- Associated Press - Sunday, September 27, 2015

SIOUX FALLS, S.D. (AP) - A national economic development consultancy has spent months studying the Sioux Falls workforce and concluded this: The need for workers has become a crisis.

“It is a clear reflection of all the input we got, in what the data says, that the community is facing a crisis.”

That’s the opinion of Mac Holladay, founder and CEO of Atlanta-based Market Street Services, which was hired by Forward Sioux Falls to study the metro area’s workforce sustainability.

The findings are likely to dominate the next five-year campaign of Forward Sioux Falls, which is a partnership of the Sioux Falls Area Chamber of Commerce and Sioux Falls Development Foundation, and is largely funded through investments from businesses.

Holladay’s assessment of the area’s workforce situation didn’t sugarcoat it:

“It (Sioux Falls) needs to understand that it is an economic, educational and social crisis and that to ignore it, to not take action on the findings … would be foolish and would put all the progress that has been made and the powerful changes that have been made in economic development in short order, in our opinion, in jeopardy.”

The news is not all dire, though, the Argus Leader (https://argusne.ws/1L6b6h9 ) reported. Market Street’s report finds the Sioux Falls area has enjoyed robust economic growth, a significant increase in startups and improvements to its quality of life.

“However, the sustained growth and development the Sioux Falls area has experienced in recent years is under threat from pervasive issues related to its workforce capacity and skills dynamics,” the report said.

Among the findings:

- An extremely tight labor market is causing thousands of positions to remain unfilled, many of them in lower-skill, lower-paying occupations.

- Fewer employment opportunities at the higher end of the skills spectrum have left many workers “underemployed.”

- Education faces challenges from many directions. The state ranks last in the nation for teacher pay. The University Center is struggling to compete for students. There’s a shortfall of applicants at technical schools because of a long-held bias against the programs.

Slater Barr, president of the Sioux Falls Development Foundation, calls Market Street among the best economic development strategists available.

“What we basically said was help us figure out what are the jobs and the skills we’re going to need in the future and help us understand what are the jobs and skills we currently have,” he said. “And how do we align the educational systems and the attracting of workers and develop strategies that ensure we have enough people with the right skills to fill Sioux Falls’ jobs of the future.”

Now (always) hiring

A job board at the Sioux Falls office of Capital One Financial Corp. helps tell the story.

When the financial service company announced this summer it was leaving town by the end of the year, it meant 750 people would lose their jobs.

Shortly after the announcement, local manager Dave Long’s phone started ringing. His colleagues in the business community expressed regret the company was leaving and typically followed up with the same question:

“How do I get in front of your employees because we have openings?”

Capital One opened a career development center for its employees on-site, staffed with 10 people to assist with everything from interviewing to resume preparation.

A job board in the center lists opportunities with more than 50 businesses.

“It’s everything from that traditional call center to retail to food service to health care to project work to a little bit of everything,” Long said. “I get amazed every day when someone reaches out. You knew they were here, and you look at it and go, ‘That might be a great opportunity for the right person.’”

He estimates 50 employees have left so far for other jobs.

Some of them have gone to Citibank, which is trying to hire 150 people through the end of the year in mostly customer service positions. The company is offering a $1,500 signing bonus and touting a benefits package that starts on an employee’s first day at work.

“Hiring in Sioux Falls in that customer service segment has been a challenge for a number of years,” spokesman Jerry Nachtigal said. “And I think we all know the reasons why. It’s a good, strong economy here. Unemployment is very low. It’s just a very competitive market, bottom line.”

Sioux Falls-area employers who responded to surveys from Market Street said a low number of applications was their top competitive challenge, with 38 percent saying it was always the reason they have trouble filling positions.

“Due to the tight labor market, employers reported that they have been forced to compromise their hiring standards, noting that a lack of workforce quantity has affected employee quality,” the report said.

That’s the same story Shawn Lyons, executive director of the South Dakota Retailers Association, hears from retailers statewide.

“A lot of them talk about the struggles, whether it be the managerial level to entry-level employees,” he said. “Some of them are telling us they’re holding off on new locations. They want to grow, but they’re having trouble finding employees. Some have told us they would rather have open positions than hire those who aren’t qualified.”

Lyons said he recently talked to a Sioux Falls business owner with eight open positions who is aggressively advertising them but still finding a small pool of applicants.

“And we often hear of businesses stealing from companies to get that ‘A team’ player,” he said. “Employees you’re stealing from one company are not going to come to you for the same pay. You’re definitely having wage pressure up, and I think businesses recognize that … but at the same time the pie is only so big.”

Future projections

If filling open positions were a simple numbers game, Sioux Falls wouldn’t have to worry as much.

The Market Street report found the metro area will have enough workers to replace those that are retiring over the next 10 to 20 years. For every 10 workers age 45 to 64, there are 12 workers age 25 to 44 to replace them.

But that advantageous ratio depends on the area’s ability to keep younger people living in Sioux Falls. And it doesn’t account for a mismatch between the jobs that will be available and the skills or education younger workers possess.

For instance, 23.1 percent of Sioux Falls residents have a bachelor’s degree. An additional 9 percent have a graduate or professional degree.

But only 14.3 percent of jobs in the area require a bachelor’s degree, and only 3.1 percent require an advanced degree.

“The majority of greater Sioux Falls’ fastest-declining occupations require a bachelor’s degree or above for employment, while its fastest growing require just a high school diploma or, on occasion, a certificate or associate’s degree,” the report found.

The area’s fastest-growing occupations include health care, social assistance and manufacturing, especially welding. The positions with the highest demand since 2009 included registered nurses, customer service representatives and bill collectors.

The higher-wage jobs experiencing the tightest labor markets are health care and computer or mathematical occupations, suggesting they might be appropriate targets for education and training.

The report presents 10-year occupation projections, including predictions about which jobs are most endangered because of automation.

The top occupations with the largest projected hiring needs through 2024 are registered nurses; bookkeeping, accounting and auditing clerks; customer service representatives; and administrative assistants.

“The Sioux Falls area’s future workforce needs will largely mirror current trends in which lower-skilled, lower-wage positions experience greater talent shortages than occupations requiring a more advanced level of education,” the report said.

Jobs such as teachers and truck drivers are the most susceptible to worker shortages as people retire, it added.

“The road ahead will be challenging for the Sioux Falls area,” the report concluded. “Job growth will be depending on increased labor force capacity, while the labor force is constrained by the maximization of existing supply and challenges in attracting out-of-state talent.”

The consultants are making several recommendations for tackling the next decade of workforce development. They will be announced starting this week at meetings with investors and will continue to frame the discussion for the new Forward Sioux Falls campaign, which starts in 2017.

“For a community to do this and to take the risk of what the findings are is both, in our opinion, courageous and, at the same time, absolutely necessary,” Holladay said.

The end goal, he emphasized, is building a better community. That means a workforce development strategy must be built around giving people greater opportunities.

“We want to see wages go up. And we want people to have different choices. You create companies through entrepreneurship. You expand the companies you’ve got. And you recruit companies that fit the type of community you want to be. It’s all those things. It is not a choice between the status quo and going forward. It’s a choice between going forward and going backwards, and that’s all there is.”

___

Information from: Argus Leader, https://www.argusleader.com


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