Even after a year that saw the global economy plummet and many workers lose their jobs, the U.S. manufacturing sector is still struggling to fill key roles. While the May 2021 jobs numbers are encouraging, manufacturers nevertheless will need to rethink their approach to hiring if they want to attract talent throughout the current decade and beyond.
Staying the course could be devastating for both the manufacturing industry and the greater U.S. economy.
The Big Shortage
The U.S. manufacturing industry is looking to fill nearly half a million job openings, according to a report released in May by Deloitte and the Manufacturing Institute (MI). And that number is poised to grow; about 2.1 million manufacturing jobs are likely to be unfilled by 2030. The study warned that the shortage could damage the U.S. economy by up to $1 trillion.
According to the study, the COVID-19 pandemic undid over a decade of job gains in the manufacturing sector, wiping out more than 1.4 million positions. About 820,000 of those jobs had been backfilled by the end of 2020, but about 500,000 positions remain open and employers say they haven't been able to fill the roles. Deloitte estimates this to be a near-record pace of job openings in the sector. Companies are having trouble filling both higher-paying entry-level positions and specialized roles that require skilled workers.
There are multiple reasons why these positions are going unfilled. The survey found that many younger workers have different expectations for jobs and careers (38 percent of respondents) or a lack of interest in the industry (36 percent). Additionally, many of these roles had previously been filled by members of the Baby Boomer generation who have retired (34 percent).
According to Carolyn Lee, executive director of MI, the lack of interest from younger workers can largely be attributed to misconceptions about the manufacturing space. Many recent college graduates view manufacturing as an industry that's earmarked for people who did not pursue post-secondary education. In actuality, there are many manufacturing jobs that require college degrees and some that require doctorates. "They don't know this is an industry that might even appeal to them," she said.
That gap in perception has led MI to team with the National Association of Manufacturers to help change the mentality. The associations have launched Creators Wanted, a virtual event series aimed at engaging prospective workers and showing them the opportunities in modern manufacturing.
The survey also found a disparity between manufacturing and distribution center employment. Even though both entry-level and skilled jobs in manufacturing tend to pay more than those in distribution, workers are gravitating toward warehouse and distribution jobs in greater numbers. While manufacturers have recouped about 60 percent of their pre-pandemic workforce, the warehousing sector not only recovered all of its lost positions, but doubled them by the end of last year.
Deloitte and MI also found that younger workers prioritize work/life balance and don't view manufacturing as a sector that allows for a lot of flexibility. A treasury executive for a manufacturer of equipment used by the oil and gas industry noted that younger workers tend to look for jobs that fit their lifestyle. "From what I'm hearing, you're going to have to offer younger people things like flexible work hours; it's not always about pay," she said. "And [the COVID-19 pandemic] has helped companies see that your work can still be done at different times than the 9-to-5 we're used to. So when I'm talking to recruiters, that's more what they're targeting with the new generation in the workforce."
The Diversity Issue
Perhaps most important, manufacturing needs to make a greater effort to diversify its workforce if it wants to survive. Women are heavily underrepresented in the industry—making up about 30 percent of manufacturing workers despite being about half the overall workforce—and the Deloitte/MI survey found that 1 in 4 are considering leaving. The primary reasons for this are the lack of work/life balance and the need for more flexible schedules.
One factor pulling women (and some men) away from manufacturing throughout the pandemic has been child care. This became a significant issue as schools and child care centers were closed and parents were forced to juggle their jobs and care for their children full time, which is especially difficult to do in essential industries where jobs have to be performed onsite.
"I would encourage businesses who are concerned about child care as a barrier [to finding talent] to voice their opinions to their state leadership," said Linda Smith, director of the early childhood development initiative at the Bipartisan Policy Center. During a recent virtual event hosted by the U.S. Chamber of Commerce, Smith noted that the American Rescue Plan Act has allocated about $24 billion that states can use to help struggling child care providers stay up and running. "Because the money is there, and it should be spent to help get this economy back where it needs to be."
More broadly, most manufacturers surveyed by Deloitte and MI have implemented diversity, equity and inclusion (DE&I) training in talent management programs. However, less than one-fourth said they found these initiatives impactful in retaining talent. The treasury executive quoted in the survey report noted that many of these DE&I programs haven't been effective, because many companies hastily adopted them in mid-2020 after the murder of George Floyd and the subsequent rise of the Black Lives Matter movement, and they didn't really think through how the programs would be applied to the entire organization.
Companies need to figure out how to make it work; Millennials and Generation Z workers have made DE&I a top priority. That extends to the manufacturing sector, according to the treasury executive. "DE&I is top of the list of every younger person's agenda for working," she said.
But it's not just younger workers. New research from Glassdoor revealed that 76 percent of employees and job seekers consider a diverse workforce to be an important factor when assessing companies for jobs. Thirty-two percent said they would not apply to a company whose workforce lacks diversity. Due to these findings, Glassdoor expects DE&I programs to continue to expand in 2021 and beyond.
Likewise, MI's Lee expects that companies will continue to refine and grow their DE&I efforts over time as the conversations evolve. Over the past five years, she has observed organizations transitioning from focusing only on numbers (diversity) to helping people bring their full selves to work (inclusion). "That's a tremendous evolution, and some companies are way out on the tip of the spear on this, and others are just beginning," she said. "But the conversation is so mainstream that right now, it's building the momentum."
According to a 2019 study by Morning Consult, members of Generation Z are focused on having successful careers. With that in mind, the manufacturing sector can engage younger workers by providing good career pathing and opportunities for growth.
Lee noted that there is a lot of potential for upward mobility in manufacturing; companies simply need to improve their messaging. "We need to do a better job of talking about what those skilling and upskilling opportunities are," she said. "You're not necessarily choosing the thing you want to do forever, but you're choosing where you want to start. And I would be hard-pressed to find another sector that has as much upward mobility as we have in manufacturing."