Manufacturing & the Next Generation Workforce: How Adapting to New Norms Is A Recruitment/Retention Tool
By: Aimee Sukol, JD/MA/MS Ed
Manufacturing works with heavy machinery around a strict clock and requires attention to detail so that orders are correctly filled on time. The supply chain operates around understanding of procedure, swift corrections, structure, and routine. For fair reasons, trade pedagogy tends to promote timeliness, uniformity, and adherence to rules and regulations to manage production and protect worker safety. In contrast, studies show that younger generations itch for change, discussion, and frequent feedback. The new workforce resists authority and does not perceive a paycheck to be the final consideration for its time or labor.
Manufacturers from ownership and management to the production floor are predominantly white males in their mid-40’s to 50’s. Manufacturing as an industry has been categorized as bi-partisan; however, the blue element has been tied to labor’s influence, not employers – a feature that has been changing since the decline of unions. In contrast, new generations are more diverse, critical of authority, socially conscious, and subscribe to job (employer) fluidity.
For context, my last article explored the relationship between manufacturing and the economy. Rather than detail that discussion, I am linking the article here. The last article covered policy and this article is about outcome, specifically how and why a generational gap that grew during the height of layoffs presented longterm hiring and retention challenges for manufacturers today.
The problem identified: Thus far manufacturing recruitment programs have entirely focused on encouraging youth toward trade industries, but have yet to address generational/cultural differences between trade industries and younger workers. Presuming training programs lead youth to manufacturing jobs (there is little information about their efficacy), once in the door generational differences present operational conflict and retention challenges.
How can manufacturers address demographic discrepancies that make its industry less desirable to a categorically different labor pool and how might policy leaders support manufacturers in this effort?
At the core of this article is self-reflection and cost-benefit review. Best practices discussed here can be overwhelming and to be effective, may take a company years of internal analysis and gradual implementation. Meta Fab, Inc. is interested in this topic in many ways because it is very challenging to grasp, accept, achieve internal buy-in, and execute fundamental change in an industry with 125 years of American history. Meta Fab knows they have considerable work ahead, but as an industry leader in sheet metal fabrication specifically and manufacturing generally, they are embarking on this difficult task of data collection and self-reflection to improve their operations and serve the supply chain.
Last, as a writer for Meta Fab, and as a policy specialist, I seek to dig deeper into industry issues so that companies are best able to weigh complex factors that affect them. Digging deeper means exploring not only the “whats” (what is missing), but the “why’s” (the complex backstory). It says a lot about Meta Fab that they want to lead in this discovery.
To optimize the navigation of material, I have outlined the article’s contents. While there is a graduation of history and context, it’s not illegal to hop around.
- Economic Policies Revisited: Outsourcing
*Background and context
Self-Awareness: The Key To Success
*Maintaining history & generational differences
The Next Generation: Not Your Father’s Oldsmobile
*Millennial and Gen Z demographics, in-demand industries
*Additional information on how to reach next generations
Moving Forward: Considerations When Hiring
*Brief re-cap & introduction to cost of living discussion
*Cost of living vs. minimum wage definitions
*Cost of living standards and calculators for employers to determine whether their industry’s market rate for compensation meets the area’s cost of living
*Fixing the problem requires more complex evaluation and multiple strategies
Economic Policies Revisited: Outsourcing
Quick recap from my last blog: China agreed to purchase US securities in exchange for the US buying Chinese exports after China was added to the WTO. This policy benefited the US financial sector at manufacturing’s expense. Unable to compete with Chinese prices, US operations were forced to close or contract with Chinese labor, which reduced manufacturing’s share of employment in the US.
As the United States shed manufacturing jobs over a 30-year span, those entering the workforce no longer saw job security in the industrial sector. Thousands of parents were laid off, factories closed, and pink slips issued for more than two decades. Consequently, out of these layoffs grew a fear of being a casualty of trade fluctuations. In response, families and educators began to emphasize four-year colleges and liberal arts professions. The job market has since seen a saturation of liberal arts graduates who are now struggling to find work. Meanwhile, as potential workers sought non-industrial jobs and customer service positions, manufacturers began to experience a limited labor supply to meet their demand.
The topic of outsourcing highlights the supply and demand relationship between employers and workers. Workers supply their labor where there is high demand. Outsourcing reduced the demand and workers reacted accordingly. Fundamentally, however, the supply exists in the marketplace. Potential workers are walking among us and can be persuaded to supply their labor. The question is not how to create supply, but how do manufacturers access it. What is the price of supply and how is it measured?
Self-Awareness is Key to Success
Manufacturing owns a distinct space in American culture that can be perceived as both positive and negative. Before looking outward at the potential labor force, manufacturers must first look inward at what they offer.
First, there is an irony to the relationship between manufacturers and the workforce. Companies are the buyers and workers are the sellers. Imagine needing to purchase equipment, but for some reason, the supplier doesn’t want to sell to you. Similarly, imagine you need someone to come and clean your house, but cleaning companies don’t answer your calls. Do you ask, “What the heck is wrong with these people?!” or “Did I do something to make these suppliers not want my patronage?”
In this case, manufacturers haven’t done anything to scare away sellers. In fact, it’s what they haven’t done that presents the problem. For over a century manufacturing has plodded along experiencing market ups and downs focused on orders, pricing, and transit – issues perceived directly related to operations and the bottom line. Workers weren’t treated like valuable sellers in part because of a hierarchical employer/employee relationship, but also because workers were always available, like sellers of replaceable commodities. Labor reacted to layoffs by redirecting its sales pitch to different industries. The aftermath was a labor desert. I liken this case to over-cutting the forest. Once trees are clear cut, it takes years for them to grow back. Now that we’ve learned this, we harvest trees differently.
Another important factor is younger generations are accustomed to bouncing around with different jobs and companies. Many Millennials haven’t worked in the same job more than 3-5 years. While they ideally might prefer a long term employer, they know about layoffs and the vulnerability of at-will employment; thus, their experience and expectations are not reliant on the concept of job security.
The new generation is not from or born during the Depression – their operating memories contain warnings either by their parents or educators about decades of massive layoffs. In their buyer pitch, manufacturers have been pointing to job security (and pay) as their bargaining chip not realizing that lack of job security is what drove people to higher education and isn’t particularly relevant among younger generations. The issue regarding pay is discussed later in this article.
Manufacturers cannot change work processes that keep products moving and workers safe like rote, time-sensitive, uniform operations that may not spark opportunities for discussion, but they can compare their company culture with what they know about their target labor pool and seek alignment.
The New Generation: Not Your Father’s Oldsmobile (or Chevy)
When a vital seller (company) changes management and decides to conduct business differently, what does the buyer do? If the buyer refuses to work with the seller on their terms, then the buyer faces a bottom-line loss. This is the dilemma manufacturers face today with Millennial and Gen Z workers. The supplier is there, it just isn’t compelled to enter this business relationship.
Below is an outline of survey results of worker values followed by a discussion on cost of living evaluations. I spend some time on cost of living because compensation is both a strong emphasis for younger generations and a primary bargaining chip for manufacturers. Compensation and work culture must offer strong incentives if job security isn’t convincing.
Work/Life Balance & Flexibility
a. How many hours do workers spend commuting? A significant commute means less time for personal interests. Thus the workday is not 8 hours but can be 10-13 hours. How expensive is that commute? Failing to consider commute time and cost digs into the supplier’s bottom line.
b. New generation workers also enjoy traveling and volunteering, so vacation and opportunities to modify their schedule is important. If their life is overly dictated by their work, then compensation becomes a priority. Thus companies that pay exceptionally well can demand more from their labor supply. It is not unheard of for manufacturers to offer flexible schedules, but if remote work is impossible or frowned upon, and 40 hours a week is required, then any employer with those expectations needs to adjust their compensation accordingly.
a. The younger generation has been educated with different pedagogy than older generations. School emphasis is on demonstrating understanding and offering feedback for improvement. They are less interested in tests that summarize what they know once a quarter or year; thus, annual evaluations are frustrating because workers operate every day with questions that are often unanswered. It may help employers to consider putting on a “teacher” hat as they devise a feedback strategy.
b. Similarly, younger generations are taught under a constructive, not punitive feedback model. They will not tolerate from employers what they wouldn’t tolerate from a teacher. Manufacturers would benefit from approaching their workers as suppliers/equals as workers can withhold their labor by walking off the job or by slacking off at work.
c. Younger generations of workers do indeed place value on their performance, and if a company doesn’t offer guidance, then it not only deprives workers of the needed information to do the job correctly; it takes from them a feeling of professional success. Even less motivated people want to feel successful – this concept is so fundamental it can be applied to dog training.
d. As noted above, Millennials and Gen Z perceive work in more fluid terms. They are not shocked by layoffs, and when they experience enough dissatisfaction, their lifestyles and cultural norms make it easier for them to quit. Job fluidity is also why the punitive feedback model is less effective and why the concept of job security is viewed with more cynicism.
Compensation & validation
a. Data show Millennials and Gen Z face more financial pressure than previous generations, a fact that is not lost on them. Financial rewards and validation are at the crux of workers’ cost/benefit analysis. While manufacturing offers competitive wages, cost of living has outpaced mid to low-income wages across the board. In the absence of compensation that eliminates financial pressure, validation of some form is vital.
b. Rewards can come in the form of bonuses, raises, and even free food in a common area. Younger generations believe that with more time and experience on the job, the more money they are worth, so raises, advancement, and/or meaningful workplace culture are crucial to retention. Your workers’ time with you is an asset to your competitor.
c. Manufactures tend to oversell benefits. A millennial told me that her company kept emphasizing “boomer” benefits, which she said comprised nearly 1/3 of her paycheck. While for very valid reasons a company may emphasize its benefits package, this approach may not align with younger workers. Ultimately, the conversation around recruitment and retention does not revolve around what the employer values, but what the worker values.
Engagement – being part of the decision-making process
a. Again, this goes back to 21st-century schools. Students are taught to be accountable, not subservient. You will see this play out in classrooms where there is open student defiance. The culture today is not the same as the 1950s. Younger workers are more likely to question arbitrary decisions and expect fairness and competence from management.
b. This does not mean that manufacturers are seeking production floor’s input on design or how things are run per se, but how information is communicated and workplace policies are set (Do they need more visuals? Is there a handbook to check? Is the chain of command consistent?).
a. Younger generations are putting off family and homes for traveling, dining, and social engagement. Unlike their older counterparts at the same age, Millennials and Gen Z are less likely to punch in/out and rush home to family. Younger workers are more likely to socialize with each other and seek opportunities to collaborate on the job. Thus, isolating workers can conflict with workers’ instincts and lead to dissatisfaction.
b. The factory environment may not lend itself to worker collaboration or engagement, but after-work parties and picnics foster a sense of belonging. There is no law that says the worker/employer dynamic can’t be fun.
a. Millennial and Gen Z workers were born in the tech era. They are at home in this environment. They are also among the most diverse generations entering the workforce and more socially conscious/aware. Ultimately, how willing an employer is to embrace worker diversity or modify the work environment to reflect changed values/interests depends on the extent to which the employer needs new blood.
b. Branding and feeling part of innovation is valued. Companies that offer comprehensive training that connects their work with the world are more likely to attract younger talent than companies that adopt the traditional clock in/out model. Inspiration, meaning, and purpose are crucial, but manufacturers shouldn’t bank on a welder’s desire for meaning.
Sources: Next Generation Workforce Demographics
Gen Z and Millennials: “Gen Z and Millennials Seek Recognition at Work”
Gen Z Traits: “The Key to Hiring Gen Z Candidates? Think Like Them”
Millennial Perceptions: “US Millennials Feel More Like Working Class Than Any Other Generation”
Lack of Understanding Between Young Workers & Employers: “The Millennial Mindset”
Moving Forward: Considerations When Hiring
So far we’ve covered considerable territory in manufacturing from aspects of its history and evolution and economic trends to demographic features of the next-generation workforce. From this we know:
Origins: The early manufacturing labor force (post-New Deal) from the Depression Era was grateful for a stable paycheck after years of hardship. Depression Era, and to a great extent, Baby Boomers experienced vastly different events and norms than today’s labor force.
Changes: Manufacturing had a strong history of supporting American labor, especially after WWII and the Korean War when soldiers returned. The Golden Age of Manufacturing where working with one’s hands for a stable paycheck subsided after the 1960s. The 1970s re-introduced an Industrial Era measurement of labor’s contribution to operations from a post-war sense of patriotism to a value-add equation. This shift, particularly for the US, meant labor was the first cost cut when companies faced financial pressure.
Outsourcing: Trade agreements in the 1990s and on encouraged outsourcing, which led to massive layoffs. Job losses left a psychological impact on workers and their families. As a result, the labor market’s reaction was to avoid the trades and focus on four-year universities, thereby leaving a labor shortage for domestic operations.
New Generation Demographics: Manufacturers have been seeking a resurgence in trade labor for the past 20 years with little luck. As Baby Boomers and many of their Gen X offspring were laid off, Millennials and Gen Z were born. The time gap introduced technology, candidate diversity, changes in education, attitudes, values, and new careers that neither resemble manufacturing operations nor respond to some of the bargaining chips manufacturers deem valuable.
Cost-Benefit Analysis: Younger workers experienced unique challenges as cost of living rates increased in many parts of the country. While manufacturing continues to pay better than other sectors, it’s uncommon for employers to conduct a cost-benefit analysis that weighs compensation that matches the cost of living in the area (as opposed to what the industry is willing to pay) against modernizing the workplace. Below is a discussion on this topic with resources. Note: If the entire industry is struggling to find workers, then industry standards may not be a useful barometer for determining pay.
Cost-Benefit Analysis: Cost of Living Compensation vs. Work Experience
As noted earlier, younger generations are more financially burdened than previous generations. Cost of living has skyrocketed compared to most wages forcing younger generations to live at home and delay family planning. Employers would benefit from knowing their area’s cost of living standard. Cost of living is NOT wage – it is how much it costs to live in a specific area. COL is measured differently depending on the source and I have provided a source/comparison list below.
Minimum wage differs from cost of living because it is merely the minimum compensation permitted by law. Calculations do not take into consideration the current cost of living, which is why minimum wage is commonly subsidized by public assistance.
It is recommended that employers conduct a cost-benefit analysis to balance the work environment and pay. If the work environment does not match next-generation workers’ interests (diversity, feedback, flexibility, rewards, etc), then an employer will likely only attract baseline qualified workers if it pays above the cost of living. I would agree that the next generation workers’ cost of living measurement will resemble The Oregonian’s/GoBankingRate calculation that includes savings and relief from financial stress over MIT’s, which is what it takes to avoid government assistance (see below).
Below are resources for employers to make wage comparisons and identify the cost of living in their area.
Wage comparisons. Payscale and salary.com will let you plug in job and region details and provide you with median figures for your area.
Cost of Living: Not all sources define cost of living the same. It is common to base compensation on years of experience and skills required for the position, however, an employer should consider a range of pay adjusting for the diversity of candidates and their needs.
Below are cost of living figures from different sources for one person, no children.
MIT: (Living Wage): The wage that would cover the cost of living for the Portland Metro. Below their table of wages, they line item specific costs that led to their final figure, which are survival costs that avoid government assistance – $31,532
Oregonian (Relied on GoBankingRate analysis based on Portland Metro’s costs): Level of “comfortability” (survival costs plus a cushion to handle emergencies, savings, or some form of leisure activity) – $60,195
WorldData.info: Average cost of living in the US (averaging the costs to live among 50 states from very affordable to expensive) – $65,760
While it is the case that manufacturing pays at or above industries with the same level of experience and education, it falls below the cost of living in the Metro.
Note, when comparing industry employment and wages, manufacturing is often compared to retail and food, which pay less but known for high turnover and flexible schedules. If workplace operations are not conducive to a new generation’s lifestyle/expectations, such as a set 40 hour work week, then compensation will become a priority. The higher the employer’s expectations – skilled or unskilled – the higher the worker’s expectations.
Conclusion: Leading Youth through Factory Tours Will Not Change Who They Are
Empirically, the manufacturing industry does not reflect the workforce it wants to recruit. Training programs have attempted to target candidates least likely to attend four-year programs, but haven’t addressed underlying issues, namely cultural and generational shifts.
In short, not being interested in college doesn’t mean an 18-25yr old candidate is or holds the same habits or values as a 50-year-old white male. To recruit the next generation into manufacturing, fundamental changes must take place in HR policies, training programs, workplace incentives, management practices, and messaging. With this analysis of industry and culture, and the resources listed above, I hope manufacturers are better positioned to align their pitch with the labor pool they seek.