The for-profit industry of placement agencies, exemplified by Medlin's company, is an increasingly important source of blue-collar and unskilled labor. There's a parallel industry of not-for-profit placement agencies, many of which are community based and government funded. They typically provide a steady stream of workers, whom they train in such "soft skills" as showing up on time for work and resolving conflicts without violence. One such agency is the Independence Center, in St. Louis, a mental-health rehabilitation center that specializes in helping people get off welfare and into private-sector jobs.
Holder has "gone overboard" on benefits to lure employees.
Rick Kalina, president of Kirkwood Insurance Service Co., also based in St. Louis, depends on the Independence Center to staff his company's four unskilled clerical jobs. The center handles all screening and interviewing and guarantees that the workers it hires for Kalina will report to work when they're expected. "I had a constant turnover problem, which accelerated in the past few years because of the tight labor market," says Kalina. "We'd run an ad every week just to keep applications coming in, because I never knew if Monday morning somebody would've taken another job that pays 50¢ more."
No longer. Kalina says the Independence Center has solved his problem.
Still, welfare-to-work programs in general have received mixed reviews from employers around the country. For example, Harry C. Alford, president and CEO of the National Black Chamber of Commerce, in Washington, D.C., hired two office workers trained by the Georgia Avenue Community Development Corp., a welfare-to-work program. "In and out, in and out," is how he describes their stay. Both workers have left his employ, although Alford says he's open to hiring graduates of similar programs.
As for New Hampshire restaurant owner Lorrie Ambrose, she has been at her wit's end trying to solve her labor-shortage problem. "Putting an ad in the paper is throwing money away," she says. One kitchen helper quit in pursuit of higher-paying work driving a truck. His prospective replacement found another job before appearing for the first day of work. Ambrose once had five waitresses and six kitchen workers at the 85-seat Dominick's. Customers now line up outside because she's down to her husband, two of her children, one part-time waitress, one part-time cook, and herself. She and her husband work 70 to 90 hours a week. Now she is trying to sell the business, in part so she can follow through on some real-estate-development projects that she and her husband have recently undertaken.
Ambrose feels a sense of dÉjà vu as she sees Dominick's slipping away. In the late 1980s her bank was among several that failed in New Hampshire. The Federal Deposit Insurance Corp., which took over the bank, threatened to collect her $25,000 loan balance in short order, even though she had never missed a payment, she says. Outraged, she complained to her state legislators, a gambit that apparently kept the FDIC at bay. "We nearly lost our shirt here," she recounts. "My husband said if we can make it through this, we can make it through anything." Never did she imagine that she'd be done in by good times.
Rifka Rosenwein is a senior writer at Inc.
Shortage Expected to Persist
Would a recession or economic slowdown expand the pool of unskilled workers available for employment by small businesses? Paul Harrington, associate director of the Center for Labor Market Studies at Northeastern University, in Boston, notes that small companies will feel some ripple effect as large companies lay off factory workers and other low-level employees. In recent months, for example, General Motors, Office Depot, and Whirlpool were among the giants that announced major layoffs. And two big retailers, Montgomery Ward and Bradlees, shut down for good.
Harrington, however, says the shortage of workers at the bottom end of the labor market is here to stay because of demographic trends. As the 79 million baby boomers move up through -- and out of -- the workforce, there aren't enough younger workers to replace them in low-level jobs. And by 2008, there will be almost 5 million fewer adults between the ages of 25 and 44 than there were in 1998. Plus, the recent influx of working mothers has just about been "tapped out," according to Harrington. Together, those trends account for a slowdown in labor-force growth. As a result, job growth will continue to outpace the increase in the working-age population for most of the decade, according to the Employment Policy Foundation, in Washington, D.C.
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