John Hood: Let’s head off labor shortages

RALEIGH — It may sound preposterous at the moment, with North Carolina’s unemployment rate still significantly above its pre-COVID rate, but I think our leaders should be talking about the state’s coming labor shortage.

No, I don’t necessarily mean that businesses will have a hard time finding young, low-skilled workers to do entry-level jobs. Assuming we don’t make such jobs artificially pricey through big minimum-wage hikes, firms will probably be able to fill them.

But when it comes to jobs requiring more specialized skills and experience — ranging from construction trades and manufacturing to finance and technology — we may well arrive at a near-future in which too many North Carolina employers are chasing too few capable, dependable workers. Indeed, some business folks tell me that near-future has already become their present-day.

As of January, about 59.9% of North Carolinians who are 16 years old or older were either working or actively seeking work. While the labor-force participation rate is up nearly four percentage points since April, it’s still lower than the 61.3% rate we had in February, before the onset of COVID-19. As vaccination rates rise and service industries, in particular, are allowed to return to full capacity, more workers currently on the sidelines will reenter the labor market.

My concern about shortages, though, extends beyond such short-term fluctuations in labor-force participation. To put it bluntly, not enough of our young people are graduating from high school, receiving good postsecondary education or training, and then developing valuable skills through on-the-job training and experience. Too many are being left behind, at every stage.

Policy analysts often argue that gaps in educational preparation emerge during the first few years of life — and they’re right! To the extent that public policy can close those gaps, however, either by discouraging out-of-wedlock births or enrolling disadvantaged children in high-quality preschool, the benefits of those interventions will take many years to show up in the labor market.

We should do those things. But we should also do what we can to enhance the education and training of the teens and young adults who form our immediate pool of potential workers and entrepreneurs.

One promising strategy is to provide struggling high-schoolers with intensive tutoring. A large team of university researchers, including two Duke University scholars, just released a study of a tutoring program in the Chicago public schools. It’s an affordable model — $3,500 to $4,300 per participant per year — and yet produces strong returns.

The researchers used a random-controlled trial, meaning that some at-risk students were assigned tutors and other, similarly situated students were not. The test scores went up significantly more for the tutored students than for the control group, as much as a third of a standard deviation in math. “The estimated benefit-cost ratio is comparable to many successful model early-childhood programs,” the scholars concluded.

Although not the subject of scholarly study yet, as far as I know, large numbers of North Carolinians have recently had their own experience with the benefits of high-quality tutoring. During the months that public schools were closed to in-person instruction, frustrated parents turned to both longtime and newly recruited tutors to supplement their children’s inadequate virtual schooling.

Many were pleasantly surprised by the results, and now form a constituency for state policies such as education savings accounts that would increase access to supplemental services, including tutoring.

In addition to expanding the use of tutoring, I think our high schools should also offer more career and technical education, and counsel young people who are neither prepared for or likely to succeed in university courses that they can find good, low-cost options for postsecondary education and training among North Carolina’s community colleges, apprenticeship programs, and private training firms.

State lawmakers can help by making it easier for professionals to move here from other states to work without jumping through licensure hoops. Federal policymakers can help, too, by reforming immigration laws.

Without an adequate supply of skilled labor, our economic recovery will stall out. Let’s avoid that.