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Local employers face ‘unprecedented challenge’

By SCOTT O’NEIL IWV Economic Dev. Corp.– In the first three installments of this series, we examined the broader challenges of recruitment and retention, as well as specific challenges for healthcare and defense. In this article we will explore the challenges facing small- and medium-sized organizations.

After interviewing local employers in heavy industry, technology, hospitality, food service and retail, we heard many common themes, some of which have already been discussed in this series. But the main frustration from proprietors who have been in business 20, 30, 40 and 50 years was the same — we are facing an unprecedented challenge in finding and keeping skilled workers.

One of our sources even had a suggestion of what is different about today: this may be the first time in the history of our country where we have seen such record-high inflation coupled with record-low unemployment. Typically you have high inflation balanced by a deep labor pool, or a skilled-worker scarcity balanced by affordable costs of living.

In our current predicament employers are facing exponentially increasing costs of doing business, soaring wage increases, and a labor pool either ill-equipped or uninterested in the available jobs.

Another employer pointed out how difficult it is to keep their customers happy, keeping up with mandated wage increases means having to pass those costs on to the consumer. In 2000, the California minimum wage was $5.75 per hour. Beginning January, the minimum wage will rise to $15.50.

In the meantime, fuel costs, materials costs and state mandates that place an onerous burden on proprietors (with what most employers criticize as offering little or no value to the general public), the costs of providing products and services to the consumer have become ludicrously expensive — and in some cases untenable. (The Wall Street Journal reports that at least 200,000 businesses more than historic trends were permanently closed during the pandemic).

While the extent of the “COVID impact” remains difficult to quantify, we have already seen some of the effects in the job market. Some fear that paying people to stay home (and not work) has lowered the general interest among many to participate in the workforce. Others worry that COVID mandates and precautions have exacerbated other challenges, like the availability of child care, making it difficult even for those who want to work.

But COVID had a mixed impact on the Indian Wells Valley. A disproportionate number of workers here hold government jobs, resulting in a lower number of layoffs compared to similarly sized communities. And with a $3 billion reconstruction of China Lake kicking off in early 2021, hundreds of new job opportunities flooded the market.

However, that too has taken a toll on smaller operations. Nearly all of the employers we spoke to said that they have lost qualified staff to civil-service and contract opportunities on the base. While this component may always have some impact on the local labor market, the pressure has intensified in recent years.

And when employers go to solicit new candidates, proprietors cite that only 5-10 percent of applicants meet minimum qualifications and appear genuinely interested in working.

This leads to another discouraging trend that has hampered employers: when a green candidate is brought on board for training, once they have a more marketable skill they are often recruited by a larger organization. Many of the employers admit that they are now reluctant to invest the unsustainably high resources of training someone who will not stay.

Most of these employers acknowledged that the existence of the IWV community is largely driven by the presence of the base. But some also questioned how they could meaningfully contribute to providing a quality level of services that would attract the skilled workforce the base is looking for if they cannot sustain quality operations.

Several employers noted that Ridgecrest and the surrounding areas have some unique barriers for encouraging job candidates to relocate: many are uninterested in making their home in such remote communities, and those open to the rural lifestyle cite California’s comparatively high cost of living as an inhibitor.

So many of the skilled workers in demand here are taking their skills to states like Texas, where their expertise remains in high demand but the cost of living is lower.

Finally, small employers noted that for many operations, there is simply no redundancy to survive the short staff resulting in resignations, reassignments, and even a temporary illness. Some noted that COVID outbreaks triggered temporary closures that only increased the pressure to keep operations in the black.

Even among the smaller businesses, workers express the desires of those in larger organizations — competitive wages, affordable housing, comprehensive services in their communities, and opportunities for entertainment and relaxation.

The question is, how do we ensure that our private sector is in a position to provide that?