Workers wanted: How to fill the skilled-trade shortage

| Podcast

Plumbers, carpenters, builders: In the United States, skilled tradespeople are in high demand, earn good salaries, and are vital to economic progress and prosperity. So why are they in such precariously short supply? In this episode of McKinsey Talks Talent, talent leaders Brooke Weddle and Bryan Hancock join global editorial director Lucia Rahilly to discuss what’s causing the shortage in the skilled trades, as well as what’s necessary to attract new workers to these roles and to help them thrive. The following is an edited transcript of their conversation.

What’s at stake

Lucia Rahilly: So today we’re talking about new research on the shortage of skilled tradespeople in the US—a topic that’s increasingly in the headlines. Brooke, why does this research matter?

Brooke Weddle: This problem has been around for a long time. We have had a shortage of skilled-trade workers for multiple years. What’s new is that we have more urgency to address this shortage.

Lucia Rahilly: What is at stake when these jobs go unfilled?

Bryan Hancock: Our economic progress is at stake. If we don’t have skilled tradespeople to build highways, real estate, and new housing, or we don’t have the workers needed for areas critical for our national defense, our economic prosperity and liberty are at stake.

We’re at a point where we’ve got job opportunities. We have manufacturing. We have construction. We can create good careers for people in these skilled trades, but we just haven’t been able to attract them or keep them in jobs where they grow over time.

Lucia Rahilly: Let’s just get a little bit deeper into the supply-and-demand ratio. Is demand static? Is it rising?

Brooke Weddle: There is skyrocketing demand for these roles. When you look at the Bipartisan Infrastructure Law construction expenditure, it could expand job market supply by 345,000 jobs. And when we think about churn, it costs a lot of money to continuously hire workers into these roles and have them leave because they don’t have career advancement, they are not treated well, or they don’t have the flexibility they need.

Looking at the supply of talent, for a long time, the US has had a hard time getting people into vocational or apprenticeship schools, with a focus instead on going to college. However, there’s been a harder look at this recently. And interestingly, there was a Wall Street Journal article that called Gen Z the “toolbelt generation” because they are embracing this notion of vocational work.1 It’s not making up the difference between supply and demand at this point. But it’s interesting to see how these generational shifts might help us start to make up some of the gaps here.

Bryan Hancock: If we’re going to see the generational shift make up for some of the gaps, we have to be able to fulfill the promise we give to Gen Z when they show up for training. One of the disconnects we see is that some hiring in some manufacturing environments is cyclical.

If Gen Z folks sign up for training—where they may or may not get paid—through a community college or a technical college system for a year, and they graduate in what they are told is an in-demand field, they could still find themselves unable to get a job. This could be because local employers are laying off instead of hiring, even though, in aggregate, their skills are needed and they should be able to find something in the economy.

So immediately, the promise that they thought they were signing up for—a job with a manufacturer in town that is now not hiring—doesn’t come through. That trickles through to their friends and their social networks. And so we need to take care of people from learner and future-worker perspectives. We need to make sure that if they commit to the skilled trades, we commit to them. All too often, there are some breaks in the last parts of the chain.

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Lucia Rahilly: Brooke, you alluded to churn; is that rate high? Is this related to the cyclicality you’re describing, Bryan? Does that drive churn?

Bryan Hancock: There may be some cyclicality that drives churn, particularly for those industries that are more boom and bust. And on a downswing, the newer hires may be the ones that churn out. We also see it in churn as people show up to the job excited to apply what they’ve learned, really excited by the work environment, and engaged in the mission. They say, “Hey, I want to build stuff because building stuff is important for our country and building stuff is cool.” But when they get there, they’re told, “Well actually, the stuff that you’re signed up to do, we’re not really ready for. Here’s a broom. We need you to clean.”

So they might not have a great first experience. But knowing that their skills are in demand, they go somewhere else, perhaps where there is a supervisor who is better engaged in helping them to learn and develop. Whether in manufacturing or another sector, that supervisor matters a lot.

Brooke Weddle: In our research, we found that churn is costing companies $5.3 billion in talent acquisition and training costs every year.2Tradespeople wanted: The need for critical trade skills in the US,” McKinsey, April 9, 2024. There is a whole transformation that needs to occur in terms of how we embrace these workers. And a pivotal role is that supervisory–managerial layer. It’s important to think through how we can equip that role to really embrace this talent. This really can, in some cases, affect national security or the future of economic growth in our country.

Lucia Rahilly: So the stakes are high. What’s something companies might consider doing right now to help solve this problem of unfilled skilled-labor jobs?

Brooke Weddle: I think the only way to really address this challenge is to do it at the ecosystem level. What I mean by “ecosystem” is that one company alone is not going to be able to address the pipeline challenge. We need to bring together employers, the social sector, the not-for-profit sector, employment groups, work councils trying to understand the training landscape, and educational players and really try to facilitate those connections at scale. There is also a role for government. But without those connections being made, it is going to be extremely difficult to make progress on the shortages that we see.

How skilled labor has changed

Lucia Rahilly: I’m just thinking of one of our colleagues, Asutosh Padhi, who cowrote a book a couple of years ago called The Titanium Economy: How Industrial Technology Can Create a Better, Faster, Stronger America [Public Affairs, 2022] on the boom in industrial-tech manufacturing. It talks about the ways that automation has made previously physically arduous manual labor less taxing, safer, and more accessible to people who have historically gravitated to less manually oriented jobs. How do you see automation affecting this toolbelt generation and other demographics?

Bryan Hancock: Automation may help with flexibility in the production environment itself. You may be able to move away from rigid, eight-hour shifts to have more flexible scheduling. For example, at the Land O’Lakes Saint Joseph’s plant, part-time workers are able to pick their own schedule. When the company launched that program, it instantly had more than 100 applicants for a relatively limited number of positions because now the work worked for them. It got parents who had caregiving obligations, students who were able to schedule work around classes, and retirees for whom a combination of the timing and type of work was important. When manufacturing environments are more advanced, it enables you to reach new people to work in them, expanding both the number of people and the demographics available to work.

Lucia Rahilly: Say more about how demographics play into this question of attracting people into the field and then retaining them once they’re there.

Brooke Weddle: A big part of this is expanding the diversity of potential workers who could fill these roles. We still don’t see as many women as men taking these roles. There have been efforts—for instance, in the semiconductor industry—to reframe some of these roles and get younger women and girls excited about what’s possible in these fields. That’s got to be part of the calculus here. We’ll never make up the numbers needed by focusing on one gender alone.

Lucia Rahilly: What about older demographics? Is there any benefit in investing in bringing them into the production environment? Are you seeing companies that are investing in keeping workers who might otherwise retire in training and apprenticeship roles?

Bryan Hancock: One of the reasons the retirement age has gone up in this country is that the physical intensiveness of work has gone down. But that’s not true for every occupation, particularly in the skilled trades. There are some that still involve a lot of physical toll on the body. As those hard-to-do things get automated at a macro level, people should be able to work longer. Retirement won’t be driven by the body physically breaking down but rather by a desire to do something else.

We need to attack this in two ways. Are we doing the things, such as automation, that will allow people to physically keep going for longer? And for those job positions where people are able to work longer, how do you keep them engaged? How do you make it a meaningful environment?

Challenges and opportunities

Lucia Rahilly: What about the practical challenge of getting workers to job sites?

Bryan Hancock: Many of the new jobs—particularly on megasites and megaprojects—are not in urban centers. They may be in communities where the existing population may be an older population. And so we need to be thinking about how to get more people to where the work is.

When you look at where people are versus where work is, there probably needs to be some migration, something that is low in our country compared with 50-year norms. And so how do you incentivize people to get there? That’s got to be part of the equation of linking supply and demand here.

I think one other factor is whether, through a combination of automation and digital twins, there is a possibility to have some of the operators of equipment be located hundreds, if not thousands, of miles away from where the actual equipment is.

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Lucia Rahilly: Is there an awareness-building challenge as well? Is there a role for trade associations, for example, to use digital platforms to create transparency both into opportunities and where the talent to fill those opportunities is located?

Brooke Weddle: There’s a need and a demand for that. There’s already some progress being made in Ohio, in the building out of the Silicon Heartland. There are some interesting developments there in terms of trying to support the talent inflows and the talent development that’s needed to support the economic development that Intel is trying to drive in that state.

Looking nationwide, where we could take the shifts in one industry and use them to help to understand how labor outflow—auto players, for instance, could go into aerospace—is growing? Cyclicality is part of that, but it could be helpful.

The other interesting factor here is thinking about immigration. As a lot of sectors go through this gray-to-green transition, some of the short-term hiring is aided by new immigrants. Thinking through how to manage that in ways that are effective and how to set those immigrants up for success in terms of their transition is important to consider as we think about the pipeline.

Lucia Rahilly: A factor we haven’t discussed yet that seems vital both in attraction and retention is compensation. I don’t think of the skilled trades as low-paying professions, so what’s going on with wages in these fields? And if they’re good, why aren’t they attracting more people?

Bryan Hancock: I think there are career pathways in the skilled trades where people can make up to a quarter of a million dollars a year, if not more. Think about some of the advanced individuals in skilled trades such as aircraft manufacturing—very highly paid and highly valued roles. But there is a perception mismatch when you are a high school student, or an eighth grader even, thinking about what you want to do. The conversation is often more with parents, who ask, “Well, why don’t you want go to college?” Indeed, there’s still that pressure, “If I don’t go to college, I’m a failure.”

I was part of a panel discussion where a big manufacturer was asked how early they had to get at people to get them interested in production. And they answered that even high school is too late—they had to start telling the story in middle school.

We have to get out there and shift the perception of one, how cool these jobs are, and two, what the career path is, so that’s what people think of versus being an influencer or going to college. There’s an in-between path there that may be more lucrative than the average college career. And yet most people don’t know that at age 12.

Lucia Rahilly: Are there any additional demographic groups that might make a fruitful source of talent for skilled trades?

Bryan Hancock: One other population we haven’t talked about yet is returning citizens—people who are returning from incarceration back into the work force. They face huge barriers to employment. And unemployment in that subdemographic is among the highest if you slice and dice our demographics.

These are people who could be really excited for a good construction, manufacturing, or other skilled-trade job. But we need to provide training for these people and give them the knowledge that their prior record isn’t going to inhibit them from getting these well-paid roles.

There are a number of good organizations thinking about how to provide job training for returning citizens and link them up to specific opportunities. We need to also look at second-chance-hiring programs and ways of changing mindsets among employers—and among hiring managers—to make sure that they’re welcoming environments. Because if we’re able to tap even more effectively into that population, it could work toward helping us build the infrastructure we need for our economic future.

Where to start

Lucia Rahilly: What can organizations do now to start making progress on these challenges?

Brooke Weddle: First and foremost, really take a no-kidding look at the employee value proposition for these roles and understand what is and isn’t attracting people to them. There’s a lot of misinformation about the role of compensation relative to flexibility and relative to having the opportunity to have meaningful work on a day-to-day basis, as well as about the types of relationship with direct supervisors or manager.

Second, companies can take a hard look at the information, bring some data to that question, and in many ways, redefine what it means to be in a skilled-trade role at an organization. There’s also a lot of space for innovating once you figure out what those factors are.

Third, there needs to be awareness of what’s at stake here. I’m not sure that is felt universally across all different organizations. I think they feel the pressure of rising attrition in many ways. But everyone owns that problem, and everyone should own the solution. And everyone together can change the narrative by working proactively across this ecosystem to really drive the bigger solutions.

Bryan Hancock: I’ll add some tactical pieces. One, consider where you can expand your earn-and-learn apprenticeships so that people are able to learn on the job and also have a confirmed role when that learning is complete.

Two, look at where people with the skills you need already exist and what you can do to attract them to your company. Veterans who may have been trained mechanics in the Air Force have a role in the private sector, for example.

Finally, how do you keep people once you recruit them? In many manufacturing environments, there are enough applicants on the front end of the funnel. The problems are moving quickly to get them started in a role and creating an environment they want to stay in. If we can do that, we may be able to bring more people into manufacturing—and keep them there.

Lucia Rahilly: Anything we missed that you would like to add to our conversation?

Bryan Hancock: I would add the challenge of having scaled solutions. There are a number of good examples of point solutions—for example, Rockwell Automation and ManpowerGroup have an Academy of Advanced Manufacturing. It’s a 12-week residential program for veterans that, over six years, has developed 280 people who are employed with Rockwell Automation customers. Those graduates make up 10 percent of some of the facilities of those customers—a huge success. How do we think about that at scale? They’ve proven it works. What does that scale look like? And what’s the type of investment that is needed to make that happen?

Brooke Weddle: I would add the need for innovation—the potential for a national clearinghouse, to understand where the jobs are and how you could better match supply to demand.

When I graduated from high school, I did this program called City Year, which is an AmeriCorps program. It sends students out into the community to do good work—like Teach for America, a similar concept of working in schools upon graduation. Why can’t we have the same thing for skilled trades? How cool would it be to have more of our high school graduates spend a couple of years in skilled-trade professions, and understand what’s that like, and contribute to some of these core economic needs of our country right now?

I think that is the kind of innovation that we need to engage on and really start to think big about in terms of what’s possible and how to shift some of the prevailing mindsets with respect to these occupations.

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