Archives: Reg Murphy Pubs

“There’s a shortage of good, skilled workers.”

I have heard this complaint from local employers for years. And not just local employers; it has been a common complaint among employers in places around the country for some time.

I don’t buy it.

Now, I’m a huge fan of our local businesses. I cheer for them every day. But this “shortage of good workers” complaint doesn’t fly.

Labor market statistics indicate that the percentage of skilled workers in the labor force is greater than ever. That’s true for the U.S., for Georgia and for Glynn County.

If you are an employer and you are having difficulty finding good workers, the problem is not a shortage of good workers. The problem is your wages are too low.

Not long ago a local employer said to me, “We’ve been looking for a skilled machinist for months, and we can’t find anybody.”

My question: “What’s the pay?”

Answer: “$12 an hour.”

$12 an hour for a skilled machinist and none have come knocking on your door? Is that a surprise?

If I’m a skilled machinist and I see a job posting for a skilled machinist paying $12 an hour, my response is: “Don’t insult me and don’t waste my time.” You’d never receive an application from me.

A common response to the suggestion “have you considered raising your wages?” is, “Look, this isn’t Jacksonville or Savannah or Atlanta. This is Brunswick.”

Wrong. On a map, this is Brunswick. But as far as the labor market is concerned, this is not Brunswick, nor is it Georgia or even the South. As far as the labor market is concerned, this is the U.S. of A.

Good workers — skilled, conscientious workers who take pride in what they do — are mobile workers. They’re like entrepreneurs: They search for the best opportunities, and when they find them, they seize them — wherever those opportunities may be.

My wife and I have a daughter who graduated from college last May. She majored in psychology so, knowing her job options would be limited, started her job search six months before she graduated.

She got a job offer from an outfit in Jacksonville. The job was decent, but the pay was lousy. She asked her mother for advice.

“Employers find job applicants who are currently working more attractive than applicants who are not. Take this job, work very hard, and in three months, start looking again.” Wise advice from Mom.

Our daughter did just that. She confined her job search to the United States. All 50 of them.

She soon had phone interviews with employers in Corvallis, Ore.; Anchorage, Ala.; Phoenix, Ariz.; and St. Paul, Minn. She now has a decent job for decent pay in Phoenix, Ariz.

That’s how good workers operate. Good workers are out there. But if you pay low wages, you won’t see them.

Employers want employees to care about the work they do. Right and good. But, dear employer, the wages you pay tell employees how much you care about the job they do. If you pay wages that suggest you don’t care very much, how much do you think employees will care?

What I’m talking about here is strictly business. In business, you get what you pay for. Pay good wages, you’ll get good workers. Pay lousy wages … well, what did you expect?

So, the point bears repeating: if you’re not finding good workers, your wages are too low. Raise them.

Kicking back and conversing with a friend or friends over a cold beer or cocktail is a simple, yet great joy. Doing so in the environs of the Golden Isles is an even greater joy.

Piling on even more joy, a distillery and a brewery are on their way to downtown Brunswick.

The Richland Distilling Company’s new rum distillery is in the final phases of construction on Newcastle Street. The distillery has already had a couple First Friday open houses.

On the other side of Newcastle will be Silver Bluff Brewing Co. Silver Bluff is in the early stages of construction. When it opens, perhaps this year, it will be a fully operational brewery with a beer garden and tap room.

The distillery industry is booming. According to the Bureau of Labor Statistics, the number of operating distilleries in the U.S. has increased from 145 in 2010 to 675 in 2016. Employment in the industry has increased from 7,252 workers in 2010 to 12,207 in 2016. And distilleries pay well: the average weekly wages of distillery workers in 2016 was $1,362.

The boom in the brewery industry has been even more impressive. In 2002, there were 365 breweries operating in the U.S. By 2010, there were 527. In 2016, there were 2,843. Employment in the brewery industry has increased from 24,864 in 2010 to 58,580 in 2016.

But there’s much more to the beer story than that. If you are an old and inveterate beer snob, as I am, the evolution of the beer industry in the U.S. since the 1970s is a small yet glorious episode in the history of American capitalism.

In the 1970s, the beer situation in the U.S. was grim. The country had only 40 breweries, and the industry was highly concentrated: the five largest beer manufacturers accounted for 75 percent of beer sales. Weak and wimpy lagers ruled the day. Beers with actual flavor were pricey and hard to find.

Big beer’s only innovation in the 1970s was to introduce light beer. Is there any beer worse than a weak and wimpy lager? There is: light beer. It is light beer, along with disco, bell bottoms and a disturbing enthusiasm for polyester that mark the 1970s as among western civilization’s lowest ebbs.

In capitalism, such situations are the mothers of entrepreneurship. And it was in just that situation in the 1970s that craft brewers were born. The increase in U.S. breweries from 40 in 1970 to 2,843 in 2016 is almost entirely attributable to craft brewers entering the market.

Compared to the 1970s, the variety and quality of beer available in the U.S. today is spectacular. The big brewers of the 1970s had to become entrepreneurial to survive, and most of them have, by offering much more variety and much better quality.

Now the booming distillery and brewery industries are making their way to downtown Brunswick in the form of Richland Distilling and Silver Bluff Brewing. This is great news for downtown Brunswick and an encouraging sign. Entrepreneurs don’t locate just anywhere. They locate where they see profitable opportunities.

And Richland and Silver Bluff are the sorts of businesses that can spark a boom in a small and pretty downtown. Downtown Brunswick has seen a rising wave of entrepreneurship over the past couple years. Richland and Silver Bluff could make the wave much bigger.

The construction sector has had a tough go over the past 12 years.

We all know the beginning of the story. In 2006 and 2007, the housing bubble popped. Then financial markets tanked, banks hunkered down, trillions in corporate and household wealth went poof, and economies on both sides of the Atlantic sunk into the worst recession since the Great Depression.

The sector hit hardest by the recession was construction.

What happened to construction in Glynn goes a long way in explaining why the recession was so much worse here than in the U.S., Georgia, and many local economies.

The housing boom was bigger in Glynn than in most other places. From 2000 to their peak before the bubble popped, home prices jumped 42 percent in Georgia, 65 percent in the U.S. and 79 percent in the Brunswick Metro Stastical Area, a census region. (The Brunswick MSA consists of Brantley, Glynn, and McIntosh counties. Glynn accounts for about 80 percent of economic activity in the Brunswick MSA.)

The magnitude of the housing boom here is better reflected by construction activity than home prices. Over those same years, the construction sector’s contribution to inflation-adjusted GDP increased moderately in both the U.S. and Georgia — less than 6 percent in each case. In the Brunswick MSA, construction’s contribution to local inflation-adjusted GDP increased from $244 million in 2001 to $412 million in 2006, an increase of 69 percent.

That’s a big deal. As vital and prominent as the industry is, in 2006 construction accounted for a bit more than 5 percent of GDP in the U.S. and in Georgia. It accounted for 10.4 percent of GDP in the Brunswick MSA. In other words, on the eve of the crash, construction was a much larger part of our local economy than it was of other economies, national, state and local.

As is often the case, the bigger the boom, the bigger the bust. During the bust, home prices fell 19 percent in the U.S., 24 percent in Georgia, and 31 percent in the Brunswick MSA.

Construction activity fell even more. Between 2006 and 2009, the construction industry’s contribution to inflation-adjusted GDP fell 23 percent in the U.S. and 36 percent in Georgia.

In the Brunswick MSA? Unlike construction activity in the U.S. and Georgia, which largely flattened out between 2009 and 2012 before resuming moderate growth, activity in the Brunswick MSA fell almost without interruption through 2014. In 2014, construction’s contribution to local inflation-adjusted GDP was $107 million, a 74 percent fall from the 2012 figure of $412 million.

A 74 percent hit on an industry that made up more than 10 percent of our local economy — that’s a major reason for our long and nasty recession.

If there’s any silver lining here — and there isn’t much — it’s that construction activity is on the rise again in the U.S., in Georgia, and in Glynn. But the industry is not the same. Construction activity accounts for less than 4 percent of GDP in all three economies.

This is a case of a crucial feature of capitalism’s ceaseless churning: the decline of once prominent firms and industries. But there’s another crucial feature of capitalism’s churning: as some firms and industries decline, others — some new and some old but transformed — blossom and thrive. In my next column we’ll talk about a thriving industry that’s about to blossom in Brunswick.

(Data sources: On home prices, from the Federal Housing Finance Agency; on construction activity, from the Bureau of Economic Analysis of the Department of Commerce.)

Of all the markets in the economy, the labor market is without question the most complex. The national labor market consists of tens of millions of buyers of labor — private firms, nonprofit organizations, governments and government agencies — and more than 160 million sellers of labor — workers who are scattered all over the country.

The buyers of labor have ever changing demands for zillions of specific skills, while the sellers each have specific skills that are also fluid: skills can be enhanced and acquired, as well as lost.

Obstacles to labor market transactions abound. It takes time and money for employers and workers to find each other, and bad matches are costly to both parties.

Local labor markets, to the extent there are such things, are only slightly less complex. I say to the extent there are such things because employers and workers rarely limit their searches to workers and employers of a local area.

Labor markets are always in flux. Even more so over the business cycle.

It’s not just the levels of employment and unemployment that fluctuate with the business cycle. The size of the labor force itself fluctuates with the business cycle.

The labor force — which consists of employed workers plus workers classified as unemployed (not working but looking of work) — rises in boom times and shrinks in recessions. Our local labor force is a perfect example.

The years 2000 to 2005 were boom years in Glynn County. During those years, the county’s population increased by 7.4 percent. The county’s labor force increased by even more: 12.4 percent.

The recession hit us sometime around mid-2006. The local labor force continued to grow, but at a slower rate. Between 2005 and 2008, while the county’s population grew by 7.5 percent, the county’s labor force grew by 5.1 percent, reaching a peak of 41,730 in July 2008.

The recession then went from bad to worse. It lingered in Glynn through 2014. And the county’s labor force shrunk.

From 2008 to 2014, the population of Glynn grew by 5.3 percent, from 78,013 to 82,175. From July 2008 to December 2014, Glynn’s labor force fell from 41,780 to 36,427, a decrease of 12.7 percent.

Consider the decrease from another angle. In 2005, 54 percent of Glynn’s population was in the labor force. By 2015, 45 percent of the county’s population was in the labor force. That’s not the aging of the local population at work. That’s the business cycle at work.

Where did all those workers go during our recession?

Workers, like entrepreneurs, seize opportunities. Most workers in the labor force are full-time workers who remain in the labor force looking for work should they lose their jobs. But a sizable portion of workers — roughly 30 percent according to recent Bureau of Labor Statistics estimates — do not work full-time, year-round.

These workers tend to be more responsive to shifting labor market conditions. During recessions when jobs are scarce, many of these workers are quicker to drop out of the labor force should they lose their jobs. When economic conditions and job opportunities improve, back into the labor force they go.

The good news for Glynn is, that’s just what we’re seeing now. The county’s labor force now stands at 39,506 up 8.5 percent from that December 2014 level of 36,427. As our local economy continues to grow, we’ll see that trend continue.