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Perc Pineda, Ph.D.

Chief Economist

A lack of skilled workers continues to be a major challenge for U.S. manufacturing, including the plastics industry. Most states have created workforce development offices to increase qualified labor supply. States with high plastics industry employment concentration such as Michigan, Indiana, Wisconsin, Ohio and Kentucky, have these offices or agencies.[1] Changes in U.S. employment dynamics partly explain the shortage of skilled workers. Job hires and job separations have been declining in the U.S. since the early 1990s, according to a study by Hyatt and Spletzer in 2013.[2] 

Changes in job hiring, separation, and job mobility all relate to labor mobility. In economics, the ability of workers to move from one industry to another and from one geographic location to another is referred to as labor mobility. Late last year, the Organization for Economic Co-operation and Development (OECD) released a Working Paper—The decline in labour mobility in the United States: Insights from new administrative data by Azzopardi, D., et. al. (2020)—analyzing job mobility in the U.S. from 2000 to 2018.[3] 

STATES ARE COMPETING FOR WORKERS

There are three key points in OECD study the plastics industry must recognize. First, 50% of all hires involved workers who were already employed ­– those moving from one job to another. Second, approximately 16% of job-to-job moves from 2010 to 2016 occurred between different states, about half occurring between neighboring states. Third, hires of unemployed—those out of work for three months or more— continued to decline.  

The second and third points above relate to the plastics industry. Job seekers with transferable skills and open to other industries are moving to neighboring states if labor demand is strong or if tax incentives exist. The third point reinforces job seekers' concerns about employment gaps. Recruiters and HR managers might view an employment gap as a red flag. However, that gut reaction could produce a lose-lose outcome, if a qualified job seeker is automatically disqualified.

UNEMPLOYED JOB SEEKERS ARE AN UNTAPPED RESOURCE

An employment gap is not necessarily a bad sign. People voluntarily take time off to raise a child or to care for a sick parent. It could be that an employment gap conveys a job seeker's sense of duty and compassion. For the plastics industry, given the persistent gap between skilled labor demand and supply, unemployed job seekers should be given a chance.

Plastics products manufacturing lost an estimated 60,900 jobs from March to April last year, due to the pandemic. However, 57,500 jobs were added from May on. Based on this year's January and February production and shipment data, the plastics industry is operating above the pre-pandemic level. Hiring is expected to continue in 2021 with industries competing for a limited pool of skilled workers.

[1] See Plastics Workforce Resource at www.plasticsindustry.org/data State workforce development offices contact information.

[2] Hyatt, H.R., Spletzer, J.R. The recent decline in employment dynamics. IZA J Labor Econ 2, 5 (2013). https://doi.org/10.1186/2193-8997-2-5.

[3] Azzopardi, D., et al. (2020), "The decline in labour mobility in the United States: Insights from new administrative data", OECD Economics Department Working Papers, No. 1644, OECD Publishing, Paris, https://doi.org/10.1787/9af7f956-en.

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