Jason Tebben has a big problem at his Pineville landscaping company, one that has caused him to drop a couple dozen residential clients and lose as much as $160,000 in business so far this year.
He just can’t find enough qualified workers.
“2018 hands down has been our worst year in trying to find quality, drug-free, noncriminal employees,” said Tebben, co-owner of the 18-year-old company, Arborscapes. “Straight out of the gates it was brutal.”
Across Charlotte and the U.S., many employers say they are struggling to fill jobs at a time when unemployment is at its lowest level in about two decades. In July, the national unemployment rate was 3.9 percent. Charlotte’s rate stood at 3.8 percent that month.
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Fewer unemployed people means workers are in short supply, making it harder for employers to fill jobs, experts say. While that’s creating challenges for businesses, it has the opposite effect for workers: The high number of openings are motivating unhappy employees to jump ship, which is fueling turnover.
“Workers have their pick of jobs,” said Gus Faucher, chief economist for PNC Financial Services Group. “They’re choosing the jobs that either pay more or offer the best working conditions, or some combination.
“Businesses are finding it much more difficult to recruit workers, and that’s something that we’re seeing nationally but especially in Charlotte,” he said. Job growth in the Charlotte metro area has been above the national average since 2010, Faucher said, and stronger demand for workers makes it more difficult to find skilled labor here.
Industries dealing with the biggest shortfalls include manufacturing, truck driving, construction, information technology, health care, commercial property management and financial services, according to experts.
In some cases, those sectors were already facing labor shortages, which are being exacerbated by the low unemployment.
“It is definitely hard to find good people,” said Rich Cerretti, head of the Charlotte office for general contractor JE Dunn. The labor shortage is increasing the price of construction projects as subcontractors also wrestle with tight labor supplies, he said.
“When they run out of labor, the good ones are not bidding future projects,” Cerretti said. “You may not have the best subcontractor available or the best-priced subcontractor available. ... All that has an effect of pushing up overall project prices.”
The construction sector has a large need for skilled workers, such as pipe fitters and electricians. Many people with those skills left the industry during the last recession and haven’t returned, Cerretti said.
Also, for construction and some other fields, labor shortages are being compounded by the Trump administration’s crackdown on illegal immigration, industry officials say. Charlotte’s landscaping industry also has historically drawn immigrant workers, said Hugh Crump, owner of Charlotte-based landscaping company Greenline Design.
But “that has come to nearly a complete halt,” said Crump, a board member of the North Carolina Nursery & Landscape Association.
‘Train wreck after train wreck’
Tebben said his landscaping company encountered difficulties filling jobs last year but the problem intensified this year. The firm specializes in installing and maintaining landscapes for high-end residential properties, such as in Myers Park and Eastover.
Rather than risk doing subpar work with not enough employees, Tebben said he turned away about $500,000 in installation work over the past year. He also decided to drop about 25 clients, some of whom he’d had for more than a decade.
“That was not a fun phone call to make,” he said. “It was something that we had talked about needing to do for probably at least eight to 10 months. But I just couldn’t do it until it finally got to the point ... that I had to do it.
“I didn’t have the staff to service those houses,” he said. “It’s just been train wreck after train wreck.”
And competing firms have poached some of his employees, Tebben said. “What it’s forced us to do, and it’s forced a lot of people in the green industry, is ... to increase our payroll across the board fairly significantly,” he said.
At Morris-Jenkins, the low unemployment rate is making it harder to fill customer service and repair positions, said Mike Simons with the Charlotte-based residential heating and air conditioning company.
As a result, this past May it might have taken a day or two to send a technician to a customer’s home for repairs, Simons said, noting that other companies have seen similar delays. At other times of the year, when demand for service is lower, Morris-Jenkins can send out a technician the same day, he said.
The heating, ventilation and air conditioning industry has been dealing with a skilled-labor shortage for years, Simons said, adding that Morris-Jenkins is using an internal training program to fill some of its openings. “Not everybody’s going to crawl into a 140-degree attic,” he said. “We’re all looking for people.”
Other industries also are grappling with worker shortages, including amusement park Carowinds.
Spokeswoman Lisa Stryker said construction has begun on a college-style dorm designed in part to help Carowinds address the challenge. Every year, the park hires about 4,500 part-time and hourly employees, she said.
The building will house college students studying tourism and hospitality as part of an internship program Carowinds is developing, Stryker said.
Even with employers complaining about worker shortages, critics say wages are not rising fast enough in Charlotte and elsewhere. Median wages nationwide are increasing at a slower pace than before the recession, according to Federal Reserve data.
In Mecklenburg County, the median wage over the past decade increased by only $565 when adjusted for inflation, said Allan Freyer, director of the Workers’ Rights Project at the N.C. Justice Center, a left-leaning nonprofit in Raleigh. That small increase is partly due to the median wage for entry-level employees falling by about $1,300 over the same period, he said.
“And that’s where a lot of the growth has been in Charlotte’s employment,” Freyer said. He also said the median wage for new workers entering the labor market was $21,900 in June, compared with $72,500 for experienced workers.
“Wages aren’t growing because companies are choosing to invest in stock buybacks and executive compensation ... rather than investing in the wages of their employees,” he said. “We hear a lot of employers complaining they can’t find employees, and some of that is skills. But a lot of it is they’re just not paying enough.”
Faucher, the economist, said businesses are still scarred by the recession and have been reluctant to raise wages too much.
The worker shortages are forcing some employers to take steps to attract and retain people, such as offering more flexible schedules, signing bonuses and bonuses for referring people to their organization, according to industry officials.
“As the job market gets tighter and tighter, I think that we will see businesses being forced to raise pay in order to attract workers,” Faucher said.
Shortages could worsen
It’s not clear what labor supplies will do in the coming months. But some economists expect the shortages to worsen before they get better as unemployment remains low — and possibly falls further.
The Federal Reserve has forecast the U.S. unemployment rate to be 3.6 percent in the last three months of this year, and 3.5 percent in the same periods in 2019 and 2020.
“I think the job market is going to get even tighter over the next year or so,” Faucher said, pointing to the retirement of large numbers of baby boomers as a key factor.
To employers like Tebben, the landscaper, the worker shortages are especially painful when business is booming.
“I think it’s great that unemployment is so low,” he said. “But as an employer that’s actively searching for qualified and reliable employees, it’s a real bummer right now, because they are few and far between.”