There's something missing from the Buffalo Niagara region's renaissance: jobs.
Despite the flurry of construction, the return of millennials who once fled at the first chance and a hot housing market, the rebound that is so widely felt across the region still is stuck in its traditional old pattern of sluggish job growth that lags far behind the rest of the country.
Revised job data from the U.S. Bureau of Labor Statistics this month showed just how stark the job creation gap has become. Job growth across the country was almost five times stronger last year than it was here. And the 2,000 jobs that were created here over the past year – a growth rate of just under 0.4 percent during 2018 – were the fewest since 2010, when the region was just starting to emerge from the Great Recession.
But for the first time in decades, the problem isn't a struggling economy. Buffalo Niagara badly needs more people.
Companies want to hire, but they struggle to find people to fill their openings in a region where Baby Boomers are retiring and the overall population is stagnant. The number of unemployed workers is at its lowest level since at least the 1980s. The proof of that is literally in signs – the "help wanted" signs that are so common outside companies across Western New York.
William Fierle, the chief operating officer at Conax Technologies, says it's hard for the 150-employee manufacturer to find quality workers, and that difficulty is a constraint on its ability to bring on new business. In today's tight job market, Conax now tests its new workers on their aptitude in the basic skills they'll need in their jobs and offers additional training to workers who need extra help.
"It's a people problem," said Timothy Glass, the State Labor Department's regional economist in Buffalo. "Either companies aren't finding the people with the qualifications they're looking for or the skills they're looking for, or they're just not finding enough people."
That's a potentially dangerous thing for the Buffalo Niagara economy in the long run. If companies here can't find the workers they need here, they have two choices: Either turn down business because they don't have the workers to handle the additional work or move someplace where they can find the people they need.
It's not an idle threat. Just this past week, a Jamestown truck lighting supplier, Truck-Lite, said it was moving its headquarters to suburban Detroit to be closer to its auto industry suppliers, but also to be in a market with a bigger pool of qualified workers.
"The number of people available to hire in Buffalo is starting to manifest itself in downward pressure on our economy," said Gary Keith, the regional economist at M&T Bank in Buffalo.
"We're starting to see the bite of the hiring issue," he said. "If you want to hire someone, but can't find them, that investment either doesn't get made, or it gets done some other way."
That's not to say there isn't plenty of hiring going on, but it's more of a churning of the local job market than an expansion. Workers are retiring and companies are hiring replacements as best they can. Workers are moving on to different jobs, and their former employers are hiring replacements as best they can. On top of that, add in the extra workers that growing companies are struggling to add.
But the worker shortage isn't paying off at payday. The average weekly wage here was up by a little less than 3 percent through the first three quarters of last year, which is about on par with the average pay increase over the last four years. Economists, though, think that the churn in the labor market could be keeping a lid on the rise in average wages, with Baby Boomers who retire at the peak of their earnings power being replaced by younger employees starting at the bottom of the wage scale.
The pressure that the Buffalo Niagara region is feeling isn't unique. Across the country, there now is less than one unemployed worker for every job opening, according to federal data. During the depths of the Great Recession, there were more than six unemployed workers for every job opening.
Similar data isn't available on the local level, but we do know that the number of people who are actively looking for a job but can't find one here is at a more than 30-year low after dropping by almost 50 percent during the past six years.
That's the key ingredient in the recipe for sharply lower unemployment, which stood at a seasonally adjusted 4.1 percent in January.
The Buffalo job market also has some more unique ingredients.
Our population is stable – in contrast to population growth nationally.
And our population is older – the median age of people in the Buffalo Niagara region, at nearly 41 years old, is three years older than the national median. That means the wave of Baby Boomers heading into retirement and dropping out of the workforce is even bigger here. Our labor pool has shrunk by 8 percent over the past decade.
So it doesn't take much in the way of job growth in a shrinking labor pool to push unemployment down to modern-day lows.
"As Baby Boomers retire, it's getting harder and harder to find replacements," Glass said.