WORKFORCE STUDY FULL REPORT

Transcription

1 WORKFORCE STUDY FULL REPORT Prepared for STEG Southern Tier Economic Growth Serving Chemung County and New York s Southern Tier By Donald T. Iannone Associates February 17, 2014

2 TABLE OF CONTENTS Section I: Preface Page 3 Section II: About Southern Tier Economic Growth (STEG) Page 4 Section III: Donald T. Iannone Associates and This Study Page 5 Section IV: Study Objectives, Approach and Deliverables Page 6 Section V: Chemung County Target Industries Page 10 Section VI: Long Term National Labor Market Trends Page 17 Section VII: Trends and Factors Shaping Labor Supply in the Seven-County Chemung County Labor Market Page 20 Section VIII: Trends and Factors Shaping Labor Demand in the Seven-County Chemung County Labor Market Page 46 Section IX: Summary of Findings and Recommendations Page 64 Section X: Implementation Guidelines Page 74 Section XI: Appendix. Occupational Skill Requirements of the Target Industries Page 77 Chemung County Workforce Study 2

3 SECTION I: PREFACE A competitive workforce is an essential ingredient to business growth and successful economic development. This study assesses labor supply and labor demand conditions in Chemung County and the surrounding 7-county labor market located in the bi-state region. The study was undertaken to support future economic development efforts by STEG and its partners, especially its workforce development partners. One of the major recommendations of this study is that a strengthen economic development-workforce development partnership preparing Chemung County to develop new business and job opportunities in target industry sectors. To create the industries of the future in Chemung a workforce of the future must exist. This study finds some significant weaknesses in both labor supply and labor demand. On the supply-side, more middle-skill and high-skill workers must exist in the local labor market to develop advanced manufacturing and service businesses and jobs in the future. Current weakened labor supply conditions are a result of the converging effects of population losses, an aging and shrinking labor force, and lessened demand for workers over time. While a number of existing Chemung County employers have open positions they are unable to fill because they cannot find the workers they require, overall labor demand is weak as evidenced by significant job losses in several goods and service-producing industries. Total employment has actually been in decline since the late 1990s. Technical, management, and entrepreneurial talent retention and attraction are significant challenges for many area employers, although Corning Inc. and area universities (e.g. Cornell University) have done fairly well in the race for talent. Local labor market conditions reflect larger national and statewide labor market trends, and in that sense Chemung County is not at all unique. In that regard, larger surrounding social and economic trends explain Chemung County s labor market challenges. The situation is far from bleak or hopeless, but planned adjustments to the area s labor market will take time and a stronger economic development-workforce development effort. Because similar labor supply and demand issues exist in most other area counties, this points to the need for a stronger regional response to these issues. STEG and its counterparts in these other counties will need to work together to strengthen the regional workforce. These are challenging economic times for most local areas, but stronger local and regional partnerships can make a measurable difference. Chemung County Workforce Study 3

4 SECTION II: ABOUT SOUTHERN TIER ECONOMIC GROWTH (STEG) Southern Tier Economic Growth (STEG) is the lead economic development organization serving Chemung New York. STEG s mission is to increase prosperity and economic vitality for Chemung County businesses, communities, and workers. During the organization s 77-year history of service to the community, STEG has made many significant contributions to local and regional economic development through direct assistance to companies, communities, and workers, while giving shape to a positive economic climate for job and business development. STEG was formed in 1936, which was during the latter years of the Great Depression. This was also the beginning of the era of modern industrial development in the Elmira-Chemung County area. STEG s Board of Directors is comprised of Chemung County s top business, government, education, and civic leaders, who work together with vision, intelligence, and skill in setting the direction for economic development across the and helping define that direction for the larger surrounding Southern Tier Region of New York State. The organization s four staff members are seasoned economic development professionals with extensive skills and experience in existing business retention and expansion, new business attraction, area marketing, and economic climate improvement. STEG works in partnership with Chemung County communities, Chemung County Government, the area s many chambers of commerce and local and regional economic development, workforce development, and planning organizations and groups, the Southern Tier Regional Economic Council, and Empire State Development to promote and assist economic development in Chemung County and the Southern Tier Economic Region. Southern Tier Economic Growth (STEG) 400 Church Street Elmira, New York Web: Phone: gminer@steg.com Chemung County Workforce Study 4

5 III. DONALD T. IANNONE ASSOCIATES AND THIS STUDY Donald T. Iannone Associates (DTIA) is an economic development research and strategy consulting company based in Cleveland, Ohio. DTIA was formed in 2000, following Don Iannone s departure from Cleveland State University, where he headed its Economic Development Policy Center for 15 years. Don is an economic development expert with nearly 35 years experience in local and state economic development. He has worked in over 30 states and several countries on economic development projects. Mr. Iannone has held several national and state leadership positions in economic development, and he is the author of many academic and professional journal articles, book chapters, and reports on economic development trends and issues. DTIA has completed numerous target industry and workforce studies and strategies for county, regional, and state economic development organizations. DTIA has been hired by Southern Tier Economic Growth (STEG) to conduct two related studies that will in part give direction to STEG s future economic development work. The first is a target industry study, which identified the those industries to which STEG should give attention from the standpoint of existing business retention and expansion, new business attraction, and entrepreneurial development The second is this study, which examines the area s labor market in terms of supply and demand, and the area s readiness to meet the workforce needs of the recommended target industries. Donald T. Iannone Associates Two Bratenahl Place Suite 14D Bratenahl, Ohio Web: Phone: diannone@ix.netcom.com Chemung County Workforce Study 5

6 SECTION IV: STUDY OBJECTIVES, APPROACH AND DELIVERABLES A. Objectives 1. Profile the Chemung County area labor market from an overall supply and demand standpoint, and assess its general readiness to meet the requirements of the recommended target industries, which were identified by Donald T. Iannone & Associates (DTIA) in a related study. This profile identifies where the local labor market has strengths and weaknesses and the major gaps that may need to be filled in meeting the workforce requirements companies in the target industries. 2. Produce workforce data packets that will be useful to STEG in its outreach to companies in the recommended target industries. These data spreadsheets contain some of the salient data used in this study that may be useful to companies evaluating Chemung County as a possible future business location. B. Approach and Deliverables The workforce study has been conducted in tandem with the target industry analysis. See Chemung County Target Industry Study, February 2014, by Donald T. Iannone & Associates. The Workforce Study focuses primarily on Chemung but also gives attention to the seven-county commutershed surrounding Chemung County (Chemung NY, Schuyler NY, Steuben NY, Tioga NY, Tompkins NY, Bradford PA, and Tioga PA). Also, some observations are included about the labor market in New York s Southern Tier Region, which includes the following New York counties: Broome, Chemung, Chenango, Delaware, Schuyler, Steuben, Tioga and Tompkins. The study draws upon relevant earlier workforce and labor market analyses and published labor market data by the State of New York Department of Labor and the U.S. Department of Labor. It also incorporates insights from local and state workforce development experts and Chemung County employers on the area labor market. The workforce study consists of two interrelated parts: 1. The first is an analysis of supply (available workforce and skills in Chemung County and the surrounding labor market area), and demand (existing and expected future workforce requirements of Chemung County employers) trends for the overall area labor market. Chemung County Workforce Study 6

7 2. The second part of the study examines the major workforce demand requirements of the final target industries to ensure that Chemung County can meet these requirements. Note: Because of budget constraints, a detailed analysis of supply and demand on an individual industry basis is not possible. Nor can we conduct new primary research on complex workforce issues such as underemployment. Specific work steps in the workforce study have included: 1. Assemble published state and federal labor market data related to Chemung County and surrounding counties. 2. Analyze in data from Step 1 over the past ten years and use available labor market forecasts and projections to inform the future direction of the labor market in terms of supply and demand trends. 3. Assemble relevant earlier studies and plans that inform this study. Draw salient trend information from these studies and plans and apply them to this workforce study. 4. Interview local labor market and workforce experts and representative employers to gain their insights. 5. Interview industry association and national workforce experts on workforce trends in the target industries. 6. Examine the wage levels of the proposed target industries with a careful eye to those industries that could create more higher skill/higher wage jobs in Chemung County. 7. Analyze the occupation-industry matrices for the target industries to identify high demand skills and other requirements. 8. Identify existing public and private sector workforce development resources, including college and universitybased resources, available to support workforce improvement and development in Chemung County. 9. Incorporate the workforce study findings into the target industry study and prepare the two deliverables. C. Deliverables 1. Area labor market supply and demand executive report with major findings, conclusions, and recommendations on future actions to capitalize on workforce assets and strengths and reduce workforce weaknesses and fill essential gaps related to the final target industries. 2. Workforce data packets (spreadsheets) for use by STEG in its future business outreach efforts. Note: The scope of this study did not include an assessment of the adequacy of existing training programs and employment service resources. This would be a logical follow-on step after this study. Chemung County Workforce Study 7

8 Figure 1 below shows how the Workforce and Target Industry studies are designed to assist STEG s future work efforts. Figure 1: Role of the Target Industry and Workforce Studies in Strengthening STEG Business Development TARGET INDUSTRY STUDY Strengthen Demand for Workers in Chemung County Business Retention and Expansion New Business Attraction Entrepreneurial Development Strengthen Worker Skill Supply in Chemung County WORKFORCE STUDY The Target Industry Study (TIS) defines Chemung County s best opportunities for business development. The Workforce Study (WS) analyzes the local and regional labor markets and their ability to meet the workforce requirements of existing Chemung County businesses and businesses in the target industries. Recommended workforce development priorities and strategies are identified. Many factors beyond STEG s control will ultimately determine if these strategies will actually work. A major one on the supply side (workforce available) is the ability to find and train the workers needed. A major one on the demand side (employer job creation) is the ability of Chemung County employers to create quality jobs to employ these workers. Chemung County Workforce Study 8

9 Figure 2 below identifies how the data and analysis in this study relates to labor supply and labor demand, the two sides of the labor market equation. Figure 2: Labor Supply and Demand Data Analyzed in this Study Labor Supply: Population growth Population composition (age, race, and gender) Population location Wages and income Work force participation rate and number Unemployment rate and number Labor force size/growth Working age population Unionization Commuting patterns (by place of residence) Labor Demand: Job and employment growth Number of employers/establishments Employment by industry sector growth/projections Occupational growth/projections Employment by occupation New position/job openings Staffing patterns (occupations requirements of industries) In demand occupations Commuting patterns (by place of work) The Target Industry Study makes recommendations on industry sectors and clusters to which STEG and its partners should give business development attention over the next three years. The recommended industries represent a part of the demand side of the Chemung County area labor market. These industries require identified occupational skills and they act as a source of demand for these occupational skills. Only state level occupation by industry data are available, which the New York Department of Labor refers to as its Staffing Pattern data. Appendix A of this report contains the staffing pattern data for the Target Industries (where it is available). Chemung County Workforce Study 9

10 V. CHEMUNG COUNTY TARGET INDUSTRIES The Chemung County Target Industry Study identifies the most important industries and industry clusters to which STEG should give attention in the future for the purposes of existing business retention and expansion, new business attraction, and entrepreneurial development. This Workforce Study provides important information to support the Target Industry Study. For that reason, a summary of the Target Industry Study recommendations is provided in the Workforce Study Report. A. Business Retention (BR) Target Industries Retention Group 1: Important Industries Losing Employment The first BR industry group contains several industries (all of which are manufacturing industries) that are very important to Chemung County s economic base, even though they have lost jobs during the past decade and are projected to continue to do so in the future. While it is true that national manufacturing in general has experienced a long-term pattern of employment decline, the sector is strategically important to the national economy and Chemung County s economic base. Can anything be done to bring manufacturing jobs back? According to a 2011 Brookings Institute study of local economic development policies and strategies aimed at strengthening manufacturing companies and jobs, the overall conclusion was that these programs have helped manufacturers to gain a competitive edge through new technology and facilities, but they have not proved very successful in bringing back lost manufacturing jobs in areas with a strong historical dependence on manufacturing. 1 Various news stories and studies by business groups like the Boston Consulting Group (BCG) indicate that as other world locations, including China, lose a part of their production cost advantage, the U.S. has become more attractive for manufacturing operations. More than a third of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back some production to the United States from China or are considering it, according to 2012 survey by The Boston Consulting Group (BCG). This argues that STEG should give future attention to encouraging the retention, expansion, and attraction of manufacturing industries and companies. 1 Brookings Institute, Responding to Manufacturing Job Loss: What Can Economic Development Policy Do?, June Chemung County Workforce Study 10

11 Table 1: Key Chemung County Industries Employment Forecast to Actual Loss (000) Projected Loss (000) Industry NAICS Computer and Electronic Products Electrical Equipment, Appliance, and Component Manufacturing Nonmetallic Mineral Product Manufacturing Fabricated Metal Product Manufacturing Machinery Manufacturing Transportation Equipment Manufacturing Primary Metal Manufacturing Forecast data from Moody s Economy.com Retention Group 2: Move-Out and Contracting Companies, Churn is a way of life in today s economy. Chemung County s economic base is seeing its share of churn as Table 2 below shows. Those local employers that are contracting in terms of employment and employers moving out of the County are important business retention targets. While a significant number of expansions and move in s have occurred in the areas of concern remain, especially in two employer groups: 1. Contractions in employment in local businesses in three employment size groups (10-99, , and 500+). 2. Move outs of businesses in the employee size group. Table 2: Chemung County Business Dynamics, Contracting and Move-Out Companies, EXPANSION STARTUPS RELOCATION ESTABLISHMENTS EXPAND CONTRACT NET STARTUPS CLOSE NET MOVE IN MOVE OUT TOTAL 2,003 1, ,560 4,220 1, Self-Employed (1) ,661 1, Stage 1 (2-9) 922 1, ,676 2, NET 2 Source: Moody s Economy.com industry employment forecast series Chemung County Workforce Study 11

12 EXPANSION STARTUPS RELOCATION ESTABLISHMENTS EXPAND CONTRACT NET STARTUPS CLOSE NET MOVE IN MOVE OUT Stage 2 (10-99) Stage 3 ( ) Stage 4 (500+) Source: Business Dynamics Database, Edward Lowe Foundation Retention Group 3: Chemung County Suppliers to Former Sikorsky Plant in Elmira While the Sikorsky plant closing occurred a couple years back, some of the plant s local suppliers were likely significantly impacted by the loss of sales to Sikorsky, and its is possible that their future presence in Chemung County could be threatened. B. Business Expansion (BE) Industry Targets The Target Industry Report recommends that STEG give major attention to helping businesses in expanding industries to grow and increase employment. Expansion Group 1: Expanding Companies The expanding businesses in Table 3 below should be given attention by STEG. These businesses will need to be identified through the Dun and Bradstreet database that is linked to the Edward Lowe Business Dynamics data. A 10% sample of the 524 net expansion businesses should be drawn to identify prospects in the County. Table 3: Business Expansions, Chemung EXPANSION STARTUPS RELOCATION ESTABLISHMENTS EXPAND CONTRACT NET STARTUPS CLOSE NET MOVE IN MOVE OUT TOTAL 2,003 1, ,560 4,220 1, Self-Employed (1) ,661 1, Stage 1 (2-9) 922 1, ,676 2, Stage 2 (10-99) NET NET Chemung County Workforce Study 12

13 EXPANSION STARTUPS RELOCATION ESTABLISHMENTS EXPAND CONTRACT NET STARTUPS CLOSE NET MOVE IN MOVE OUT Stage 3 ( ) Stage 4 (500+) Expansion Group 2: Existing Industries Growing in Chemung County Table 4 below identifies those industries that have grown employment in and are expected to grow employment in Table 4: Chemung County Existing Growing Industries, and Industry (000) (000) Accommodations and Food Services Miscellaneous Manufacturing Administrative Support ,20 Health Care and Social Assistance Repair and Maintenance Note: Jobs in (000). Source: Moody s Economy.com, January 2014 Expansion Group 3: Industries with Favorable Growth Alignment and Rising Location Quotients The third group of industries recommended as business expansion targets are industries that: 1) have positive growth alignment (regional-state-national); and 2) rising location quotient (LQ) values between 2003 and Positive growth alignment means these industries are growing within the Southern Tier Region, New York State, and nationally. A rising location quotient (LQ) means these industries have become more highly concentrated within Chemung County. These industries include: 1. Food Products (NAICS 311) 2. Wood Products (NAICS 321) 3. Plastics and Rubber Products (NAICS 326) 4. Fabricated Metal Products (NAICS 332) 5. Machinery Manufacturing (NAICS 333) 6. Warehousing and Storage (NAICS 493) NET Chemung County Workforce Study 13

14 7. Other Information Services Internet Services (NAICS 519) 8. Professional, Scientific, and Technical Services (NAICS 541) 9. Administrative and Support Services (NAICS 561) 10. Hospitals (NAICS 622) 11. Accommodations (NAICS 721) C. New Business Attraction (NBA) Target Industries Attraction Group 1: Supplier Industries to Natural Gas Drilling Study interviews point to potential future business investment opportunities for Chemung County related to the natural gas drilling industry in Pennsylvania s Northern Tier. Because of the close proximity to natural gas drilling activities, STEG should attempt to attract supplier industries to these drilling companies. Table 5: Top Growing Suppliers to the U.S. Natural Gas Drilling Industry NAICS Code Description 2013 Jobs Oil and Gas Pipeline and Related Structures Construction 145,870 49% Support Activities for Oil and Gas Operations 302,077 43% Oil and Gas Field Machinery and Equipment Manufacturing 78,502 32% Source: EMSI Estimates, July 2013 In Bradford PA, there are 1,142 gas wells operated by the following 7 companies: Chesapeake Appalachian Energy Chief Oil and Gas EOG Resources Southwestern Energy Production Shell Western E&P Talisman Energy U.S.A. Tenaska Resources There are 792 active wells in Tioga PA that are operated by 6 companies: % Change Since 2010 Chemung County Workforce Study 14

15 Southwestern Energy Production Shell Western E&P Talisman Energy U.S.A. Tenaska Resources Equipment Production Co. Seneca Resources Group Business Attraction Group 2: Move In Companies, 188 businesses moved into Chemung County during A sample of businesses in this move in category should be requested from the Dun & Bradstreet data linked to the Edward Lowe business dynamics data. See Table 6 below. Table 6: Business Move-Ins, Chemung EXPANSION STARTUPS RELOCATION ESTABLISHMENTS EXPAND CONTRACT NET STARTUPS CLOSE NET MOVE IN MOVE OUT TOTAL 2,003 1, ,560 4,220 1, Self-Employed (1) ,661 1, Stage 1 (2-9) 922 1, ,676 2, Stage 2 (10-99) Stage 3 ( ) Stage 4 (500+) Attraction Group 3: Growth Aligned Industries with Rising Location Quotients A fourth group of industries, which were also recommended for Business Expansion, should be given attention for Business Attraction. These are industries with positive growth alignment (regional-state-national) and rising location quotient values between 2003 and Once again, positive growth alignment means these industries are growing within the Southern Tier Region, New York State, and nationally. A rising location quotient (LQ) means these industries have become more highly concentrated within Chemung County. These industries include: 1. Food Products (NAICS 311), NET Chemung County Workforce Study 15

16 2. Wood Products (NAICS 321) 3. Plastics and Rubber Products (NAICS 326) 4. Fabricated Metal Products (NAICS 332) 5. Machinery Manufacturing (NAICS 333) 6. Warehousing and Storage (NAICS 493) 7. Other Information Services Internet Services (NAICS 519) 8. Professional, Scientific, and Technical Services (NAICS 541) 9. Administrative and Support Services (NAICS 561) 10. Hospitals (NAICS 622) 11. Accommodations (NAICS 721) D. Cluster Development (CD) Opportunities Chemung County should strive to develop business investment and job development opportunities in these 5 clusters that are identified in the Southern Tier Regional Economic Development Council s strategic plan report. According to Harvard Business School professor Michael Porter, a cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. A cluster is broader and more encompassing than a target industry. Clusters are considered to increase the productivity with which companies can compete, nationally and globally. These are: 1. Energy Cluster: Natural gas drilling suppliers 2. Healthcare Sector: Opportunities linked to the area s existing major healthcare providers. 3. Bioscience: Entrepreneurial development opportunities linked to bioscience technologies at Cornell and Binghamton University. 4. Advanced Transportation: Related to clean manufacturing and public transportation systems of the future. 5. Forestry and Wood Products: Related to area university research strengths and forestry found in the Southern Tier. Note: The major occupational skill requirements for most of Chemung County s target industries have been identified. This information is contained in Appendix A. Chemung County Workforce Study 16

17 VI. LONG TERM NATIONAL LABOR MARKET TRENDS A. U.S. Labor Market Megatrends As an important backdrop for this study, it is important to understand long-term trends in the national labor market, which have a significant bearing on Chemung County s labor market. The key trends include: 1. Slowing Labor Force Growth: There are two forces negatively impacting the U.S. labor force growth rate: slowing population growth and declining labor force participation rates. This study finds this same reality in Chemung County and New York s Southern Tier. 2. Slowing U.S. Population Growth Rate: Population is the single most important factor in determining the size and composition of the labor force. A variety of factors contribute to this population growth slow-down. For one, the aging of the population has a major bearing on population growth. Both Chemung County and the Southern Tier face these same trends. 3. Population Share Gains in the South and West: Overall, states and regions in the South and West accounted for 84.4 percent of the U.S. population growth from 2000 to 2010, according to the 2010 Census. The South and West accounted for 77.0 percent of the total growth from 1990 to Meanwhile, the Middle Atlantic, New England, and Midwest regions have experienced significant declines in their shares of population growth in recent decades. 4. Declining Labor Force Participation Rate: The overall U.S. labor force participation rate (the percentage of the working age population in the labor force) for men and women is declining. After peaking at 67.1 percent in 2000, the overall labor force participation rate declined to 64.7 percent by Since then, the labor force participation rate declined gradually, falling to 64.1 percent by 2011, a drop of 3.0 percent- age points. By September 2012, the rate had dropped further, to 63.6 percent. Furthermore, as the labor force continues to get older due to aging baby boomers, the labor force participation rate is projected to decline even more. These same dynamics are at play in Chemung County and the Southern Tier region. 5. Skills and Talent Shortages: An estimated 31% of employers worldwide find it difficult to fill positions because of talent shortages in their markets, reports the 2012 Talent Shortage Survey from Manpower, an Chemung County Workforce Study 17

18 international employment agency. When it comes to attracting employees with critical skills, the task becomes even more challenging. Why can t companies find the right talent despite the growing ranks of collegeeducated workers and the high unemployment in some of the best-educated markets? Part of the answer has to do with the rising skill level needed in the evolving global economy. Another element is the failure of educational systems to produce an adequate base of talent to meet these changing needs. Although educational access is growing worldwide, not enough students graduate with the skills desired by global employers. The employer interviews for this study point to these same difficulties in Chemung the Southern Tier, and the Northern Tier of Pennsylvania. 6. Continuing Slow Labor Force Growth in the Next Decade: According to the Bureau of Labor Statistics most recent long-term labor market forecast, the U.S. labor force is projected to reach million in The labor force is anticipated to grow by 8.5 million, an annual growth rate of 0.5 percent, over the period. The growth in the labor force during is projected to be smaller than in the previous 10-year period, , when the labor force grew by 10.1 million, a 0.7-percent annual growth rate. Population projections for the Southern Tier and Chemung County suggest the area s slow labor force growth trend will continue in the years ahead. B. National Manufacturing Workforce Trends A 2011 national workforce survey by the Manufacturing Institute and Deloitte Consulting found that: 3 1. The hardest jobs to fill are those that have the biggest impact on performance. Shortages in skilled production jobs machinists, operators, craft workers, distributors, technicians, and more are taking their toll on manufacturers ability to expand operations, drive innovation, and improve productivity. Seventy-four percent of respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity. Unfortunately, these jobs require the most training, and are among the hardest manufacturing jobs to find existing talent to fill. 2. While they recognize the importance of recruiting and developing talent, many manufacturers depend on outdated approaches for finding the right people, developing their employees skills, and improving their 3 Manufacturing Institute and Deloitte Consulting, The Skills Gap in U.S. Manufacturing, October Chemung County Workforce Study 18

19 performance. At a time when finding the right talent for the job has become so difficult, the spotlight shines even more brightly on recruitment and development efforts. After all, if manufacturers can t bring in talent with the skills they need, they can take steps to expand the skills base of their existing workforce. The bad news is that while most manufacturers have some tools in place to address these challenges, they are depending on outdated, informal methods such as word-of-mouth recruiting. When it comes to training, there is also considerable room for improvement. 3. High unemployment is not making it easier to fill positions, particularly in the areas of skilled production and production support. There s no way around it: respondents report, on median, that 5% of their jobs remain unfilled simply because they can t find people with the right skills. Translated to raw numbers, this means that as many as 600,000 jobs are going unfilled, a remarkable fact when the country is facing an unemployment rate that hovers above 9%. Respondents separately report that the national education curriculum is not producing workers with the basic skills they need a trend not likely to improve in the near term. 4. The changing nature of manufacturing work is making it harder for talent to keep up. Over the past five years, most manufacturers have redesigned and streamlined their production lines while implementing more process automation. In short, as the industry has changed, the nature of work that it requires is changing as well. It s happening fast, and manufacturers will continue to expect more from their employees. Unfortunately, respondents report that the number one skills deficiency among their current employees is problem-solving skills, making it difficult for current employees to adapt to changing needs. 5. The skills gap is expected to take the biggest toll on skilled production jobs, and will likely widen as time passes. When asked where the skills gap is likely to hurt the most as respondents look to the future, they identify skilled production jobs by a wide margin. Fully 80% of respondents indicated that machinists, operators, craft workers, distributors, and technician positions will be hardest hit by retirements in the upcoming years. At the same time, companies expect the skilled production group to be the hardest to find in the job market. Chemung County Workforce Study 19

20 VII. TRENDS AND FACTORS SHAPING LABOR SUPPLY IN THE CHEMUNG COUNTY SEVEN- COUNTY LABOR MARKET AREA A. Introduction The Chemung County seven-county labor market area includes five New York counties and two Pennsylvania counties: Chemung, NY; Steuben, NY; Schuyler, NY; Tioga, NY; Tompkins, NY; Tioga, PA; and Bradford, PA. B. Population Growth Trends 4 Table 7 below provides an overview of major population changes occurring in the seven-county labor market area. Table 7: Historical Population Growth Overview, Population Over Time Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA 7-County Totals ,911 18,514 99,063 50, ,554 62,792 42, , ,830 18,344 98,989 51, ,564 62,622 41, , ,070 19,224 98,726 51,784 96,501 62,761 41, , ,195 18,662 99,088 52,337 94,097 60,967 41, , ,656 17,686 99,217 49,812 87,085 62,919 40, , to 2010 % change -2.50% -4.60% 0.30% -1.30% 5.20% -0.20% 1.50% -0.23% 1990 to 2010 % change -6.70% -1.70% -0.10% -2.30% 7.90% 2.70% 2.10% 0.27% 1980 to 2010 % change -9.00% 3.70% -0.20% 2.60% 16.60% -0.50% 2.50% 2.24% While the 7-county regional population has grown slightly (from 455,348 in 1980 to 464,889 in 2012), the population in Chemung County declined from 97,656 in 1980 to 88,911 in Source Data: U.S. Census and Current Population Survey Chemung County Workforce Study 20

21 Table 8: Components of Recent ( ) Population Changes Components Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA Seven- County Totals Net Domestic Migration (Change 2011/2012) ,282 Net International Migration (Change 2011/2012) Natural Increase (births minus deaths) Births , ,773 Deaths ,263 Migration accounted for a population loss of 1,281 with the majority of this loss occurring in Tioga and Steuben Counties in New York. Table 9: Population Estimates by Race and Hispanic Origin, 2012 Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA Seven- County Totals American Ind. or Alaskan Native Alone Asian Alone 1, , , ,255 Black Alone 5, , , ,394 Native Hawaiian and Other Pac. Isl. Alone White Alone 79,094 17,935 94,462 48,979 84,670 61,165 41, ,781 Two or More Race Groups 2, , , ,837 Hispanic or Latino (can be of any race) Chemung County Workforce Study 21

22 Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA Seven- County Totals Not Hispanic or Latino 86,420 18,207 97,593 49,730 97,878 61,966 42, ,858 Hispanic or Latino 2, , , ,031 Diversity is an important labor force issue for many employers, especially those with strong international roots and those serving ethically and diverse markets. The data in Table 9 above indicates that nearly 88% of Chemung County s population base is White and 92% of the population in the 7-county labor market area is White. Table 10: Population Growth Projections, County Change % Change Chemung NY 91,070 88,830 85,524 81,715-9, % Steuben NY 98,726 98,990 96,181 91,516-7, % Tioga NY 51,784 51,125 48,337 44,570-7, % Tompkins NY 96, , , ,893 4, % Schuyler NY 19,224 18,343 17,331 15,936-3, % Bradford PA 62,761 60,664 59,359 58,680-4, % Tioga PA 41,373 40,361 39,772 39,680-1, % Total 461, , , ,990-28, % Source: Cornell University Applied Demographics Program, Projections for NY State, & Penn State University Population Projections for PA Counties, The data in Table 10 above indicates a population slide for Chemung and its neighboring counties over the next 20 years; a trend that has been taking shape over the past two decades. See Table 7 above. Chemung County s total population is projected to drop by 9,355 by The seven-county labor market area is expected to lose 28,449 people during the same period. As mentioned earlier, population growth is a critical ingredient to labor force growth. These overall population declines will likely detract from workforce growth in the years ahead. Chart 1 below presents data on Chemung County s working age population for For this study, working age population is defined as age 15-69, which allows us to use the groupings provided in Cornell s projections. Also, Chemung County Workforce Study 22

23 we assume that people will continue working past age 65 in the future and for that reason we used 69 as an average upper limit for this group. Chart 1: Chemung County Working Age Population Projections 70,000 65,069 60,000 62,120 62,419 61,460 56,995 52,390 50,000 59,550 54,435 50,986 40,000 30,000 20,000 10, Source: Cornell Applied Demographics Program Population Projections for State of New York Since 1990, Chemung County s total working age population has dropped from 65,069 in 1990 to 62,419 in 2010, and it is expected to continue to drop through 2040 to 50,986, according to the Cornell population projections. The original projections were prepared in 2008 (based upon the 2000 Census) and then revised in 2011 in light of the 2010 Census numbers. The numbers suggest a fairly major loss for Chemung especially from 2020 onward. Table 11 below provides detailed data for the various age sub-groups comprising the working age group in Chemung County. Seven of the eleven sub-groups are expected to see a decline and four (30-34, 35.39, 60-64, 65-69) Chemung County Workforce Study 23

24 are expected to see gains. The and age sub-groups are prime working age and the and subgroups fall into the Boomer (near retirement category). Table 11: Detailed Breakdown of Population Changes by Age Group in Chemung County Age Group Change % Change ,985 5,371 5, % ,533 5,611 5, % ,328 5,340 5, % ,143 5,528 5, % ,138 5,184 5, % ,818 5,363 5, % ,849 5,704 5,252-1, % ,072 6,441 5,383-1, % ,327 6,471 5, % ,396 5,795 5, % ,830 4,652 4,988 1, % Totals 62,419 61,460 59,550-2, % Chart 2 below shows the projected population shares of males and females in Chemung County to The curves point to some drop in the male population share and some gain in the female population share. These changes underscore the importance of women in the workplace in Chemung County. The labor force participation rate has been an increasingly important issue nationally and to most local labor markets. As of 2012, the national labor force participation rate (LFPR) for males and females combined was only 63.1%. By comparison, New York s LFPR was only 61.4% in The answer to raising the LFPR is not creating more lowskilled and low-paying jobs. Rather, the answer is creating more middle and high skilled jobs that offer sufficient income to support families. Labor force participation rates for the counties in the 7-county labor market are calculated and presented later in this report. Chemung County Workforce Study 24

25 Chart 2: Female and Male Shares of Chemung County s Future Population 52.00% 51.50% 51.40% 51.00% 50.50% 50.60% 50.30% 50.20% 50.20% 50.20% 50.30% 50.30% 50.40% 50.00% 49.50% 49.00% 49.40% 49.70% 49.80% 49.80% 49.80% 49.70% 49.70% 49.60% Males Females 48.50% 48.00% 48.60% 47.50% 47.00% C. Wage and Income Trends Wage and income levels are lead indicators of whether a local area is becoming more or less prosperous over time. They reflect the quality of jobs located in an area and whether the population has a sufficient standard of living in light of the area s cost of living. While Chemung County wants to provide an appropriate mix of employment opportunities matching residents skills, a goal of economic development is to raise prosperity levels across the population over time. This desired increase is conditioned on both supply (worker education and skill levels) and demand (the availability and quality of higher paying jobs that offer reasonable benefits to workers and their families. Table 12 below provides average wage data on the seven counties comprising the regional labor market. Since 2002, average wages in Chemung increased from $37,204 in 2002 to $41,393 in 2012, which represented an 11.3% growth. On a percentage increase basis, Chemung County s wages increased by more than all other labor market counties Chemung County Workforce Study 25

26 except Bradford PA. This increase was well above the 7-county wage growth increase of 6.74%. However, Chemung County s average wage remains below that of Steuben NY, Tioga NY, Tompkins NY, and Bradford PA. Schuyler NY and Tioga PA have consistently had the lowest overall average wage of the seven counties over the past decade ( ). Table 12: Average Wages (All Jobs) in the Regional Labor Market Counties 5 Avg. Wage Per Job (2012 Dollars) Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA Seven- County Totals 2012 $41,393 $33,497 $48,995 $45,586 $45,308 $41,885 $35,553 $41, $41,206 $33,274 $50,877 $46,004 $45,054 $40,390 $37,082 $41, $41,140 $34,193 $51,436 $47,932 $45,355 $38,870 $34,300 $41, $39,592 $34,235 $48,068 $50,833 $45,781 $37,624 $33,197 $41, $39,439 $33,330 $50,955 $48,777 $44,456 $37,109 $32,062 $40, $38,622 $32,934 $52,321 $49,424 $43,614 $37,073 $32,772 $40, $38,685 $32,614 $55,852 $49,327 $43,660 $36,793 $32,225 $41, $38,782 $33,825 $49,416 $47,283 $42,859 $36,412 $32,694 $40, $37,737 $34,682 $46,218 $46,576 $43,841 $36,737 $33,522 $39, $37,475 $31,577 $44,335 $45,039 $44,273 $37,164 $32,941 $38, $37,204 $32,344 $45,459 $46,414 $43,413 $37,054 $32,635 $39, Year Change $4,189 $1,153 $3,536 ($828) $1,895 $4,831 $2,918 $2, Year Percent Change 11.30% 3.60% 7.80% -1.80% 4.40% 13.00% 8.90% 6.74% The data in Table 13 below compares average wages by major industry sector in each of the 7 counties making up the Chemung County labor market. These data come from the U.S. Bureau of Labor Statistics (BLS) and the New York Department of Labor (NYDOL). 5 U.S. Bureau of Labor Statistics and New York Department of Labor data Chemung County Workforce Study 26

27 Table 13: Annual Average Wages by Industry in the Regional Labor Market Counties Industry Distribution of Tioga Tioga Seven County Avg. Wage Per Job in 2012 Chemung NY Schuyler NY Steuben NY NY Tompkins NY Bradford PA PA Totals Total Covered Employment and Wages $41,393 $33,497 $48,995 $45,586 $45,308 $41,885 $35,553 $41,745 Private $39,604 $31,820 $50,518 $47,272 $45,736 $42,275 $34,357 $41,655 Agri., forestry, hunting $20,346 $28,854 $24,748 $21,041 $36,251 $22,585 $26,612 $25,777 Mining $91,644 $76,268 $53,920 $29,500 $63,702 $81,536 $59,764 $65,191 Construction $49,150 $60,223 $33,090 $37,367 $44,517 $42,444 $43,165 $44,279 Manufacturing $54,234 $49,520 $57,322 $80,369 $62,251 $48,905 $42,176 $56,397 Wholesale trade $37,800 $44,759 $38,402 $45,753 $45,197 $48,142 $43,342 Retail trade $23,669 $22,806 $24,481 $27,737 $23,639 $23,166 $21,569 $23,867 Transportation, warehousing $43,114 $31,009 $36,932 $34,737 $37,851 $44,410 $41,022 $38,439 Utilities N/A $80,809 $91,197 $73,992 $66,510 $78,127 Information $57,054 $26,419 $36,934 $37,123 $51,634 $30,586 $24,791 $37,792 Finance and Insurance $51,079 $36,902 $76,580 $40,838 $57,196 $44,408 $49,433 $50,919 Real Estate, rental, leasing $32,255 $19,436 $34,351 $25,656 $33,402 $59,206 $38,506 $34,687 Professional, technical services $43,857 $21,545 $103,126 $59,366 $43,383 $56,548 $54,638 Mgmt. of companies, enterprises $52,139 $39,882 $191,348 $56,502 $56,550 $79,284 Administrative, waste services $32,505 $17,528 $56,902 $26,003 $32,279 $35,608 $33,471 Educational services $29,631 $40,015 $40,628 $12,753 $39,710 $42,516 $40,729 $35,140 Health care, social assistance $42,829 $36,444 $29,205 $102,159 $46,874 $51,502 Arts, entertainment, recreation $24,613 $26,559 $35,504 $24,459 $20,743 $11,354 $16,420 $22,807 Accommodation and food services $14,680 $15,691 $14,829 $13,052 $16,809 $13,009 $12,584 $14,379 Chemung County Workforce Study 27

28 Industry Distribution of Tioga Tioga Seven County Avg. Wage Per Job in 2012 Chemung NY Schuyler NY Steuben NY NY Tompkins NY Bradford PA PA Totals Other services, exc. public admin. $22,894 $27,499 $21,750 $22,832 $23,984 $21,385 $21,626 $23,139 Public Administration $39,763 $37,888 $42,349 $35,774 $45,734 $31,835 $31,145 $37,784 Average wages in Chemung County are highest in the Mining sector and lowest in Accommodations and Food Services. Within Manufacturing, Chemung County s average wage is below the 7-county labor market s average Manufacturing wages and exactly in the middle of average Manufacturing sector wages among the other counties comprising the regional labor market. Healthcare average wages in Chemung County come out in the middle of the counties as well. Table 14 presents personal income data on a per capita and total basis for each of the counties in the regional labor market. Two counties (Tioga NY and Tompkins NY) have higher per capita personal incomes (PCPI) higher than Chemung County and four are lower. Chemung County s PCPI ($38,056) is above the seven-county area s PCPI. Chemung County s PCPI has grown more slowly (on a percentage basis) than the seven-county area over the past 10, 20, and 30 years. This growth rate has narrowed to where Chemung County s PCPI is close to being on par with the regional growth rate. Table 14: Personal Income Comparison of Seven-County Labor Market Counties Chemung NY Tompkins NY Bradford PA Seven- County Totals I. Per Capita Personal Income Schuyler NY Steuben NY Tioga NY Tioga PA Per capita income $38,056 $37,789 $37,988 $38,734 $38,852 $37,653 $32,623 $37,385 Per capita income (adj. for inflation) $31,924 $29,691 $34,172 $31,852 $32,682 $30,828 $27,632 $31,254 Per capita income (adj. for inflation) $28,541 $23,796 $29,199 $28,949 $29,210 $26,524 $24,553 $27,253 Per capita income (adj. for inflation) $24,523 $21,126 $22,934 $25,105 $22,549 $21,912 $20,526 $22,668 Chemung County Workforce Study 28

29 Chemung NY Tompkins NY Bradford PA Seven- County Totals I. Per Capita Personal Income Schuyler NY Steuben NY Tioga NY Tioga PA 10-year adjusted % change 19.20% 27.30% 11.20% 21.60% 18.90% 22.10% 18.10% 19.77% 20-year adjusted % change 33.30% 58.80% 30.10% 33.80% 33.00% 42.00% 32.90% 37.70% 30-year adjusted % change 55.20% 78.90% 65.60% 54.30% 72.30% 71.80% 58.90% 65.29% Tompkins NY Bradford PA Seven- County Totals II. Personal Income in 2012 ($000) Chemung NY Schuyler NY Steuben NY Tioga NY Tioga PA Total Earnings by Place of Work $2,313,134 $298,717 $2,595,070 $906,403 $3,288,161 $1,573,682 $761,745 $11,736,912 Equals: Personal Income by Place of Residence $3,383,573 $699,629 $3,763,221 $1,955,197 $3,984,435 $2,364,312 $1,388,979 $17,539,346 Source: U.S. Bureau of Economic Analysis (BEA) Table 14 also presents data on total earnings by place of work and total personal income by place of residence for Chemung County residents. Personal income is comprised of various sources of income, including earnings from work, retirement/pension payments, governmental transfer payments, and investment income sources. Earned income represented 68% of personal income of residents in Chemung County in 2012, which is slightly higher than earnings share of income for the seven-county region (67%) but it is slightly lower than Steuben County (69%) and much lower than Tompkins County s 82.5% earnings share of personal income. Where earnings from work represent a larger share of personal income, this indicates that a larger share of the residential workforce is still employed in the workforce. Where other non-earned sources of income are higher, this indicates that a bigger share of the residential population relies on retirement funds and other income sources. Table 15 below presents percent of U.S. average wages for Chemung and the other six counties comprising the regional labor market. The data indicates that overall average wages were 84% of U.S overall average wages in Steuben County (99.4% od U.S. level) most closely tracked the U.S. in Schuyler County NY and Tioga County PA had the lowest percentages of U.S. average wages; 68% and 72.1% respectively. Chemung County Workforce Study 29

30 Table 15: County Annual Average Wages Compared to U.S. Annual Average Wages Percent of US Avg. Wage Per Job (2012 Dollars) Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA 7- County Totals % 68.00% 99.40% 92.50% 91.90% 85.00% 72.10% 84.70% % 67.90% % 93.80% 91.90% 82.40% 75.60% 85.63% % 69.50% % 97.40% 92.10% 79.00% 69.70% 85.11% % 70.20% 98.60% % 93.90% 77.20% 68.10% 84.79% % 68.60% % % 91.50% 76.40% 66.00% 84.14% % 66.90% % % 88.60% 75.30% 66.60% 83.23% % 67.30% % % 90.10% 76.00% 66.50% 85.27% % 70.70% % 98.90% 89.60% 76.10% 68.40% 84.01% % 72.50% 96.60% 97.40% 91.70% 76.80% 70.10% 83.43% % 67.00% 94.10% 95.60% 94.00% 78.90% 69.90% 82.71% % 68.90% 96.90% 98.90% 92.50% 79.00% 69.60% 83.59% 10-Year Change N/A N/A N/A N/A N/A N/A N/A 10-Year Percent Change N/A N/A N/A N/A N/A N/A N/A D. Labor Supply Measures Beyond the underlying demographic factors and trends shaping labor supply available to current and prospective future employers in Chemung a number of direct measures must be examined to understand the labor supply situation in the area. Unemployment Chemung County (8.7%) had the second highest unemployment rate in 2013 of the seven regional labor market counties as the data in Chart 3 below shows. The average annual rate across all seven counties was 7.9% last year. It is important to understand the primary reasons for unemployment in local areas. These include: 1. Fewer new job openings by private sector employers, including large, medium, and small size firms. Chemung County Workforce Study 30

31 2. Lack of real economic growth on a national and local/regional level. 3. Government sector layoffs: Cutbacks in government contracts add to the overall problem and cause job loss or layoffs to government contractors, which is a concern for Chemung County. 4. Business and job relocation offshore or fast growing U.S. regions (South and West). 5. Structural unemployment caused by low educational attainment, and inadequate skills to compete in the labor market. Minorities and other disadvantaged populations groups (including older workers) often face these challenges. Chart 3: Regional Labor Market Counties: 2013 Average Annual Unemployment Rate Chemung NY Schuyler NY Steuben NY Tioga NY Tompkins NY Bradford PA Tioga PA 7- County Totals Chart 4 below provides the actual number of persons unemployed in the regional labor market counties. Just over 18,000 people were unemployed in the area with the greatest numbers of these people in Steuben, Chemung, and Tompkins Counties. Many areas consider unemployed workers, so long as they are actively looking for jobs, to be part of the available labor supply. Chemung County Workforce Study 31

32 Chart 4: Unemployed Persons in Seven-County Labor Market Area, County Totals 18,058 Tioga PA Bradford PA Tompkins NY Tioga NY Steuben NY Schuyler NY Chemung NY 1,671 2,248 3,416 2,079 4, , ,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Underemployed Workers Underemployment is an issue for most labor markets. By definition, an underemployed worker is someone who is working in a position below his or her level of qualifications. For example, someone with a master's degree who is working as a retail salesperson is underemployed on this basis. Note, however, that this underemployment analysis compares and defines underemployment against the current national average. Labor that falls under the underemployment classification includes those workers: 1) that are highly skilled but working in low paying jobs; 2) workers that are highly skilled but work in low skill jobs; and 3) part-time workers that would prefer to be full-time. Technological innovation that reduces the demand for certain skills is one major cause of underemployment. A second important one is economic growth; specifically recessions which tend to produce insufficient job opportunities for workers forcing them to work at jobs below their educational and skill levels. Chemung County Workforce Study 32