Local economic development officials are being careful not to jinx anything, but they say the unemployment rate is creeping uncomfortably low.
It’s a nationwide trend that seemed hard to imagine during the recession, when factories were closing and the jobless rate for both the New River and Roanoke valleys rose up toward 8 percent.
Skilled workers were easy to come by then, and Charlie Jewell, executive director of the regional economic development organization Onward NRV, focused almost all of his attention on attracting new jobs for unemployed people.
But now, as the unemployment rate falls to its lowest point in two decades, he says he’s increasingly spending his time searching for people for all the unfilled jobs.
Not that that’s a bad thing.
“It’s one of those challenging things to talk about. Of course it’s good that the unemployment rate is low and people are employed,” Jewell said. “But in terms of the business climate, it can make it challenging for companies that are located here to be able to compete and grow. It also undermines our ability as a region to be able to absorb new companies moving into the area.”
Pulaski County Administrator Jonathan Sweet said he heard from enough employers struggling to fill vacancies that he created a new position, called the workforce innovation advisor. Retired Pulaski County Administrator Peter Huber took the job with the goal of tapping into new pockets of potential workers and expanding the labor pool.
The unemployment rate in Pulaski County sat at 2.9 percent in December, down from 10.4 percent during the same time in 2009. Employment at Volvo Trucks, the county’s largest manufacturer, has soared from 1,700 workers in January 2017 to 3,500 late last year.
“We saw the writing on the wall that our workforce is being absorbed by the opportunities here in the community,” Sweet said. “If we continued this trend, our business community is going to have a very difficult time filling their jobs as part of their growth.”
When the county heard many people couldn’t work because of lack of transportation, it began working on a bus system for commuters. When it realized many ex-convicts weren’t finding their way back into the workforce after release from prison, it began programs aimed at assisting with the transition.
“A job market like this forces us to look at creative solutions like that,” Sweet said.
The Bureau of Labor Statistics reported a 2.6 percent unemployment rate in the Blacksburg-Christiansburg-Radford metropolitan statistical area in December 2018. In the Roanoke area, the rate was 2.5 percent.
That’s the lowest unemployment rates for this time of year since 2000, when the Roanoke and Blacksburg rates were 1.8 percent and 2.6 percent, respectively.
Virginia Tech economics Professor Niloy Bose said there are a lot of caveats built into unemployment statistics. A worker that clocks one hour per week, for instance, is counted as employed even though he or she may be looking for a better job.
But, diving deeper into the data, he said, it’s clear certain sectors have seen “drastic” growth here.
In the Roanoke area, for instance, the professional and business services sector — which includes high-tech, legal services, human resources, accountants — grew by 1,700 workers, or 8 percent, from December 2017 to December 2018, according to BLS data.
Anecdotally, tech companies like Torc Robotics and 1901 Group have announced major expansions. Virginia Tech recently said it will hire 130 new faculty in Blacksburg as part of its expansion to help lure Amazon to Northern Virginia.
With that many new jobs, it’s safe to say demand for workers in the sector is up. And with higher demand, employers may find it harder to fill open positions.
Torc CEO Michael Fleming said his company is hiring in an increasingly competitive self-driving industry, which adds another layer of difficulty beyond the unemployment rate.
Torc hired about 60 people last year, and anticipates more growth in 2019.
“It’s been challenging for the last several years, and we think it will be challenging for the next several years,” Fleming said.
Bose points out that hourly wages across almost every job category tracked by the BLS lag in the Roanoke and Blacksburg areas compared to national averages. Both localities average less than $21 per hour, compared to $24.34 nationally.
Wages tend to rise when the employment market is tight. Since wages are still well below other communities, Bose said this region should be able to withstand those additional costs.
“So even if the cost increases a little bit for the employers, there is room for it,” Bose said. “It is not that we are going to be the most expensive region in the country, or anything.”
The other, more long term strategy Bose said localities can deploy during times of low unemployment rates is to increase the supply of workers. You can offer incentives for people to move in from out of town, Bose said, but that’s a short-term fix.
Instead, he said, producing more skilled workers through college and other training programs will offer sustained benefits.
“If this demand persists, then within three or four years you can meet this demand — if you do it right,” he said. “That is a win-win. That helps the local economy, that creates the kind of job that’s going to stay here.”
Both Torc and IT services provider 1901 Group have focused their efforts on this strategy.
Torc is a spinout of Virginia Tech and keeps close ties with the university. It routinely partners with student teams on projects, lending experts to mentor young engineers and speak to classes.
Reston-based 1901 Group announced in November it was expanding its operations center in Blacksburg by 580 additional workers. Three months later, it unveiled a partnership with Radford University.
Curriculum designed around the company has been embedded in classes there, allowing students to work on real-world projects with 1901 Group employees mentoring along the way.
That helps the company reach students early. 1901 Group later stays connected through internships, and — if everything goes well — eventually hires graduates with the necessary skills.
Once employees are brought on, 1901 Group says, it has an internal training program to keep employees learning, motivated and progressing in their careers.
The company hired more than 100 employees in Blacksburg last year and is expecting as many new hires in 2019.
1901 Group’s Senior Vice President of Partner Relations Brendan Walsh said talent attraction is a struggle across the entire tech industry, and Blacksburg is no exception.
“It’s an investment in the future,” Walsh said. “Growing talent means from seed to harvest. It’s not an overnight thing. It takes consistency and focus.”