Behind industrial growth, KC labor pool is bleak

Jim Roy

Jim Roy

It’s no secret that the industrial market in Kansas City is on fire. While each passing announcement of hundreds of new jobs is a great indicator for the local economy, people like Jim Roy are struggling more than ever.

“My job has never been harder,” he says.

Roy is senior RVP and 12-year veteran at QPS Staffing, a firm that specializes in finding labor for the industrial realm, from warehouses to third party logistics companies. But when he’s not busy building a staff for companies like Amazon, he’s working with local economic development professionals as well as companies looking to call Kansas City home.

“We do a lot of wage labor data for them, looking at the available talent pool and average wages in certain areas of town where they’re looking,” Roy said. “We go into depth about the quality of candidate available, as well as the impediments to hiring.”

Roy and his team then evaluate each company’s hiring process, from pre-employment requirements to drug tests and background checks. While this work keeps him busy, he harbors growing concerns about the labor market.

“Economic development [officials] are doing a good job bringing folks to Kansas City, but I’m concerned that the growth is outpacing the talent pool,” he said in a recent interview. “I’ve been looking at our talent pool and how we can develop a realistic approach in how we continue to grow.”

THE SHRINKING TALENT POOL

While employers want to locate and expand their businesses here, Kansas City’s unemployment rate has been steadily falling over the last two years -- but now it’s hit a dangerously low level of about 3.8 percent. Roy says conditions in Kansas City made it ripe for a perfect storm.

“All of these employers and growth have driven unemployment down a full point and a half in less than a year,” he said. “I’ve never seen anything like it. In my life, this is unprecedented.”

So what happens when the rate is this low?

“You’re digging into a talent pool that maybe isn’t interested in full-time gainful employment, or who have a different focus. Today, if you want good employees, you have to recruit them from someone else, which creates a circle in construction, manufacturing and warehousing are all poaching back and forth.”

THE WAGE GAP

Many existing and incoming industrial companies have labor budgets of only $11 to $12 an hour, Roy says, while other companies fall $1.50 below market rate.

“That level of person is not coming to the city in droves,” Roy said. “Companies aren’t paying people what they’re worth. When you’re competing internationally on manufacturing, margins are tough. But thinking you’re going to get away with substandard pay rates to attract really good labor, it’s foolish thinking.”

CONNECTING LABOR & JOBS

While it’s relatively easy to staff a warehouse in Kansas City, Mo., most of the remaining industrial jobs are located on the outskirts of the metro in towns like Lenexa, Edgerton, Gardner, and Grandview. Roy says there’s a pool of labor waiting to fill these $10 to $15 an hour jobs, but these are inner-city residents that lack the means to commute.

“How does someone living on the east side get to the job they’re qualified for?” Roy said. “Here we have jobs that need to be filled and people that can do those jobs, but they just can’t get there. That’s another big concern.”

To combat this issue, Roy has ignited a conversation on reverse commuting. He aims to connect employees to employers by tapping public transportation and other resources.

BARRIERS TO EMPLOYMENT

Of 100 applicants to the average industrial-related job in Kansas City, only about 4 applicants are actually considered.

Out of 100 applicants for the average industrial job, only four candidates will pass screening. That’s a shocking statistic that Roy is looking to combat by educating and working with local employers to revise their hiring process.

There are five basic barriers to landing a job within the industrial realm. Of all applicants, 21 percent don’t meet company-specific requirements, 11 percent won’t accept a lower wage, 8 percent don’t pass a drug screening, 18 percent don’t pass skill testing, and another 38 percent don’t pass a background check.

This is where Roy steps in to work with employers and re-evaluate these limiting factors. He encourages companies to examine applicants on a case by case basis, instead of clinging to hard and fast limits. Of course no one wants to hire felons, Roy says, but with companies struggling to find workers, it’s worth evaluating whether that person has cleaned up his or her act and whether they can move forward with gainful employment.

“Isn’t that what rehabilitation is all about?” Roy says. “The law says to take it case by case. If someone had an issue years ago but it’s been cleaned up and their work history shows they’ve become a hardworking, contributing member of society, should that person not be awarded the opportunity to seek gainful employment? Isn’t that what the system is designed for?”

FINDING A SOLUTION

Roy presents employers with the data behind this employee funnel to demonstrate the issues. With a handful of companies, he’s able to effectively communicate that their standards are too high, and negotiate a more realistic approach. For example, Roy recently saw a client in Iowa lower its drug test barrier by omitting marijuana users from failing the test. Others have opened up the available talent pool significantly by evaluating felon applicants.

But without more meaningful change in Kansas City, Roy is concerned about how this could affect future growth.

“We say it’s the promised land, where all of this labor will be and then there’s nothing,” he says. “That affects economic development when the promises made to these prospective companies don’t come true when they find out what a labor shortage we have.”

Interested in hearing more about challenges and opportunities within Kansas City’s industrial market? Register now to attend the 2016 Industrial Summit on Thursday, September 8.