Today is Manufacturing Day, a day to inspire the next generation of manufacturers and shine a light on the skills shortage in the industry.
Job openings in US manufacturing have been growing at double-digit rates since mid-2017 and are nearing the historical peak recorded in 2001. While demand for labor increases, the skills gap in manufacturing may leave approximately 2.4 million positions unfilled between 2018 and 2028 — a potential economic impact of $2.5 trillion, according to a Deloitte study.
Why the shortage?
Blue-collar jobs are currently the hardest to fill because more and more Americans are going to college and taking professional jobs while working-class baby boomers are retiring. So much so that 27% of manufacturing workers are eligible to retire over the next 10 years, taking their specialized skills and institutional knowledge with them. What’s more, 80% of the workforce work in professional jobs, whereas only 8% work in manufacturing.
Previous predictions raised concerns that new technologies, such as artificial intelligence and robots, would eliminate jobs, yet the opposite has happened with more jobs being created in order to oversee these technologies. This is partly attributed to the continued rise of e-commerce, placing strain on companies to fulfill and manufacture products to meet demand.
Lastly, there’s a branding problem. While there is demand for skilled labor, people haven’t exactly rushed to enter blue-collar industries. Only 1 in 3 parents said they would encourage their children to pursue a manufacturing career, as 66% are worried about job security and only 50% feel the industry provides a good income.
According to the National Association of Manufacturers, the average manufacturing worker in the U.S. earned $81,289 annually, including pay and benefits, while the average worker in all nonfarm industries earned $63,830. (Other surveys put the average annual pay, not including benefits, closer to $45,000.)
Are we over educating?
Adapting to technological advancements is nothing new. For over two centuries, the manufacturing industry has evolved tremendously: from automatic flour mills in 1785 to the industrial revolution in 1820 to the assembly line in automotive manufacturing in 1913, and so on. Today, according to Deloitte, “digital skills must marry human skills.” While 50% of manufacturers reported having adopted automation, the top skills needed to with today’s technological boom are critical thinking, programming (for robots and automation), and data sciences.
Our current higher education system needs revisiting if the trend toward pushing young adults into traditional 4-year degree programs won’t wane. Not all jobs require a college degree. Credential creep is a well-documented problem. Jim Nelson, vice president of external affairs at the Illinois Manufacturers’ Association, claims that only one-third of all jobs in the US actually require a bachelor’s degree or greater, which means higher ed needs to start developing a curriculum focused on developing talent for manufacturing, supply chain, and blue-collar jobs.
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The manufacturing industry was an early adopter of apprenticeship and training programs, similar to how Workforce Opportunity Services manages the STEP (Service to Employment Program) program for United Rentals. The model requires companies to pay upfront for their employees’ job-related education and reap the benefits of developing a workforce: Equipping its employees with the skills they need to positively impact the business on day one, while also reducing the risk of an on-the-job injury.
Says Nelson, “Every job should have a pathway to a bachelor’s degree. But not every job starts there.” Learning and development don’t need to stop at the apprentice stage: Tuition reimbursement for continuing education and technical skill development enables professional growth opportunities and could be a powerful retention tool. This opens entry-level positions for new folks entering the workforce or industry while creating opportunities for more senior talent to rise through the ranks.
Since manufacturing is now also competing for skilled tech talent, that means competing with the likes of high-tech companies, like Google and Facebook. Often these companies offer a solid financial package, flexible schedule, and generous vacation and sick time. Recruits are often enticed with stock purchase opportunities, free food, and even massages!
To entice workers to join the blue-collar labor market, and combat current perceptions of manufacturing, employers need to sweeten the deal. Gad Levanon, The Conference Board’s chief economist for North America, says, “Companies looking to attract enough blue-collar workers will have to continue increasing wages, and as a result, possibly experience diminished profits.”
A version of this article was originally published on wforce.org.