Jobs go unfilled despite high unemployment
By Bertha Coombs,
For the 15 million Americans who can鈥檛 find jobs, the labor market is like an awful game of musical chairs. There are many more players than there are available seats.
Yet at Extend Health, a Medicare health insurance exchange firm in Salt Lake City, Utah, the problem is just the opposite鈥攁 growing number of chairs to fill and not enough people with the skills to fit the jobs.
鈥淚t seems like an oxymoron in this environment that you can somehow be challenged to find great workers,鈥� CEO Bryce Williams admits, almost sheepishly.
Extend Health鈥檚 call center workers help retirees navigate the process of signing up for commercial Medicare Advantage and drug coverage plans.
For this fall鈥檚 Medicare Enrollment season, the firm will need close to a thousand workers. The ideal candidate is over 40, with a background of financial services in order to qualify for insurance licensing.
鈥淭hey need to be able to pass the state of Utah exam, which is not easy," Williams explains. 鈥淭hey need to have a background in comparing the financial metrics of trying to help someone compare and analyze and give great advice.鈥�
Williams has hired a recruiter, plans to roll out billboards along Interstate 15 in Utah, and is now looking at establishing a new call center out of state where the firm can find .
鈥淲e like being in Utah but at a certain point you max out on the total pool of people that you can tap, 鈥� Williams says. 鈥淪o, we're going to have to look at other states.鈥�
Part of Williams鈥� problem is that his business is in a sector that鈥檚 facing a skills gap.
A Tight Labor Market For Skilled Jobs
Overall labor demand softened in February, but online ads for computer science jobs were up more than 15 percent from January, according to The Conference Board Help Wanted Online Data Series (HWOL).
While there are more than 25 job seekers for every open position in fields like construction, the exact inverse is true in technology, health and science-related jobs.
For computer science jobs and skilled health care practitioners, there were just over three ads for every job seeker in February. For life sciences jobs like medical science researchers and chemists, the ratio was 2 to 1.
"It鈥檚 the equivalent of a seller鈥檚 market in real estate,鈥� says Jeanne Shu, HWOL Project Coordinator. While those occupations are seeing a lot of growth, employers are scrambling to find available qualified workers. 鈥淚f they can't find the right person with the right skill set they'll hold out longer for them."
But employers also appear to be holding out for ideal hires for jobs that aren鈥檛 facing a skills gap, says professor Steven Davis of the University of Chicago Booth School of Business, who recently co-wrote a paper on the subject. 鈥淥ur best estimate is maybe 20 percent of shortfall in hires per vacancy in the last couple of years can be accounted for by lower recruiting intensity by employers.鈥�
Though they may be placing ads, they don鈥檛 appear in a rush to fill vacancies.
The Beveridge Curve
A number of economists are closely watching the relationship between the jobs vacancy rate and the unemployment rate鈥攚hat鈥檚 known as the Beveridge Curve, named for economist William Henry Beveridge.
鈥淚n March last year the vacancy rate started to rise, without drawing down in the unemployment," says professor Steven Davis, making for what he sees as a troubling move in the curve. 鈥淚t broke down rather substantially.鈥�
Davis believes the repeated extension of jobless benefits for long-term unemployed workers has made job seekers more willing and financially able to hold out for better jobs. But, in the mean time, their skills are falling behind, making them less employable.
鈥淲e have to some extent set ourselves up to have 1 to 2 percent of the workforce without jobs for long time, with dim prospects of returning to a job market even after the market recovers,鈥� he cautions. 鈥淭hat's what kind of worries me.鈥�
New York Federal Reserve President William Dudley doesn鈥檛 see the Beveridge Curve signaling a long-term structural problem in the jobs market.
"The loop in the Beveridge that is evident now has been seen in the past business cycles," Dudley said in a speech at the Stern School of Business earlier this week. "This strongly suggests that the rise in job mismatch has a cyclical component."
When Workers Can鈥檛 Move For Jobs
Mark Zandi, of Moody鈥檚 Analytics, believes the shift in the Beveridge Curve is likely temporary. But, he is concerned that the downturn in the housing market may be making it harder for job vacancies to be filled.
鈥淪o many people are underwater on their mortgages and they can鈥檛 move,鈥� he says. 鈥淪o, they lost a job in Las Vegas and can鈥檛 move to L.A. because of their mortgage.鈥�
Zandi鈥檚 own firm is feeling the impact of the skills gap. He鈥檚 having trouble finding and hiring junior economists with advanced degrees.
鈥淭hat part of the job market is tightening up quite significantly.鈥�
Extend Health鈥檚 Bryce Williams is actively looking at options beyond his company's base in Utah, and beyond that is also trying to develop a home-based model so that he can bring his jobs to the workers he needs. But he's worried he won't be able to ramp up hiring enough, and that would kill his company's growth.
鈥淲hat it could require us to do is meter the number of clients we can take on, in any given year," he says.
With the health care exchange sector poised for rapid expansion over the next two years because of the health reform law, Williams is determined not to turn business away.
