Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 30, 1995 TAG: 9504290014
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE: LENGTH: Long
But he can't find enough new sewing machine operators. Newspaper classified advertisements have generated little or no interest for his openings, with starting pay at $5.25 an hour. He is resigned to selling his idle machines if new workers don't come along first.
"Right now, if the body's warm, we hire them," Ragone said. "There is a labor shortage."
There's a light-hearted tone to Ragone's comments about his predicament - he actually requires applicants to pass a manual dexterity test - but his message is clear: Frustration is rising in low-paying industries over the difficulty of finding employees.
Stories such as Ragone's began to trickle in last summer at the Virginia Employment Commission office in Roanoke, where employers call for help in finding employees and potential workers are screened for a variety of occupations. Since that time, employee-starved companies appear to have become more common, according to the VEC's Marjorie Skidmore, job service manager for the agency's Roanoke office.
A year or two ago, minimum-wage jobs were in demand. Today, companies must offer more than $6 an hour to attract a good number of qualified applicants to a job without benefits, Skidmore said. Scores of companies employing skilled and semi-skilled workers pay that much and more, and they avoid the problems associated with the labor shortage.
The apparel, retail and fast-food industries have perhaps the most difficulty paying wages the market demands, Skidmore said. Manufacturers, distribution centers, telemarketing operations and Carilion Health System also are affected.
But the list of businesses strapped for low-wage help doesn't stop there. Skidmore said she has heard from a veterinarian scouting for an assistant and various temporary employment services searching for workers for manufacturing, warehouse and other jobs.
"Employers call and they're screaming, 'We've placed an order with you. We haven't been able to get anybody out here,'" Skidmore said.
Her agency has filled an average of one in three job openings phoned in by employers since last summer. The placement rate has run as high as 75 percent. But Skidmore said that was several years ago, at a time when VEC offices were evaluated by the state based on their placement rate; and, as a result, the offices were more dogged in filling orders and keeping records.
To be sure, the Roanoke Valley is not the only place with excess jobs. Employers also are drumming their fingers on their desks over a similar problem in economically strong areas, such as Northern Virginia and North Carolina's Charlotte and Raleigh regions, according to Ray Owens, economist with the Federal Reserve Bank in Richmond.
While openings go begging, Roanoke Valley companies have put existing employees on overtime and, in some cases, raised wages to make openings more attractive.
Skidmore said jobs paying the federal minimum hourly wage of $4.25 are a thing of the past in this area. And the average work week grew from 39.7 hours in February 1994 to 41.8 hours this February, an increase of 5.2 percent, according to the VEC.
|n n| Not every company feeling the pinch has the option of raising wages or paying overtime, however. And for them, coping isn't possible without compromising production and service.
"We just muddle through," said Wendy Haynes, manager of a Roanoke Burger King that raised its starting wage for those without experience 25 cents an hour to $4.50 in November.
Haynes schedules 14 employees for busy Saturdays even though she only needs 11, because she knows some of her new or recent hires won't show up. She said she suspects "drug problems" play a role with some workers. Although she hasn't found any drugs at the restaurant, Haynes said observations and word-of-mouth tips have led her to believe there is drug use among some employees. Some workers, she said, quit after getting their first paycheck, suggesting to Haynes they wanted to work only long enough to raise money to buy drugs.
Some employees simply have a transportation problem, because buses don't run in time to get first-shift employees to work at 5 a.m. or permit last-shift employees to get home after midnight.
With new employees frequently in training, service and food quality at the restaurant can suffer, she said.
"Everyone you hire is a gamble," Haynes said.
Having experienced the same trend, Adia Personnel Services in Roanoke increased wages to lure better-qualified applicants.
"Last year, we didn't have any trouble finding people at $4.75 an hour for entry-level positions. Our lowest-paid job at this point is going to be $5.25 an hour," said branch manager Karen Sowers.
Ragone, whose garments sell at department stores such as J.C. Penney and Hecht's, has responded to his labor shortage by cutting back production - for now.
He has done so as employees have left his plant for what he called only slightly better-paying jobs at companies such as Vitramon Inc., an electronics maker, and Crouse-Hinds, an electrical equipment manufacturer, both in Roanoke.
"If I don't get replacements, we'll shut down," he said.
Carilion Health System has noticed a drop over the last six to nine months in job appliations for housekeepers, laundry and clerical workers, food service crews and various part-time positions, said Laura Land, director of employment and equal opportunity. The jobs pay less than $6 an hour but include some benefits, she said.
In response, Carilion has advertised the openings with community-assistance agencies such as Total Action Against Poverty, the League of Older Americans and the Fifth Planning District Commission. The hospital company hopes to reach those for whom a low-paying position represents a chance to learn good work habits.
Land said an easing of the labor shortage is possible as the state government sheds employees through buyouts.
More relief could be on the way as schools break for the summer. Next month, college students begin looking for summer jobs, followed by high school students in June. The jobless rate historically has edged upward around mid-year as the flood of students swells the work force.
Economic indicators so far offer no sign that the labor shortage will end, however. In February, the unemployment rate for the Roanoke metropolitan area fell to its lowest point since December 1990 - 3.5 percent. March's rate is due out early in May.
The Roanoke Valley is experiencing a "spot labor shortage," said Owens, the Federal Reserve economist. Although he hasn't closely studied the Roanoke Valley, he said conditions here sound as if most workers have jobs that are as good or better than the low-wage positions available.
This happens in a region with a strong economy such as Roanoke's after employers gear up for expansion by hiring large numbers of employees at attractive wages, Owens said.
After a recession that was mild locally, employers created 4,200 nonagricultural jobs in 1993. That was a gain of 3.2 percent over 1992, exceeding the job-growth rate for the state of 2.4 percent.
The region added another 5,000 jobs last year, increasing the job supply by 3.7 percent, exceeding the state's rate of 3 percent.
Most likely, some employers have needed help badly enough to justify training applicants who lacked the right skills, Owens said. As more and more workers moved up the wage scale, the result was a shortage of people to perform the lowest-paying jobs.
Need proof? Drive down Franklin and Electric roads, where a row of fast-food restaurants are advertising their wages like hamburger prices on lighted signs. "JOB OPPORTUNITIES $5 & UP," read a Hardee's sign last week.
|n n| In time, the labor shortage will subside, Owens said.
Gradually increasing wages can attract new residents from places with less-favorable job markets, boosting the supply of workers. Roanoke Valley is within 200 miles of the struggling Southwest Virginia coal communities. There also are pockets of high unemployment in the parts of West Virginia near the Virginia line, such as Greenbrier County, which had a jobless rate of 12.5 percent in March.
If new workers don't show up, then the shortage persists until the next economic downturn or recession, Owens said.
"Eventually, situations like that normally correct themselves," he said.
While workers applaud higher wages, a labor shortage can discourage prospective industries. But that's not happening in the Roanoke Valley, because recruitment efforts are directed at higher-wage industries in which there will be plenty of applicants if the come to the valley, said Beth Doughty, executive director of the Roanoke Valley Economic Development Partnership.
Plus, the partnership has determined that people will drive as far as 60 miles for good jobs in the Roanoke Valley. That region extends from Alleghany County on the north, to Henry County on the south, to Bedford on the east, and Pulaski County on the west.
The large size of that area has convinced Doughty and Skidmore a high-tech employer such as Motorola Inc. could have found workers here for a proposed semiconductor factory that the company last year considered putting in the Roanoke Valley. Ultimately, Motorola passed on the valley because it lacked a large enough piece of land with sufficient water supply, Doughty said. The plant, now planned near Richmond, will employ 1,000 people to start and 5,000 people after expansions, the company said.
In the larger area from which labor is drawn, the unemployment rate is less worrisome than that for the Roanoke Valley because it hovers nearly a point higher - at 4.3 percent in February, said partnership Research Director Anne Piedmont.
"There are people willing to work, there are people willing to drive, and there are people willing to change jobs," Doughty said. The labor shortage "is not a deterrent for the kind of jobs we are trying to create."
But that is little comfort to Peter Ragone, who said he is paying workers all he can and is still unable to fill his factory.
"I need a recession," he said.
by CNB