WDAY: The News Leader

Published May 04, 2014, 10:42 AM

Coming up empty: F-M faces severe worker shortage

FARGO - A software engineer with about five years’ experience, Blaine Booher is seemingly the answer to North Dakota’s workforce woes. He and his wife, who moved here from Cincinnati six months ago, will even be featured in a series of online videos meant to attract out-of-staters to North Dakota’s abundant job market.

By: Sherri Richards, Forum News Service, INFORUM, WDAY

FARGO - A software engineer with about five years’ experience, Blaine Booher is seemingly the answer to North Dakota’s workforce woes. He and his wife, who moved here from Cincinnati six months ago, will even be featured in a series of online videos meant to attract out-of-staters to North Dakota’s abundant job market.

But as owner of Clifton Labs, a hardware, software, mobile and Web development firm with offices in Fargo and Cincinnati, Booher is experiencing the exact same worker crunch as many local employers.

“It’s a great problem to have as an economy,” Booher said.

North Dakota’s low unemployment rate is touted as good news, a sign of prosperity. The state has boasted the nation’s lowest rate since spring 2009, said Michael Ziesch, manager of Job Service North Dakota’s Labor Market Information Center.

But there’s a dark side to that seemingly sunny stat.

In the Fargo-Moorhead area, where unemployment is

3.3 percent, employers often can’t find enough workers or those with the right skills. It’s a common refrain across sectors: retail, service, tech, industrial and skilled labor.

Fargo Job Service has more than 6,300 local job openings listed on its website, compared to just over 2,100 people seeking work, said Carey Fry, Fargo Job Service office manager.

That’s three jobs for every person in their system. And a lot of those seekers already have a job, Ziesch said.

“People think all the jobs in North Dakota are out in the west. That’s just not the case,” Fry said.

Fry has had to turn away more companies from Job Service job fairs than ever before, and she’s seen a huge increase in on-site job fairs. Individual employers set up a desk in the Job Service office about three times a week, she said.

“It’s increased over the last couple years,” Fry said. “Before that, it didn’t really happen at all.”

The tight labor pool gives leverage to workers. Those willing to be trained for an in-demand skill can improve their fortunes, Fry said.

But the ongoing worker shortage keeps local companies from expanding. It also makes it more difficult to attract new businesses or industries.

“As good as things are in our region and in our marketplace, they could be exponentially better if we had an unlimited supply of labor and qualified labor,” said Mark Vaux, executive vice president of business development with the Greater Fargo Moorhead Economic Development Corp.

In some cases, if companies can’t find or attract the labor here, they open satellite operations in other parts of the country or world.

“That’s a bit concerning, because sometimes, when that business leaves, it doesn’t come back,” Vaux said.

Effects widespread

In the Fargo Moorhead West Fargo Chamber’s 2013 survey of members, nearly 40 percent of respondents said difficulty attracting and retaining qualified employees was the No. 1 factor expected to adversely affect business in the next 12 months. That was up from fifth in 2012, and more than

80 percent placed it in their top five.

Vaux and Craig Whitney, president of the local Chamber, say the topic is discussed with almost every business their organizations visit.

“We have such a strong manufacturing presence in this community that we’re very fortunate to have, but it requires a specially trained worker,” Whitney said.

The shortage is seen in other skills and trades, such as the plumbing and heating industry. Kevin Riley, vice president of service, sales and marketing for Robert Gibb & Sons, said the company has been trying for six months to find someone for its Bismarck location. It even started advertising on bathroom signs.

“We’ve tried everything,” Riley said. “We just can’t get anybody.”

Riley said the company is concerned for the future. Fewer and fewer people are going into the field, while the industry projects a 21 percent increase in demand over the next 10 years. The company has talked about offering scholarships or paying back student loans.

“HVAC and plumbing are old professions that don’t get the glitz and glamour that some of the newer professions get, but are very lucrative and respected,” he said.

Booher, of Clifton Labs, would like to hire 15 engineers by the end of the year and double in size by next year. Open desks that were earmarked for administrative staff are remaining open for his potential engineering hires.

So far, Booher has hired three electrical engineering grads from North Dakota State University. But software engineers with the right skill set have been harder to come by, he said. So are mid-level engineers.

It’s a small talent pool to begin with, Booher said, and he can’t compete with the pay larger firms offer. He focuses on what he can provide: flexible hours, workplace culture and interesting projects.

“We do get job applications from time to time,” he said. “Then you’re playing the sales game.”

Even jobs that require no specialty training are staying empty, prompting the sort of aggressive hiring incentives that have drawn attention in the Oil Patch.

Lakemode Liquors in south Fargo has had a dearth of applicants, despite advertising on multiple websites, bumping up starting wages and offering a $100 sign-on bonus, said co-owner Jodi Arneson.

“What else can you do?” she asked.

Fast growth, few workers

So, how’d we get here?

It’s been largely thanks to the duration and magnitude of economic growth in the state, said Dean Bangsund, research scientist, and Nancy Hodur, assistant research professor. Both work in NDSU’s Department of Agribusiness and Applied Economics.

North Dakota’s economy began expanding just before the national recession, which registered as a “little blip” here compared to the rest of the country, Bangsund said.

As the state rebounded, thanks to both the agricultural and developing oil and gas industries, “we quickly exhausted a lot of the free labor that was available in North Dakota and the immediate regions,” Bangsund said.

Subsequent rounds of economic expansion in several sectors removed the remaining elasticity in the labor market.

Ziesch said North Dakota’s labor force participation rate – non-institutionalized civilians over age 16 who are engaged in the workforce – is 72 percent, compared to 63 percent nationally.

“If we need additional workers, those new workers need to come from outside the region,” Bangsund said. “That’s a much more difficult prospect.”

While the Fargo-Moorhead metro area has seen tremendous population gain – 3 percent growth from 2012 to 2013 – it hasn’t been enough to keep up with workforce demand, Hodur said.

Of course, Bangsund said it’s a substantially better problem than what North Dakota faced in the late 1990s and early 2000s, when young residents were leaving and the state’s population was shrinking.

Joel Livingood, general manager of the Oxbow Country Club, sees both sides. Fargo’s economic boom has translated to increased club membership, which fuels the need for more seasonal workers.

He’ll go from about 30 employees in the off-season to 100 this season. Last summer, he had 75.

But Livingood said hiring has been more challenging this year than before, especially in the grounds crew and kitchen. He said the club has had to increase wages. It’s also been touting its ancillary benefits, like rounds of golf.

“Driving around town, you see just about every restaurant is hiring line cooks,” Livingood said. “It forces all of us in that industry to adjust our pay and incentives.”

It may require more than better wages.

Whitney, with the Chamber, said he’s talked to legislators about the possibility of special incentives, like tax breaks, to lure people here. He also believes the region needs to work on the outside perception of life here, including flooding.

Public relations campaigns aren’t enough, though, Whitney said, suggesting a comprehensive workforce study.

“It’s our number one challenge,” said the GFMEDC’s Vaux, “and we’re certainly very aware of it and addressing it in partnership with the businesses, Job Service and education providers all across the board, K-12 and beyond.”