As of May 2018, the nation’s unemployment rate stood at 3.8 percent, the lowest since 2000. However, for the nation’s construction equipment dealers, manufacturers and suppliers, there’s a different number that impacts their businesses more and more every day: the job opening rate.
The job opening rate measures the percentage of jobs unfilled at a business, and it is calculated by taking the number of unfilled jobs divided by the total number of available jobs (filled and unfilled).
Recently, researchers at the College of William & Mary (W&M) completed a study based on a comprehensive member survey by Associated Equipment Distributors (AED), the trade association representing companies that sell, rent, repair and manufacture heavy construction equipment. The researchers found an average job opening rate of 11.34 percent among AED members. At the time the survey was taken, this amounted to more than three times the national average. Due to the booming economy, all indications are the job opening rate has only increased.
Indeed, the greatest strategic challenge facing the construction equipment industry is the scarcity of skilled technical workers to fill diesel technician positions. In fact, 75 percent of survey respondents claimed the lack of skilled technicians made it difficult to meet customer demand, and more than half said the skills gap hindered their company’s growth and increased costs and inefficiencies. Simply put, the demand for technical skills in today’s labor market dampens economic growth—the W&M researchers estimate it costs construction equipment dealers $2.4 billion annually in forgone revenue. While millions of jobs are predicted to be unfilled over the next decade in all sectors of the economy, steps can be taken to reverse this trend.
To address the skilled worker shortage, policymakers must ensure students are prepared for well-paying careers, such as diesel technicians, to enable companies to seize new business opportunities and make the United States more competitive in the global economy.
Today’s career and technical education (CTE) helps bridge the gap between education and employment and is focused on aligning program offerings with local industry needs. And these programs are really working. In Oklahoma alone, graduates of the state’s CTE system provide $3.5 billion annually to the state’s economy. In Maryland, Howard Community College contributes nearly $350 million annually to the local economy. Across the country, CTE continues to fuel the talent pipeline in in-demand sectors for years to come.
But the benefits CTE programs confer aren’t just enjoyed by employers; they are shared by taxpayers and students alike. For example, in Wisconsin, taxpayers receive $12.20 in benefits for every dollar invested in the technical college system. And individuals who receive a certificate or degree from California Community Colleges nearly double their earnings within three years.
So how do we promote CTE and ensure students have access to it? First, adequate funding for these programs is necessary. At the federal level, the main source of dedicated funding for CTE is the Carl D. Perkins Career and Technical Education Act (Perkins), a roughly $1.2 billion program providing funding to all 50 states. However, funding in Fiscal Year (FY) 2007 was 13 percent less—more than 20 percent accounting for inflation—than in FY 2017. As the skills gap holds businesses back, we should instead be doubling down on these investments. While Perkins was recently reauthorized, funding is still a constant struggle and determined each year through the appropriations process.
There is some good news, however. The FY 2018 omnibus bill included an increase in Perkins funding for the first time in years. More recently, the House Appropriations Committee approved an even larger increase of $102 million for Perkins. Unfortunately, the Senate appropriations bill does not include this additional increase. As Congress considers both bills and moves to conference, it should prioritize the critical investment the House Appropriations Committee made in CTE.
Career and technical education is the solution to help industries, including construction equipment distributors and manufacturers, meet the labor market challenges they are facing. To expand access to high-quality CTE, education systems and industry will continue to work together, and accordingly, policymakers must invest in these programs.
LeAnn Wilson is the executive director of the Association for Career and Technical Education (ACTE), which represents tens of thousands of education professionals and is the nation’s largest not-for-profit association committed to the advancement of education that prepares youth and adults for successful careers.
Brian P. McGuire is the president & CEO of Associated Equipment Distributors (AED), the international trade association representing companies involved in the distribution, rental and support of equipment used in construction, mining, forestry, power generation, agriculture and industrial applications. AED’s 460 distributor member companies account for more than $51 billion of annual sales revenue of construction equipment and related supplies and services in the U.S. and Canada.