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uch headlines abound in the current news media, and for many the outlook is dreary. But is it really as bad as it seems? In a market that saw company growth rates skyrocket and labor wages creep higher due to increased demand on a short supply of knowledge workers, maybe it’s just what the economy needed — a little adjustment to knock the labor cosmos back into alignment.
Maybe that’s bit a optimistic, but since no one can predict exactly where the slowdown is heading, we can find the silver lining in an otherwise disconcerting situation.
Although companies are slowing down, they’re not stopping completely and highly skilled labor is still an issue for many. In fact, U.S. companies reported on April 2 that they expect to create 900,000 new information technology jobs this year, according to a survey conducted by the Information Technology Association of America. That number represents a 44 percent decrease in new jobs over last year — drastically slower growth, but growth nonetheless.
Of those 900,000 new jobs, 425,000 will go unfilled because of a lack of qualified applicants, ITAA reports. “Our 2001 numbers suggest that hiring has by no means halted for IT workers,” says Harris N. Miller, president of ITAA. “Rather, demand still far exceeds supply in this market.
“Skilled technology workers — still a highly desirable commodity to IT and non-IT companies — are facing more cautious hiring practices than the irrational exuberance that some say described 2000,” he continues.
‘Opportunity Knocks,’ Says Site Selection Survey
While the bottom falls out of many dot-com operations, corporations in need of skilled IT workers find the slowdown a blessing in disguise. Top metro areas serving as home base to many of the failing dot-coms and now unemployed IT talent finally find some wiggle room when discussing their labor markets with prospective companies.
“The single greatest issue facing companies everywhere in the country is getting the talented workers they need — even in this economic slowdown,” says Otis White, president of Civic Strategies, an Atlanta-based firm that tracks civic issues. “If you have the right workers, the companies will come to you.”
Site Selection recently surveyed more than 100 corporate executives about today’s labor markets. Approximately 74 percent of those surveyed said that finding available, skilled workers was their biggest challenge in today’s economy.
Respondents to Site Selection‘s labor survey noted that the current spate of layoffs has had both positive and negative effects. Though the majority of those surveyed say they’ve seen little effect on labor markets due to the layoffs, some have seen strong improvements. It seems to be more of an issue of acting quickly to snap up the best of the best.
“Because of the amount of layoffs occurring in our industry, it is becoming easier to find skilled labor in the areas where we have a significant presence,” one survey respondent said. Another added that downsizing is “making it easier and that we are able to choose more qualified staff than in the past two years and we have the ability to keep in budget better.”
But such trends only support companies that are expanding. For those who are downsizing or have hiring freezes themselves, the economic downturn provides little in the way of good labor news. One survey respondent says that “experienced workers are leaving in downsizing, taking many years of experience with them.”
Another respondent reported that downsizing is “starting to crimp effectiveness with hiring on hold.” In fact, some respondents complain that due to hiring freezes, they cannot fill even crucial positions that have been vacated.
For others, corporate downsizing is a “double-edged sword in that there has been an increase in skilled workers but corporate edicts now are more restrictive in being able to access them,” notes one respondent.
Such concerns show that labor, whether in a growing or declining economy, still plays a crucial role in corporate location decisions. So Site Selection asked the same corporate executives to rank the best labor markets based on labor quality, availability and breadth of work-force training resources. Once the votes were in, Site Selection weighted each position, with No. 1 rankings worth 5 points, No. 2, four points; No. 3, three points, and so forth. The weighted rankings were then totaled to determine Site Selection‘s Top 10 Labor Markets (see chart). Here’s a brief look at the top five markets as chosen by our respondents.
Dallas
Site Selection survey respondents had plenty to say about the Dallas MSA and labor pool. Such comments as “a number of good universities,” “state-provided training incentives,” “wide array of skill levels,” and “skill, education, dependability and affordability” show that corporate America holds Big D in high regards when it comes to labor.
In the past year and a half, many labor-intensive operations chose Dallas for their facilities. Included are Sanmina Corp. (4,500), Cisco Systems (4,000 jobs), SBC Communications (2,000) Abacus Communications LP (1,200) and TriQuint Semiconductor Inc. (900 jobs). In fact, the Greater Dallas Chamber Economic Development Department worked 26 major relocation and expansion projects that accounted for 11,180 new or retained jobs with a direct economic impact of US$335.4 million.
Abacus Communications, which opened a 600-seat call center in Dallas, expects the city and its labor pool to help in growing its operations. “Abacus Communications continues to experience a high rate of growth in the call center and e-commerce service markets and this facility meets our immediate expansion needs,” said Rick Clay, CEO, at the announcement. “We are very pleased that our new facility is in Dallas, one of our target markets.”
Dallas’ civilian labor market consists of approximately 1.9 million people, with a median age of 32.6. According to the Dallas Chamber, “The region is also rich in cultural diversity, with some 58 different languages spoken in the homes of area public school children.”
New York
New York City is one of those high-tech markets facing the downsizing of the dot-com world, but corporate America doesn’t seem to mind. One survey respondent who ranked New York as his No. 1 top metro for labor said, “Downsizing is helping to ease the labor shortages and potential hirees are more willing to accept less than ‘executive’ type pay and perks.” That’s music to many executives’ ears.
According to Site Selection respondents, New York’s labor market comprises a wide variety of skill sets and a highly educated population. Another aspect of the market is that “it is a recruitable location, meaning you can import qualified labor to the market,” says one survey participant.
Fortune magazine named New York City the No. 1 city for business based on four specific criteria: a city’s overall business environment, the cost of doing business, the caliber of the local work force and quality of life. The city’s ranking improved significantly in the past four years (in 1997 the magazine ranked NYC the most improved city for business), which speaks highly of the state’s and city’s efforts.
Today, NYC’s work force consists of more than 3 million workers with a per capita income of $31,928, according to Empire State Development statistics, and more than 407,000 full- and part-time students are enrolled in the more than 89 institutions of higher education in the city.
Though most of the city’s big job announcements in the past year came from dot-com operations, that may or may not be expanding (or even around) today, it’s important to note that they still found New York’s labor market right for the picking. Scott P. Kurnit, chairman and CEO of About.com, which chose to remain in NYC over a move to New Jersey and planned 600 new jobs, said, “Having worked in old and new media in New York for the last 20 years, I’m well aware of the huge advantages the city provides.”
Boston
Labor quality played a key role in Cisco Systems’ decision last year to locate a new 5,000-employee campus in Boston. “New England continues to be a source of great talent for Cisco,” said Don Listwin, executive vice president with Cisco. “Our five-year history in Massachusetts has been very productive.” Cisco’s Ellen Jamason, director of worldwide real estate, noted that she was “particularly attracted to the area’s education centers,” as well as the startup and technology-related venture capital. “Those factors make it one of the highly fruitful areas for us in terms of talent and acquisitions,” she added.
The education system, in fact, took top honors among the Site Selection respondents naming Boston as their No. 1 labor market. “Skill level is very important in our industry,” says one participant. “Due to the high concentration of technological universities in the Boston area, there is a substantially skilled labor pool to draw from.”
Others noted the large population as an asset. According to Dismal Scientist, the city’s total population stood at 5.9 million in 1999 (the fourth largest MSA in the nation). The labor force stands at 3.26 million as of March 1, also the fourth largest in the nation. The unemployment rate, however, is one of the lowest in the country at 2.9 percent.
Despite the low unemployment rate, Boston Redevelopment Authority projects that between 1996 and 2006, the number of jobs in the city will grow by an estimated 62,508 jobs, raising Boston’s total number of jobs to 699,092. The BRA identified five specific industries that are key to this job growth: professional and business services, health care, financial services, education and hotels.
“Four of these growth industries for Boston — professional and business services, health care, financial services, and education — are also four of the fastest growing industries nationally,” reports the BRA. “They are considered to be among the so-called ‘knowledge industries’ that rely on one of Boston’s greatest resources, its intellectual capital.”
Atlanta
According to Dismal.com, Georgia (and much of the Southeast) was one of the first areas to experience the economic slowdown, starting last fall. The number of jobless claims increased in the range of 60 to 138 percent — part of which comes from dying dot-coms in the Atlanta area. But with an unemployment of 3.1 percent, the slowdown provides some labor relief in Atlanta’s tight labor market.
“Downsizing (in Atlanta) is helping substantially,” reports one survey respondent. “There’s a shortage of technology staff, but the latest layoffs appear to be changing the situation.”
The Atlanta market has been a driving force in the Southeast’s record-breaking job growth of the past decade. Since the early 1990s, employment in the city grew 44 percent, adding some 700,000 new jobs (ranking the metro area No. 1 in the nation for job growth). The population also grew by 880,000 people during this time; the city now boasts a population of more than 4 million. Although the city has the 9th largest population, its average annual salary remains a low $37,341, according to the U.S. Department of Labor’s National Compensation Study — well below that in other Site Selection top 10 markets San Francisco (50,169), New York ($52,351), Boston ($40, 903) and Austin ($38,930).
Atlanta’s high-tech labor pool (at affordable rates) appealed to GE Power Systems, a leading supplier of power generation technology, energy services and management systems. The $15 billion company announced the relocation of its global headquarters to Atlanta early this year. “We have found the rapidly expanding high-tech resource pool available in Atlanta to be critical for recruiting and for our e-business unit located here,” says John Rice, president and CEO of GE Power Systems. GE Power Systems came to Atlanta in 1998 with 100 jobs. Today it employs 1,500 workers.
Chicago
In the hotly contested Boeing corporate headquarters race, Chicago beat out Dallas and Denver, Colo. — a testament to the community and its work force. “Boeing’s decision to locate in Chicago proves something most of us have known for a long time: that Illinois is the best place to do business and to grow and prosper in the 21st Century,” said Illinois Gov. George Ryan. “This state’s central location, local access, cultural diversity and strong work ethic make it the ideal place for companies that are looking to expand.”
ABOVE: Chicago is Boeing’s choice for new corporate headquarters
Though survey participants noted such assets as diversity, highly educated workers, good universities and excellent technical training when describing Chicago, the work ethic that Gov. Ryan mentioned came up most consistently as an area strongpoint in our survey responses. One respondent succinctly noted, “You can have a trained staff that will give you 8 hours a day.”
Gov. Ryan also said that ABN AMRO’s decision to build a new high-tech center in Chicago’s West Loop, creating up to 500 new jobs, is evidence of the strength of the city’s labor pool. “This new office complex represents a tremendous investment in the people of Chicago and the state of Illinois,” said Ryan. “To have a leading financial institution like ABN AMRO make this kind of long-term investment in Chicago is a testament to the workers, infrastructure and business environment that currently exists in Illinois.”
Further proof of Chicago’s work force came from Motorola’s decision to create 1,000 jobs last year. The company plans to build an office and research campus in Chicago’s Deer Park area. “Being in Deer Park means we are well positioned to accommodate future growth in knowledge-based talent right here in Illinois,” said Merle Gilmore, Motorola executive vice president. “Today there are more than 24,000 Motorolans employed in Illinois — a number we’re very proud of — a number that marks Motorola as Illinois’ second largest private employer.”
According to the U.S. Census Bureau, companies like Boeing and Motorola now have more labor available to them today. The latest census shows that Chicago added 112,290 people (up 4 percent from 1990) — the first time the city has shown population growth since 1950. Director of the Illinois Department of Commerce and Community Affairs Pam McDonough says, “This larger and more diverse population provides us with a broader work force to help fuel continued economic growth.”
