Workforce Development for Economic Developers
Part 3: Measuring Skilled Worker Shortages
To measure Skilled Worker Shortages by occupation, we need to determine the demand for workers and the potential supply of new workers. To determine demand, you need a projection of the growth in the number of workers over the next five to ten years. For this example, let’s look at a high-skilled occupation in Advanced Manufacturing – Computer-Controlled Machine Tool Operators (SOC #51-4011). Employment in this occupation in 2013 was 3,640 in a multi-county labor market, and the employment is expected to grow to 4,490 in 2023 – a growth of 850 jobs over 10 years or an average of 85 jobs per year. So the demand is an average of 85 new Computer-Controlled Machine Tool Operators per year over the next ten years. Correct? No, this is not correct because there is another factor involved. Each year a number of workers will leave their job due to retirement, disability, relocation, etc. Therefore, these workers will need to be replaced just to maintain the current level of employment in this occupation. In this example, let’s suppose that 780 Computer-Controlled Machine Tool Operators need to be replaced over the next ten years, which is an average of 78 Replacements per year based on an estimate from EMSI. Therefore, the total demand for these Machine Tool Operators is estimated to be 163 workers per year, which is referred to as the number of Openings.
What is the potential supply of new Computer-Controlled Machine Tool Operators over the next 10 years? There are a number of sources of new workers for these Openings – students that complete degree or certificate programs in Machining Technology, advancement of workers that receive on-the-job training, recruitment of skilled workers from outside the area, etc. Unfortunately, the only reliable source of data is the number of students that complete a degree or certificate program. In this Machine Tool Operator example, assume there were 12 students that completed a degree program in Machining Technology at the area community college in past academic year. Then assume that the community college will have 12 students earn a degree in Machining Technology each year through the year 2023, which is a minimum number for the supply.
If you subtract the 12 Completions per year from the 163 Openings, then the Skilled Worker Shortage for this occupation is 151 workers per year on average. However, the Shortage may not be this great because there are other potential sources of qualified Machine Tool Operators. Plus, the community college may attract more students.
Smart Solutions Group believes that the Skilled Worker Shortage estimates should be refined by using inputs of business executives and managers that are in the industry cluster. In key industry clusters, focus groups of business executives and managers should be held to review the occupations in their cluster that are projected to have significant Skilled Worker Shortages and make adjustments to the estimated Shortages and identify programs that can be implemented to mitigate these shortages.
In Part 4 of this series, we will present some actual examples of Skilled Worker Shortages.