n WORKFORCE
students on the basics of building. That led to 1,200 new hires
in the first year, the foundation calculates.
Part of that outreach has been geared toward rebranding
construction as a career path. “These are really good jobs for
somebody who doesn’t want to spend four years and go into
massive debt,” says Vargas. The other part is convincing more
companies to get on board with the effort. “It’s our responsi-
bility as an industry to get our own workers and to compete
with everybody else to make a case that we’re the best indus-
try with the best kind of jobs,” says Rick Larkey, executive di-
rector of the Roseville-based North State Building Industry
Foundation.
SKILLS GAP OR PAY GAP?
For all of that, there’s a knotty economic problem: how to
boost wages enough to attract people to these fields while
competing on price with companies in lower-cost areas and,
sometimes, countries.
A few labor economists contend the blue-collar skills prob-
lem is in part a wage problem given that rates for many of the
key occupations aren’t increasing significantly. According to
California Employment Development Department data (see
infobox on page 53), from 2004 to 2018 average real wages in
the four-county Sacramento metro area actually fell for CNC
tool operators and CNC programmers. (An EDD spokesperson
says figures for the CNC programmer category aren’t as reli-
able as others, given the small number of programmers avail-
able to survey. Also, the 2004 EDD data exclude Yolo County
because of a 2006 change in the metro area’s definition.) Wag-
es for welders, machinists and tool and die makers outpaced
inflation. Earnings for all of these jobs were well above the liv-
ing wage for a single adult but in most cases not enough for an
adult with a child at home.
The numbers are similar for high-demand construction
jobs. The data since 2004 show big gains in real earnings for
drywall installers, electricians and heavy equipment opera-
tors — but losses for carpenters, HVAC mechanics and install-
ers, and ironworkers. “Basic economics would imply that …
when you say there’s a labor shortage, there’s actually a short-
age at the wages you want to pay,” says Kevin Duncan, a labor
economist at Colorado State University-Pueblo who’s been a
visiting scholar at UC Berkeley’s Institute for Research on La-
bor and Employment.
Some industry representatives agree there’s a wage prob-
lem. David Goodreau, chairman of the Small Manufacturers
Association of California, calls himself a critic of what manu-
facturers pay. “I think given the technical and proficiency lev-
els that people in manufacturing have to maintain, it doesn’t
reflect the level of pay that they’re getting,” he says. “And that’s
a problem we have as far as getting new kids into the industry.”
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On the construction side, Michele Daugherty, president
and CEO of the Northern California chapter of Associated
Builders and Contractors, takes issue with the EDD num-
bers. Her members report “double-digit wage growth” in re-
cent years, she says. Lower-end contractors could be dragging
down the averages: The EDD data show the mean relative
standard error — a measure of deviation from the average —
is high for Sacramento-area construction occupations com-
pared to other jobs.
And both Goodreau and Daugherty say paying workers
more also means charging higher prices. Goodreau says that’s
impossible for manufacturers, who are up against lower-wage
competition out of state and internationally. In construction,
Daugherty says higher wages also mean higher house prices in
a state that’s in the middle of a supply crunch.
Labor researcher and management professor Peter Cap-
pelli of the University of Pennsylvania’s Wharton School has
no words of comfort for manufacturers. “Those who study
international trade would advise us not to produce goods
that other countries can turn out more cheaply,” he writes by
email, adding companies need to either raise productivity so
that they can cut prices or come up with products tailored to a
local market that outside companies can’t compete with.
Goodreau thinks companies can raise productivity by
building a talent pipeline, much like pro baseball teams do
when they invest in their minor-league systems. Manufac-
turers need to visit high schools to talk about manufacturing
and take on apprentices and interns, exactly what SVMI is do-
ing. Those recruits tend to stay at their companies long-term
and become productive enough that firms can compete on
price and quality even at higher wages, says Goodreau. Over
the years, SMA and a partner organization have helped place
about 450 young manufacturing interns. Between one quarter
and one third ended up staying at their companies long term,
beating the one of eight recruited through traditional adver-
tising, he says.
That strategy shows the most promise for Sacramento in-
dustry leaders in navigating the squeeze between wages and
sales price. Dean Peckam, executive director at SVMI, says
setting aside time and money to recruit the next generation
of skilled workers is tough for individual companies, given
day-to-day business pressures. So the solution is to tackle the
problem as an industry. “We need everybody to realize that —
I know it sounds corny — but it’s a team effort. We just can’t
complain about [the worker shortage] — we have to be proac-
tive and engaged in our community.” n
Steven Yoder writes about business, real estate and criminal jus-
tice. His work has appeared in The Fiscal Times, Salon and else-
where. On Twitter @syodertweet and at www.stevenyoder.net.