SPEAKERS
Brett Elliott, Tim Raglin
Tim Raglin 00:08
Well, hello, and welcome to the Skillwork Forum again. As always, my name is Tim, I'm joined with my partner here at Skillwork, Brett. And we appreciate your time joining us here today. As you know, here at the Skilledwork Forum, we talk about all kinds of issues, trends, impacts to industries and businesses surrounding the skilled trades. And today, we're approaching, believe it or not, I can't believe it's already happened, the end of this year. 2021 it just went screaming by, but we always try to take a crystal ball look ahead at the coming year. So in today's episode, we're actually, I think we're going to break it up into two, we're going to, we're going to talk about the things that we see some of the trends, some of the needle movers, if you will, for the businesses out there, and also for the men and women that are in the skilled trades, or use folks that are in the skilled trades to advance your business. So we will try our best to take a look at those things that are going to impact you from a business perspective. And we think probably the surest way to predict what's going to happen, is to take a look what has happened, what's currently happening, more specifically, kind of what things are beginning to emerge, what things are beginning to have an impact now that will persist into the coming year. So what are the things that impacted us in 2021, and the things that will impact you and us in the coming year? So we've identified what we think are eight factors, eight trends that we're going to discuss over this two-part segment of the Skillwork Form, and I'm just going to summarize them here. That over the the next two episodes, we'll get into more detail o,n but at a high level, we're going to talk about, obviously, the skilled labor shortage. And really where we see that going. And spoiler alert, where you see that continuing, and probably getting more acute for you in the coming year. The second thing is this baby boomer exodus, which we believe is going to be both a brain and an experience drain to your company. So we see that continuing to be a significant trend. The third thing that we'll talk about, is this growing demand of your workers for more flexibility in the workplace, and what effect is that going to have on your business. Fourth, this concept of replacement as a big driver in your labor strategy. And by replacement we're talking about not just people that leave out of attrition, or but you have to hire because your business has grown, but this is a concept called replacement that we'll talk about that's going to impact more and more the skilled trades. We'll be talking about automation of the workplace, that's going to be a continuing trend, the impact to your business from that perspective. Rising costs and inflation fears, which we see definitely on the horizon. The impact of the labor market as a result of that. The supply chain backlog, that's the seventh thing that we'll talk about. The supply chain backlog and really this growing consumer demand and how that's going to impact your business, it already is that will continue to do so in some interesting ways. And then finally, this infrastructure, we'll call it an infrastructure bill that's been passed and the impact that that could have, particularly in the construction sector. So with that, Brett, I said a lot to tee us up there, but the first one that we're going to talk about over to you.
Brett Elliott 03:34
Alright, so well, like Tim said, you know, kind of a spoiler alert, but if you thought the labor shortages were, were all of a sudden in 2022 are all going to go away, I think I think you're gonna have a bad year. So, so obviously, you know, it's an obvious the labor shortage in total, you know, from the service industry to pretty much every business is is struggling in that area. And skilled trades, which is what we're going to focus on as we always do, is is definitely, you know, going to going to continue to experience that same same issue. And so, you know, the, I think the, the demand, and the opportunity, that that's creating, really for the skilled trades is is new skills. You know, a lot of what you're going to, we're going to talk about in this episode, and even some, in part two of this is is what those trends are and what kind of where the opportunities are. If you're if you're a business, you know, this is creating a lot of challenges as to how you're going to address it. If you're, if you're a skilled worker, this is actually you know, we I don't know that we coined the term, but it's, you know, the kind of the golden age for the skilled labor. I mean, right now the demand is so strong for for skilled trades. I mean, just in probably, Tim, I would say, I think, a year and a half ago, across our system of what we see of technicians, and a lot of guys, maintenance technicians in the manufacturing space, and so forth and so on, you know, I think, probably 18 to 24 months ago, probably the average wage we saw was $24- $25 an hour? And, and this year, I mean, in a relatively short period of time, I just looked the other day, and our average across the system was was up to about $27 now, with, with even a higher increase in the higher jobs. We're seeing a lot more automation technicians and PLC type type roles where you're getting up up well into the $30 range. So we've definitely seen a seen a movement and a shift in better wages.
Tim Raglin 06:02
Yeah, for sure. And I think that trend is going to definitely continue. And it's worth talking about this as well, it's producing for you, you know, maybe the likes of we haven't seen in quite a while a very, very competitive environment for those skilled workers. Snd it's going to take a change in mindset to be able to address this labor shortage, because it's going to, it's going to continue to put stress on your current workforce. Because demand, as we talked about, is increasing. Yes, COVID demand is, you know, is is unprecedented. Yep. So, it's gonna exacerbate that issue.
Brett Elliott 06:41
Well, there's no doubt. I mean, you, you're gonna have to, I mean, we've already had to do it, I mean, our whole business, you know, Skilwork exists, you know, because of the demand and needing to think outside of the box as to how you're going to find the talent and get it there. I think that, that reality, for companies to really find the demand, I mean, you know, the number of companies that we work with, and the search for talent is just off the charts as far as trying to find not just not just individuals to put into spots, but really finding talent. And we'll get more into it, you know, probably in the next episode, when we talk about the fourth industrial revolution, the expansion of automation, but also just the level of skill and what's happening. You know, the other thing, Tim, that we're seeing happen is, you know, the, you know, the, the 24-month, elephant in the room, you know, COVID, you know, has created a lot of dynamics, obviously, that's not over, you know, we're continuing to deal with that. We'll probably talk a little bit, we'll weave it in here a little bit. But obviously, you know, the the vaccine mandates and OSHA, which right now, as we're filming this, you know, that's been put on, on pause for the moment, but you know, that, that, that fight wherever, wherever you land on that is not over. And that's going to have, we'd be remiss in saying that's not going to have an impact in here, somewhere and how it affects your workforce. But the other thing that I think COVID has, has clearly done it is it has created a more moving workforce. You, people are for a variety of reasons, they're either leaving certain parts of the country, and moving, and part of that is because a lot of a lot of people to now let's let's, let's be, let's just say that we've got a, we've got a maintenance individual, a guy or a gal, whatever the case may be, and their spouse is now able to work remote, which we're seeing a lot. And so suddenly, hey, they can be they can move, they can go or they're choosing to go, whatever the case. So that that mobility and freedom to move around is creating a unique dynamic.
Tim Raglin 09:04
Yeah, it is. And, you know, we'll we'll talk a little bit more about workplace flexibility. And that's a big part of it. And just to kind of complete or add a little bit more to your thought about COVID. And, you know, we're not going to get into, you know, the where you stand on that, I think that a prudent business will look to, you know, consider what are the potential outcomes of that. One of which is if that is, you know, corporately mandated that you're going to pursue that, whether it gets made legal or not, that's going to have an impact on your workforce. Because the bottom line is, certain workers will be okay with that, and certain workers will not, and that could, you know, further put additional stress and strain on your workforce that people choose to, you know, transition because of that and. And we'll talk about that a little bit in this replacement. I think that could increase replacement demand as well. So a lot of things are going to they're going to drive labor shortage. One of them is, it's our next our next point that we're talking about. It's kind of related, but it's, it's, it was happening before the what's the impacted us this last couple of years, and it's going to continue, I think it's been accelerated. This is what we call the baby boomer exodus. And it's no surprise or secret that we have an aging workforce across all sectors. But it's even more acute in those that rely on skilled trades. So it's a brain drain, but really, for those of us that work in the skilled trades industry, more important that you can teach somebody, you know, send them to, you know, two years, 18 months, and they can learn, you know that what the book says about PLC, but the experience? To know how to apply that in a troubleshooting environment where you depend on somebody to know what to do when to do it? It's that experience drain is going to be a significant factor, we think, in the next year and the coming year. So according to the Bureau of Labor Statistics, approximately 1/3 of all skilled workers are over the age of 50. And even, let's take a look at a particular sector, we work in construction. Those who work in construction trades, and this particular statistic that was pulled out looked at construct construction and building inspectors. So let's just take that job: the median age for that job is 53. And the median age for all other jobs is almost a decade, it's 42. So they're 10 years older in that trade. And I think that's pretty accurate across a lot of construction, and even manufacturing. So you have that percentage of people on the upper end of that, that are close to and could be considering retirement. We know for certain that the COVID actually accelerated some of that, you know, people leaving early. Conversely, only 10% of this group that I just talked about, are under the age of 25. So you've got a large group that are older and a very small group that's coming up to replace them. So that is a that is a significant issue in this baby, baby boomer. And speaking as two Baby Boomers. Right? Yeah, we get it right?
Brett Elliott 12:35
Yeah, you can't retire. But that's alright. But the, the, but no, it's very true fact, you know, we talked about, I think we've talked about it in a previous in a previous episode, you know, we, we call it the COVID exit. And, and the COVID exit, you know, meaning people of the baby boomer age, and maybe we're at the top end of that, you know, mid 60, you know, range who just said, you know, in the current environment, um, I think the industry, we as industry leaders thought that a lot of those individuals that were 64, 65, we could probably convince them to work till they were maybe 67, 68. We were trying to push that along, trying to, because we, everybody has seen this, this train coming at us for a while, and trying to figure out how to get ahead of it. And, and COVID, you know, the the people that decided, you know, it's just not worth it for me to stay, I'm just gonna go ahead and retire, that definitely had an impact. And then we're going to continue potentially, to see that. There was an article, I don't remember exactly where we read it recently, not just in the skilled trades, but across all all, all workforce that over the next five years, 10,000 Baby Boomers a day will will leave the workforce. So because they're reaching age, so that's a significant impact. We'll talk about a little bit more, you know, here when we get done in the replacements and other stats, that that really kind of drive home, the impact. You know, I'm in facilities all the time, you know, in my role here, I do a lot deal with a lot of the clients. And so it Tim, I don't know, the last time I went to a client where this conversation about their aged maintenance staff and the reality of of them retiring and leaving and the challenge to find the talent behind it. I mean, it's not like I've got to convince them. They are quite aware of the of the problem.
Tim Raglin 14:48
Yeah, I mean, some of the statistics are pretty staggering. And, you know, one that we that we picked up on is that, this is a projection, and you know it all also applies to our next our next trend that we see. But by 2030, by one projection, almost 80 million skilled tradesmen will have retired. And there's only projected to be 40 million to replace them.
Brett Elliott 15:13
Yeah, that's a scary number.
Tim Raglin 15:15
I mean, I'm from Arkansas, but I can do that math. That's a scary number knowing. So you're saying, Yeah, that's a big deal. We all know that. But here's the thing. I've been in the workforce for a while. And this has been a topic that's been discussed in all sorts of sectors. But it gets talked about, and everybody agrees, but what are you doing about it? Yeah, I mean, that's the thing. I mean, it now it's here. We do a lot of risk mitigation here, which was, hey, this thing could happen. Well, it's here. We're in the middle of it, it got accelerated. So your 5 to 10 year strategic planning? That just got moved up, you know, like today. You've got to take care of today. And here's one thing I would just caution, because I've been through, you know, a high demand for a particular skill set in a previous life. And in our rush to try to acquire new talent, and younger talent, and replacement talent, there's a tendency to forget those guys that are out there doing it, and have been doing it for a long time. So there's a sense that wait a minute, these guys are getting hiring bonuses, they're getting, you know, extra vacation, they're getting treated like rockstars what about me? I've been here, you know, working for this company for years. So my caution to you, having lived through that, is make sure you pay attention to those guys. And in your haste to fix this problem, which is a necessity, don't forget those guys, because you'll just push them out the door.
Brett Elliott 16:48
Yeah, it's like, you know, it's like a politician who, you know, forgets, forgets their base trying to trace chase the, you know, the new voter. So you gotta you got to remember your workforce. And that's a lot of, you know, what we're, you know, we're talking about here, you know, we're talking about it, you know, like you said, Tim, these labor shortages and the baby boomer exodus. And these are things that we've seen for a couple years, you know, what we're basically saying, you know, it's going to continue, probably a little bit, maybe even accelerated. I think we've already seen that in 2021. So but I think, you know, like, like Tim said, as, as, as companies, leaders and business leaders, as you're looking at this, then you say, Okay, well, okay, you know, so what, what do I do? And so so obviously, this idea of, you have to start thinking differently as how you're going to attract the talent. For one thing, but then also, once you get that talent, one of the things that that that we're seeing and reading as a as a definite trend, as we head into 22 and on is is this workplace flexibility. So I think companies are going to have to really, the traditional idea that this is the shift, these are the days, this is what it is, all those kinds of things, you're going to have to think about ways to make it just more flexible. You know, whether that's split shifts, they talk about things like flexible PTO. One of the things that I think is maybe one of the more interesting ones, you know, we have, we have we have two young ladies here on our staff, who what's the right word Tim? Timeshare share? They job share. Yeah, and so, so they're both part time, we're not probably talking part time, and obviously, in these facilities and whatnot, but they have the ability to, you know, they job share, and they kind of come that way, it works for both of them. If we told both of them, hey, you got to be full time. They'd be like, well, this doesn't work for me.
Tim Raglin 19:03
We wouldn't have either of them.
Brett Elliott 19:04
And so instead, we have two very talented, very gifted, you know, individuals on our team because of our ability to do that. I think you're gonna see it's, it's, it's unique, and it's unusual. You know, I spent 30 plus years, you know, in the manufacturing space, and if somebody would have told me, "Well, you got to do this, you got to do that", I'd be like, "No, I'm not doing that". And so but but now you just can't be that stubborn.
Tim Raglin 19:28
Yeah. And I mean, just to just to underpin what Brett's saying, this workplace flexibility is, you know, that's what we, if you're following these that's what we see as our third trend. And I mean, it's been around in other industries, but I think you're right, Brett, even the idea of you know, job sharing? For somebody on your, let's let's take a manufacturing space, on your maintenance team. Why wouldn't you consider if I have two baby boomer guys who know how to fix everything, but they're, they're at a place right now where they only want to work 20-25 hours a week, and you get two of those guys, and they can share that job. Wouldn't you rather have that then have both of them walk? I mean, it's it things like that you got to consider and think about.
Brett Elliott 20:16
I think you're gonna have to. I think things like, you know, one of the terms I hear out there is "swappable shifts". You know a lot of these facilities, a lot of the plants that we have, have skilled workers in, you know, they're 2 2 3 facilities, which basically means it's a seven day operation, you know, working, you know, 12-hour shifts, you know, one week you work three days, the next week you work four. It, it's a big rotation schedule. It's a way to accommodate a plant working seven days without individuals working seven days. But always, in all of these facilities, the hardest shifts to fill are always the night shifts. And so, so but creating maybe some flexibility, you know, where two individuals or multiple individuals on a team can actually say, "Hey, can you cover for me?" You know, you know, back when you used to wait tables, you know, if you, if you needed, you could have the day off, as long as you can find somebody that could cover for you. You know, you know, some of that flexibility. I know, it's not as easy and a lot of it is just because just like Tim and I, we can become pretty rigid in our the way we want to do things. But I think just being able to create some environments, whatever that is, I don't know exactly how it works in different facilities, but that the ability, you know, some split shift, sharing time, flexible PTO, swappable shifts. For example, like I said, if you have a guy that says, "Hey, I got to be off this Saturday", well, you know, he can get another guy to cover for him, kinds of things. All of that is going to go to, you know, along with the ability to be more mobile, and to be able to have a little more ability to move around.
Tim Raglin 22:00
Yeah, like I said in a previous career, where I was, you know, doing a lot of very time sensitive project management, delivery of products. And we had a lot of high tech engineers working on the projects. And at the time, there, the demand for these guys was extremely high. We had to get very creative with how we could not only recruit, but retain and a lot of the traditional things that hey, we all show up and work from seven to five, we had to get very creative and allow everything from, you know, attire, which you know, doesn't apply in some industries, but to shifts and availability and, you know, all kinds of creative, creative things. So staying in the current paradigm that you are with your workforce and how you manage them and the environment we're going in is going to guarantee you that you're going to struggle a lot more against your competitors that are more forward leaning for this, for the workforce. It's just guaranteed. It's supply and demand. And it's going to be, you're going to have to rethink a lot of your strategy. And also a lot of the your five year and or further projections that are currently in your planning for labor needs. We think that that's going to accelerate. So anything else on workplace flexibility?
Brett Elliott 23:22
No, I don't think so.
Tim Raglin 23:23
Alright, so the next thing we mentioned already a couple of times. So the fourth thing is this concept of replacement, which, you know, we all know what it is, but you know, now that now it's kind of being talked about more. So replacement as a driver for your workforce for your for your labor staff. Projections now are, or let's define it first. So replacement is rather than attrition, or so natural attrition you lose guys, you always have, you know, whatever your attrition rate is. So that happens for a variety of reasons, everybody's aware of that. So you have to replace those guys, you know that. And then there's also "my business is growing". So business growth, I need more people to drive that. So this concept of replacement is something that other industries have dealt with, but now in skilled trades has become more and more of a thing. Brett's alluded to it, that your workers are going to be leaving, and you're going to have to replace the workers that you had no, you didn't anticipate there was nothing in your projection that they were planning on leaving. So this idea of replacement, most economists that look into the workforce and labor trends have said that replacement will outpace growth and attrition as the drive for labor in the coming decade. So it's going to be an increasing challenge. How are you going to replace workers who are leaving those jobs? And it's going to be, as we said, a very competitive market. So think about it right now. Many of you out there are doing all sorts of creative recruiting. And there's things that are called, you know, poaching from your competitors. I've heard it called sniping. You know, so your workers out there that are in these high demand jobs, they are being actively recruited right now by other employers, and even firms, you know, that are less scrupulous, maybe than we are, that are actively recruiting your skilled tradesmen to give to your competitor down the road. That's going on. And these guys who apparently, in a normal scenario, you would expect them to be there forever. They, they like their, they like their job, you know, they're getting paid well. Apparently, everything looks good. And next thing you know, they put in their two weeks notice, or they just drop their tools off, because they don't like their supervisor and out the door they go. And that's going to that's going to happen. So you're gonna have to anticipate a certain percentage of your labor force has to be replaced. And here's a statistic along those lines: in this coming year, in 2022. Here's a projection that two out of every three job openings are expected to be for replacing workers that leave an occupation. Sometimes in the same occupation, but sometimes in an adjacent occupation. And we're seeing a lot of that.
Brett Elliott 26:22
Oh, no doubt, no doubt. No, I think this is a big, this is a, this is a tough reality. I mean, we, I just think about, I mean, we have some clients who, who they pay very well, the facilities are well run, very clean. And they're dealing with with this, more than they ever have. To a point where I think it's almost, you know, we we talk about it, you know, in our business, you know, we we're a travel staffing company for skilled trades. You know, we've recognized some of this and, you know, of what was happening and, and brought a solution, you know, to the marketplace. And one of the in the early times, you know, Tim, a lot of clients would, they saw our guys coming in, who basically assimilate into their teams. It was almost like, "Well, yeah, but they're not, they're not permanent." Yeah, guys, now, they may become permanent guys. But now, the reality is, and I always used to say it without trying to sound too, you know, you know, pushed back, but was that what makes you think your current guys are so permanent? I mean, it's not like, you know, or they're not indentured servants, you know? And now, unfortunately, that reality has become much larger to them, and that they are even very well paying jobs, very well respected companies are seeing, you know, a guy's leaving. I just talked to a client the other day, I mean, they're losing $35 an hour automation tax, getting poached by another company, across town in a different industry at $42 an hour, and guess what? They're leaving. And so, so the idea that, you know, that you got to, you just have to look at it a little bit differently in this in this replay, because they are going to leave. People are leaving jobs at record numbers, partially because they can. Unfortunately, there's not as much loyalty to stay in one location. And and so with that, you as a as an employer, or as a business leader in order to, to make sure that your facility is running as efficiently as it can or your construction site, or whatever your space is. I mean, you have to really think about, how am I going to attract that talent? And does that talent really need, do I need to be as hung up on the idea that they're going to be here for 20 years?
Tim Raglin 29:06
Yeah.
Brett Elliott 29:06
I just think you got to get past that.
Tim Raglin 29:08
You got to get past that. It's just it's just a fact. And, you know, this this topic of, we've heard before, you know, workers aren't loyal anymore. And here's here's the hard truth as well is that, there's an example when where we were we are headquartered here, a fortune 150 company, that for years had the reputation of being, "Hey we're going to take care of our people long term". And the and as a result their employees were very loyal to them. That paradigm changed in the last three to five years where that loyalty to employees was not there anymore due to pressures for business pressures that they felt they had to do things. So the idea that many skilled workers we talk about, loyalty is a two way street. So there's no there's not that reciprocal loyalty that happens in the workplace anymore. They are savvy and they realize that if business trends go at one direction or other their job is tenuous. So that doesn't speak to all of you, many of you are very loyal to your employees and you know, we try to do the same. But that's what they hear and that's what they see. And that's what they're, it's reflected to them in in our constant media overload of information. So there's an idea that there is no security, It's, it's this, every man for himself sort of thing. So the opportunity's there, and recruiters that go after these guys are very persuasive. And giving them, showing them the opportunity. So it goes back to our previous point, be careful that you're continually recruiting your current staff. You're continually thinking about: what do I need to do to recruit them to stay? Think about a professional athlete at you know, professional sports team. You know, those guys for their for their star athletes, they spend as much time and effort making sure they sign and retain those guys, as they do the the current crop of, of new draft picks. So it's similar. We got it, we got to just change our mindset a little bit. Yeah. No. Anything else on that replacement thought?
Brett Elliott 31:13
Right. No, I you know, I mean, the replacement, like you said is, is is is the fact that people are leaving to be the days back. But but part of this, you know, it's exasperated by the reality that some of the stats that I think, Tim mentioned one earlier, and it kind of feeds into this, this whole thing that really elevates it to a whole different level. But you know, that, you know, you know that right now they're saying, you know, three tradesmen will retire over the next several years, and there's only one one tradesmen to close to replace them. And and those facts and you said earlier about by 2030, 80 million skilled tradesmen were going to retire and there's only 40 million, those those numbers kind of somewhat correlate. The fact is, in simple terms, there's more leaving than is coming behind them, and you better as a business owner, you better be figuring out how you're going to attract the ones you need.
Tim Raglin 32:21
And we know a lot of skilled tradesmen watch these as well. And you know, you guys, as you know, here at Skillwork we have, we have three basic core values here that we're very, you know, keen to follow and talk about. Our first is we honor God in everything we do. Our second core value though is we we intend to always bring value and and respect to our skilled tradesmen. We believe that you deserve that so I think this concept needs to be further embraced that it's not just something that you save. The idea that you men and women out there that do this job, you keep America running, you're crucial to what we do. And there is a there is a need, and it's deserved, that you should be respected in what you do. But I would also caution that it sometimes the grass isn't always greener on the other side of the hill, that there is it there's a risk of transitioning. So there's both sides of this coin. But if we speak to you, as a business owner thinking about this thing, you definitely need to consider that coming up. So let's so the four that we covered here in this first half is, just to recap, skilled labor shortage, which we talked about in a couple of different facets here that's going to increase. Part of it is this baby boom exodus. Not only a brain but an experience drain. The third one is workplace flexibility, greater demand for that and creativity around that. And then finally, replacement. This replacement topic for current workers will outpace growth and attrition. So we have four more that we're going to talk about for next year. The trends that we think will be becoming. So so please take a look at the next podcast episode after that. In the meantime, thank you for joining us here for for bread. I'm Tim from Skillwork. God bless and have a great day