NCPA - National Center for Policy Analysis

Entrepreneurs Crying Out For Workers

May 5, 1997

With unemployment at a 24-year low, company managers and start-up entrepreneurs are desperate for qualified workers, according to a study by Coopers & Lybrand.

  • April's unemployment rate was 4.9 percent -- the lowest it has been since December of 1973.
  • Many companies report that they are having to turn down business because they lack qualified workers. Entrepreneurs say venture capitalists are reluctant to loan them money because they fear start-up companies will not be able to find enough good managers and workers to succeed.
  • Since companies cannot find qualified help, only 281,000 new jobs were created in the past two months -- down from 573,000 in January and February.
  • Nationwide, there are 190,000 job vacancies in high-tech industries alone, according to Information Technology Association of America estimates -- and the situation is reportedly getting worse, not better.

The economy grew at a decade-high 5.6 percent annual rate in the first quarter of this year. Economists say that without the constraints of scarce labor, it might have grown by more.

Starting a high-tech or medical products company now costs $16 million over five years, versus $7 million in 1985 -- largely because of the labor shortage, Coopers & Lybrand says.

Noted one human resources v.p., "A few years ago, companies had excess workers and were downsizing. Most probably wish they had them back."

Nor is the problem limited to specialized prospects. One employee leasing company executive said the shortage even extends to unskilled labor.

Source: Del Jones, "Industries Crying Out for Help Wanted," USA Today, May 5, 1997.


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