures, relocations, loss of jobs… and that’s not all. The sectors that depend most on workers with STEM (science, technology, engineering, math) skills could feel the most pressure, meaning that growing industries, such as shale gas, could be stymied by a shortage of employees with technical training and experience.

To be sure, the 144,000 figure is a worst-case scenario, yet the prospect of a workforce shortage has mobilized the community to tackle the problem. The Allegheny Conference and its allies have teamed up on a variety of new initiatives, and a number of prominent organizations in the region have introduced programs to bridge the workforce gap. In this first installment of a series exploring that potential gap, we examine the shortage and how a region known for its rich lode of skilled employees could find itself without enough of them.

The broad outlines of the story aren’t new. The collapse of the steel industry deprived the region of about 250,000 direct jobs; even more jobs disappeared when the industry’s suppliers failed or relocated. That produced an out-migration of young people who couldn’t find appropriate work in the region. While we have rebounded and rebuilt a thriving economy, we’re facing a new threat—the impending retirement of baby boomers, which could remove a serious chunk of skilled, experienced talent from the workforce.

According to the conference’s study, the 10-county region today includes 760,000 people in the 45–64 age group; many in that demographic are heading towards retirement. At the same time, the regional population in the 25–44 age group—those who could replace retiring boomers—is only 616,000. That’s how we get to a potential workforce shortfall of 144,000. Because prospective retirees constitute the most experienced workers, the gap could be felt most profoundly at the senior level, which historically provides both leadership and mentoring for younger generations.

“Some people have been with their employers 30 years, some have been there five years,” says Laura S. Fisher, the conference’s senior vice president of workforce and special projects. “There are very few people in the middle space.”

The workforce shortfall won’t likely reach the theoretical maximum of 144,000. For one thing, many of those 760,000 people in the 45-64 demographic aren’t in the workforce and won’t need to be replaced. For another, boomer retirements will be staggered rather than simultaneous, so the impact won’t be felt all at once. Still, the effects of a sizable worker shortage, particularly at the senior level, could be far reaching as employers scramble to replace departing boomers.

“It would create enormous wage pressure for those companies,” Fisher says. “They would have to recruit people from all over and might decide to move to a region that has more talent. Obviously, that’s a worst-case scenario.”

Businesses that depart would take their jobs with them, leaving young people even fewer opportunities within the region. Were they to leave, it could create a new death spiral. Moreover, some of the region’s most promising sectors could feel the crunch most acutely. Southwestern Pennsylvania is home to more than 1,000 energy companies which employ approximately 45,000 and create thousands of spinoff jobs as well. In a conference survey of 37 of those firms, managers expressed concerns about being able to find qualified candidates for the nearly 2,000 jobs they’ll need to fill between now and 2020. That same troubling scenario could face any company with technology-infused processes.

Fisher cautions that we need to better understand the potential workforce gap before making definitive statements.

“We need to know a lot more about what that 144,000 really means,” she says. “We’re trying to get a better understanding of labor supply and demand going forward. It’s very elusive. Any data we have is always retrospective by at least a year and sometimes two. By the time you see a trend, you’re too far past it to effectively address it.”

Yet that hasn’t stopped the Conference and a number of its partners from plunging ahead with initiatives to address the shortfall. One of the keys, Fisher says, is developing programs that target demographic groups, such as women and minorities, that have been chronically underrepresented in STEM careers—indeed, in the workforce generally.

“We have to be effective in attracting people to the region, but we also need to do a great job of retaining the people we already have and with populations that have been under-employed or left behind,” she says. “We have no people to waste.”

Among new conference thrusts are:

• ShaleNET—A program that offers instruction leading to careers in the shale gas industry. The conference facilitated federal grants for ShaleNET, which now includes four educational institutions—Westmoreland County Community College, Navarro College (Texas), Stark State College (Ohio) and Pennsylvania College of Technology in Williamsport, which serves as fiscal agent. Launched in 2010, ShaleNET offers curricula that lead to as many as six certifications and provides a platform for associate degrees and four-year degrees. ShaleNET has helped prepare more than 3,400 people for shale industry positions; follow-up studies indicate that more than 80 percent of those new employees remained in their positions a year after hiring.
• Service to Opportunity—Veterans are one of those under-employed groups Fisher cites, and this program is targeted to them. Through a suite of on-line tools, Service to Opportunity enables veterans to find shale industry jobs commensurate with their skills and experience, and it helps them convert their resumes, typically burdened by indecipherable military acronyms, to documents human resources directors will understand. The potential for this and similar tools is enormous, as the conference’s research suggests an estimated 45,000 veterans who muster out over the next few years will be seeking work in Pennsylvania. The current unemployment rate among veterans in the state is 8.4 percent, significantly higher than the figure for the population generally.
• Incumbent Worker Training—Employers may compete fiercely for job candidates, but they know when it comes to training current staff for higher level, more technically advanced positions, they’re all in the same boat. So why not cooperate? In 2012-13, five employers in energy and advanced technology programs did just that, working with the conference to provide a joint incumbent worker training program in mechatronics at the Community College of Allegheny County. It was a successful experiment in collaboration, and Fisher expects more of it.

“I believe we’ll see generational succession planning,” she predicts. “We’ll see companies investing more in the human capital they have. We’ll see a lot of interesting new strategies to retain older workers to train the next generation and on-boarding workers to get them up to speed faster.”

Fisher notes that other regions of the country may encounter similar workforce gaps; being ahead of the curve actually may give our region a head start.

“Everybody will be facing this issue eventually,” she says. “We’re in the forefront, so there are opportunities to take some risks.”

And in any competition for business and residential locations, Pittsburgh is well positioned to prevail. “People are looking for a life, not just a job,” Fisher says. “That’s our opportunity. We have so much to offer in terms of quality of life. We have all that going for us.”

The potential of a regional workforce gap has galvanized the community. In the second part of this series, we’ll look at some of the short- and long-term solutions in the pipeline or already implemented.