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COMMENTARY

David Robinson: It's the tightest job market of a generation, but are cracks starting to show?

You don't have to look very hard to see signs showing just how tight the local job market is.

In fact, there are literally signs that say so.

Help wanted signs outside companies from Lancaster manufacturer PCB Piezotronics and Valu Home Center hardware stores to discount grocer Aldi and local fast food chain Mighty Taco.

You see it on billboards, where companies like Moog Inc. and Servotronics Inc. are touting their openings. And even in radio ads from companies like auto insurer GEICO.

With unemployment at an 18-year low of 4.1 percent for December and the number of people without jobs at its lowest level for any December in more than 28 years, the hunt for workers is harder than ever for businesses, especially for positions that require more than entry-level skills.

"This is the tightest market that I've been in – and I've been doing this for more than 30 years," said Paul Turevon, Moog's global head of talent acquisition.

It is the "help wanted" signs that make this job market stand out. While unemployment was this low for a brief period two decades ago, the hunt for workers wasn't as challenging. Job growth was similar, but there was more churn in the local economy, with the decades-long decline in manufacturing still in full swing, putting a steady stream of experienced workers into the job market as factories cut back and forced them into new careers.

Today, with the job market so tight, we're starting to see more people who hadn't been actively looking for work start their job hunt again. The local labor pool grew by nearly 3 percent last year and is at a six-year high. But even with more people looking, unemployment continues to drop because those new workers are having good luck in finding jobs. The number of people with jobs jumped by 4 percent last year and is at a 10-year high, according to the Labor Department data released Wednesday.

"From a labor perspective, we're going pretty good," said Timothy Glass, the State Labor Department's regional economist in Buffalo. "You're finally starting to see people come off the sidelines."

One reason may be the steady increase in the minimum wage, which hit $11.10 an hour at the end of December, Glass said. That makes entry-level positions more appealing, and the competition is forcing many companies to raise pay above the minimum for entry-level jobs. Part of it could be older workers putting off retirement, especially with health insurance so pricey. Part of it could be that discouraged workers have started looking again because they now think they have a decent chance of finding a job.

Yet the tight job market hasn't been a bonanza for workers when payday rolls around. Wages started rising more rapidly for local workers last year – with average annual pay rising by 4.3 percent according to estimates by Canisius College economists George Palumbo and Mark Zaporowski, topping the 3.6 percent nationwide increase. That's good for workers, but last year's increase was, by far, the biggest since the expansion started a decade ago.

Lately, however, the job market has been showing some cracks. Job growth has slowed to a trickle since the end of 2016, with only a tiny uptick in hiring during 2017 and growth that averaged less than 0.5 percent – less than half of the national increase – during the first half of last year, according to the federal government's most reliable set of local employment data.

Just this week, Cheektowaga manufacturer Ingersoll-Rand said it was cutting 300 jobs and shifting most of its production to North Carolina. More than 200 jobs will be lost when New Era Cap Co. closes its Derby plant. Another 100 jobs disappeared when local tablet and laptop maker Bak USA shut down.

That's creating the type of churn we saw in previous downturns – which until now had been noticeably subdued in the current expansion. But with wages starting to tick higher, tariffs pushing up material costs for some firms and the economic expansion simply getting long in the tooth, companies are paying even more attention to costs and looking for ways to save.

And research from the Federal Reserve Bank of New York found that mid-wage jobs paying $30,000 to $60,000 a year have been disappearing since the start of 2015, while higher-paying jobs that usually require sought-after skills have been growing and lower-paying entry level positions also have been on the upswing.

"There's a little bit at the top. There's a lot at the bottom and not a lot in the middle," said Gary Keith, the regional economist at M&T Bank in Buffalo. "There's still a lot of demand for people with skills."

That focus on skills is partly why Ingersoll-Rand is keeping 150 jobs in Buffalo at a technology center that will focus on engineering, sales and service, even as it moves production elsewhere.

And it's why, when Moog held a job fair in Cheektowaga last Saturday, hoping to fill 50 middle-income openings for assemblers and machinists, people started lining up before 6 a.m. – two hours before the doors opened on a frigid day. At times, the line stretched outside and around the corner. In all, the company interviewed 700 job hopefuls and collected resumes from another 400.

"It's those middle-wage jobs – like machinists – that people really want," Keith said. "But they're like hen's teeth and they don't come around very often."

Moog officials hoped to be able to fill 25 of the openings after the job fair. They think they're on track to do that, and the company also put the word out that they're hiring for other positions. "This was a way to reach out to the community to let them know we have these jobs," said Kristin Lucernoni, a Moog hiring specialist.

But there just aren't enough of those middle-wage jobs to go around. That's a problem.

Another problem is that the pool of available workers often don't have the skills needed to fill those open positions, which is why there's a push to improve local job training initiatives, like the one the state is starting at the Northland workforce training complex in Buffalo, targeting the skills needed by local manufacturers, rather than the ineffective one-size-fits-all approach that was common in years past.

"Manufacturing is still the bastion for people who didn't choose the higher education route," Palumbo said.

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