Report highlights a labor issue for the Berkshires - and it's not a lack of jobs
PITTSFIELD — Unemployment dropped dramatically in the Berkshires last year, while average weekly wages rose.
Sounds good, right?
But there's a downside: Those factors also helped create a smaller labor force, which has made it harder for county employers to find skilled local employees to fill jobs, according to a new report.
This condition has made labor market conditions in Berkshire County "extremely tight" and has left employers experiencing "conditions they have not see in over 15 years," according to "What's Happening in Berkshire County?," an annual review of labor market conditions prepared for the Berkshire County Regional Employment Board.
Compiled by retired economist Bob Vinson, of Plymouth, the report is based on industry data between the second quarters of 2015 and 2016, and labor force and unemployment information from the fourth quarters of 2015 and 2016.
"You're in a situation now where for the first time in recent memory the biggest challenge is trying to get bodies to fill jobs instead of just getting jobs," Vinson said. "The population issues are becoming more pronounced; the labor force actually shrunk during the period of this report.
"If you're not getting enough labor force growth, you're not getting enough people to fill positions," he said.
The number of unemployed Berkshire residents fell to 2,018 people — a drop of 1,354 — during the report's time span, while the jobless rate dropped from 5.2 percent to 3.1 percent (the seasonally unadjusted unemployment rate in the Berkshires dropped as low as 2.9 percent last November). Both figures were the lowest in Berkshire County since 2000.
But as more positions were filled in the Berkshires, the county's total labor force failed to add replacements. The Berkshire labor market actually contracted by 806 residents, a 1.2 percent decrease. During that same time span, 25,700 additional residents entered the labor force in Massachusetts, an increase of 0.7 percent.
"In Berkshire County you have very little movement in and out of the county," Vinson said. "For the most part you really have the most self-contained labor market in Berkshire County in the state outside of the Cape. The issue now becomes 'What do we do to bring more people into the labor force?' That's a real challenge given that the population is old."
Jonathan Butler, the president and chief operating officer of 1Berkshire, the county's leading economic development agency, agrees that the Berkshires "have a gap right now between the employment needs of employers and the available workforce to fill those positions."
As an example, Butler cited General Dynamics Missile Systems in Pittsfield, which has been struggling to fill between 100 to 175 open positions for the last three years.
"I think that's an accurate observation that he's making with that data," Butler said, referring to Vinson's report. "There's a lot of work being done on that right now at Berkshire Community College, Massachusetts College of Liberal Arts and the Berkshire County Regional Employment Board to really shine a light on that so that the state can accelerate our efforts in a more focused way so career paths are readily accessible."
The lack of a skilled Berkshire County workforce isn't a new phenomenon. Butler refers to the current situation as an "evolving version of the same thing."
"It keeps changing a little bit," he said. "A lot of our companies are innovating. Onyx [Specialty Papers], Interprint, Crane [Currency] are making world class products right now. As they have, the skill sets have changed."
Peter Stasiowski, Interprint's communications director, said the current Berkshire labor markets conditions are due to a "bit of a perfect storm" that includes demographic shifts, new state regulations such as the raising of the minimum wage, and employees moving from job to job, company to company, considered to be common a trait of the millennial generation.
"The folks who are entering the workforce grew up in households that may have felt the negative impact of the recession 10 years ago, so they're not thinking about a long-term investment in a house or a career because they didn't see that pay off for their parents," he said.
"It's certainly more challenging today even than it was three or four years ago," Stasiowski said. "We've talked to our peers in the community and other companies cry on each others' shoulders because they're experiencing the same things that Interprint is."
But not every Berkshire County employer has had problems hiring because of the skills gap.
"We have not really seen it to be true," said Patricia Begrowicz, the co-owner and president of Onyx Specialty Papers in Lee. "We have a couple of different types of jobs, entry-level manufacturing and engineering. So whenever I hear about tight labor markets I hear about General Dynamics and from that standpoint we're not challenged in engineering. We have had some challenges with entry-level manufacturing. Quite frankly, a lot of people can't pass the drug test.
"I do believe some companies are having a hard time filling positions, but the devil's in the details," she said. "It's getting people with college degrees to come to the Berkshires where the rates of pay are very low. I'd have to look at the data more, but that's the experience that we've been having."
On the plus side, average weekly wages in Berkshire County increased by $42, or 5.2 percent, led by the manufacturing sector, where the average weekly salary jumped a hefty 14.5 percent to $177. The average weekly wage increased by just $21, or 1.7 percent, in Massachusetts during the same time span last year. But at $843, the average weekly wage in the Berkshires still remains far below the state average of $1,232.
The increase in Berkshire wages suggest that local employers in some industries have recognized the need to raise wages in order to attract and retain workers, the report states.
At Interprint, the entry level wage was raised to $15 per hour to compensate for the statewide increase in the minimum wage to $11 per hour.
"As the state regulations have gone up, we've had to sharpen our pencils," Stasiowski said.
The increase in weekly wages can affect a company's bottom line.
"It does," Stasiowski said, "but luckily for us we try and forecast well in advance the impact on our wages. We have launched some new products over the last three or four years that allowed us to get into new markets at the beginning of the product life cycle.
"We're not trying to squeeze the same amount of juice out of the same orange," he said. "We have a lot of oranges now."
Business Editor Tony Dobrowolski can be reached at 413 496-6224.
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