A rapidly tightening labor market is forcing companies across the country to consider workers they once would have turned away. That is providing opportunities to people who have long faced barriers to employment, such as criminal records, disabilities or prolonged bouts of joblessness.
In Dane County, Wis., where the unemployment rate was just 2 percent in November, demand for workers has grown so intense that manufacturers are taking their recruiting a step further: hiring inmates at full wages to work in factories even while they serve their prison sentences. These companies were not part of traditional work-release programs that are far less generous and rarely lead to jobs after release.
“When the unemployment rate is high, you can afford to not hire anyone who has a criminal record, you can afford to not hire someone who’s been out of work for two years,” said Lawrence H. Summers, the Harvard economist and former Treasury secretary. “When the unemployment rate is lower, employers will adapt to people rather than asking people to adapt to them.”
The American economy hasn’t experienced this kind of fierce competition for workers since the late 1990s and early 2000s, the last time the unemployment rate — currently 4.1 percent — was this low.
The tight job market hasn’t yet translated into strong wage growth for American workers. But there are tentative signs that, too, could be changing — particularly for lower-paid workers who were largely left out of the early stages of the economic recovery. Walmart on Thursday said it would raise pay for entry-level workers beginning in February; its rival Target announced a similar move last fall.
Employers are also becoming more flexible in other ways. Burning Glass Technologies, a Boston-based software company that analyzes job-market data, has found an increase in postings open to people without experience. And unemployment rates have fallen sharply in recent years for people with disabilities or without a high school diploma.
Until recently, someone like Jordan Forseth might have struggled to find work. Mr. Forseth, 28, was released from prison in November after serving a 26-month sentence for burglary and firearm possession. Mr. Forseth, however, had a job even before he walked out of the Oregon Correction Center a free man.
Nearly every weekday morning for much of last year, Mr. Forseth would board a van at the minimum-security prison outside Madison, Wis., and ride to Stoughton Trailers, where he and more than a dozen other inmates earned $14 an hour wiring taillights and building sidewalls for the company’s line of semitrailers.
After he was released, Mr. Forseth kept right on working at Stoughton. But instead of riding in the prison van, he drives to work in the 2015 Ford Fusion he bought with the money he saved while incarcerated.
“It’s a second chance,” Mr. Forseth said. “I think we’re proving ourselves out there to be pretty solid workers.”
Mr. Forseth got that chance in part because of Dane County’s red-hot labor market. Stoughton Trailers, a family-owned manufacturer that employs about 650 people at its plant in the county, has raised pay, offered referral bonuses and expanded its in-house training program. But it has still struggled to fill dozens of positions.
Meghen Yeadon, a recruiter for Stoughton, found part of the solution: a Wisconsin Department of Corrections work-release program for minimum-security inmates.
Work-release programs have often been criticized for exploiting inmates by forcing them to work grueling jobs for pay that is often well below minimum wage. But the Wisconsin program is voluntary, and inmates are paid market wages. State officials say the program gives inmates a chance to build up some savings, learn vocational skills and prepare for life after prison.
Ms. Yeadon initially encountered skepticism from supervisors. But as the local labor pool kept shrinking, it became harder to rule out a group of potential — albeit unconventional — workers.
“Our company is looking for new ways to find pools of people just because of our hiring needs being so high,” Ms. Yeadon said. “It just took them to hear the right sales pitch.”
Other companies are making similar choices. Officials in Wisconsin and other states with similar inmate programs say demand for their workers has risen sharply in the past year. And while most companies may not be ready to turn to inmate labor, there are signs they are increasingly willing to consider candidates with criminal records, who have long faced trouble finding jobs.
The government doesn’t regularly collect data on employment for people with criminal records. But private-sector sources suggest that companies have become more willing to consider hiring them. Data from Burning Glass showed that 7.9 percent of online job postings indicated that a criminal-background check was required, down from 8.9 percent in 2014.
Mike Wynne has seen the change in employer mind-set firsthand. Mr. Wynne runs Emerge Community Development, a Minneapolis nonprofit that helps people with criminal records or other difficulties find jobs. In the past, Mr. Wynne said, companies saw working with Emerge mostly as a form of public relations. But with the unemployment rate in the Minneapolis area at 2.1 percent, companies have increasingly turned to Emerge as a source of labor.
“We see employers really knocking on the door of our organization in a way that we haven’t seen in probably 20 years,” Mr. Wynne said.
As employers dip deeper into the pool of available labor, workers are coming off the economy’s sidelines. The participation rate for what economists call prime-age workers — those ages 25 to 54 — hit a seven-year high in December. Employment gains have been especially strong for groups that often face discrimination — unemployment for African-Americans fell to 6.8 percent in November, the lowest rate on record.
Amy Glaser, a senior vice president for Adecco, a staffing firm, said that especially during the recent holiday season, there was a surge in demand for warehouse workers, creating opportunities for people who might have struggled to find work earlier in the economic recovery. Two years ago, Ms. Glaser said, companies required warehouse workers to have high school diplomas and experience with the scanners used to track merchandise. Now, increasingly, they require neither, she said.
“We’ve seen an extreme escalation in the past 12 months,” Ms. Glaser said. “If someone applies for a job and you don’t get to them within 24 hours, that person will already have taken another job.”
Even during the strong economy that accompanied the housing boom of the mid-2000s, the unemployment rate never dropped below 4.4 percent, and the United States has never reached the point at which everyone who wanted a job could get one. Perhaps as a result, incomes were stagnant for many middle-class families, and many groups that have historically faced discrimination or other disadvantages in the labor market never experienced the full benefits of the strong economy.
Many economists say the recovery still has a ways to go before rivaling that of the late 1990s and early 2000s. The unemployment rate has fallen nearly as far as it did in 2000, when it hit 3.8 percent. But millions of Americans still have part-time or temporary jobs, or are out of the labor force entirely. And parts of the country still bear the scars of the recession that officially ended nearly a decade ago.
“I think of the late ’90s as having been a very healthy labor market,” said Narayana Kocherlakota, the former president of the Federal Reserve Bank of Minneapolis. “When I look at the United States today, I think it has some room to grow in terms of achieving that kind of health.”
Still, household incomes have risen rapidly in the past two years, with the strongest gains coming for those in the poorest families. And there are signs that the tightening labor market is at last beginning to shift bargaining power from companies to workers. Ahu Yildirmaz, an economist who helps lead the research arm of the payroll-processing company ADP, said her firm’s data showed more people switching jobs, and getting bigger bumps in pay for doing so.
For Mr. Forseth, the job at Stoughton Trailers was an opportunity to save money and prove his value. He even earned the Employee of the Month award — although, because he was still incarcerated, he couldn’t take advantage of the parking spot that came with it.
Now, however, he is thinking bigger. Other jobs in the area pay higher wages, and his freedom has opened up more options. He has been talking to another local company, which is interested in training him to become an estimator — a salaried job that would pay more and offer room for advancement.
“They’re saying they’re willing to teach someone that wants to learn,” Mr. Forseth said. “That’d be an actual career.”
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