Will On-the-Job Training Fill the Skills Gap? Construction Firms are Betting on It

As the labor market contracts, it’s not just that there are fewer people to hire. Employers looking to fill open positions also have fewer options to find workers with the right skills since most well-qualified candidates already have a job.

Solving the skills gap is typically discussed within the context of the education system. Hot topics include ways we can improve STEM training and encourage more students to attend vocational schools. But in order for businesses to keep growing and remain competitive today, they can’t afford to wait for systemic or cultural change. They need to hire now.  

That’s why some employers are starting to take matters into their own hands by offering on-the-job training (OJT) to workers with fewer skills—a practice which ultimately benefits both employers and employees.  

Though not every industry is moving quickly enough (if at all) to train their employees. Our data confirms that the time-to-fill is expanding. In the first quarter of 2018 it took about 17 days to fill an open role posted on ZipRecruiter.com. In Q2 that figure jumped to 31 days, as the total number of job openings soared to an all-time high, clearly illustrating how difficult it is to find skilled labor.

We analyzed thousands of job postings in our database by industry and location to determine where the best opportunities lie for applicants interested in getting paid to be trained. We also pinpointed the industries where employers have failed to respond to the skills gap by increasing OJT.

Change in Jobs Posted to ZipRecruiter Offering On-the-Job Training Q1 2018 - Q2 2018

Industries Offering More OJT Opportunities
Quarterly Increase
Industries Offering Fewer OJT OpportunitiesQuarterly Decline
Retail61%Finance and Insurance-81%
Sports and Recreation31%Business-59%
Construction25%Travel -53%
Real Estate 18%Manufacturing-41%
Food and Beverage4%Healthcare-37%

Employers quickly got comfortable with the healthy supply of cheap talent on the market during the recession. Although that supply has been shrinking steadily for the last several years, they’ve been reluctant to offer OJT primarily because it hits their bottom line. It takes time and money to bring on workers with little to no relevant skills and get them up to speed.

The industries increasing OJT so far this year are industries where compensation is either relatively low or depends heavily on performance, such as in Retail and Real Estate. Training costs can be offset in these fields, since employers are likely to pay less for labor during the on-boarding period when workers are earning lower, entry-level wages or have yet to pull in a large commission.

One major exception here is the construction industry, which has been forced to offer more OJT to meet the extreme hiring demand brought on by a residential and commercial real estate boom. A fact clearly illustrated by our metro area comparison.

Top 10 Metros With the Most On-the-Job Training Growth Q1 2018 - Q2 2018

MetroQuarterly Increase in Jobs Offering OJTTop OJT Industry
1. Sacramento, CA 66%Construction
2. Syracuse, NY 51%Construction
3. Washington D.C. 35%Construction
4. San Diego, CA 31%Retail
5. Chattanooga, TN 30%Finance and Insurance
6. Springfield, OH 15%Healthcare
7. Bridgeport, CT 11%Retail
8. San Francisco, CA 9%Construction
9. Chicago, IL 5%Construction
10. Portland, OR 4%Construction

In addition to looking at industry-wide trends in OJT, we also sliced the data by metro to pinpoint the job markets with the greatest OJT growth. The most growth was in mid- to large-size metros by population and most heavily concentrated in the Construction industry.

As this data helps prove, the Construction industry has been the first to aggressively address their labor shortage. As of July, construction wages grew 3.5% annually, which is close to a full percentage point higher than the national average, and a recent study from Zillow showed residential construction wages growing 5% year over year in April.

Add the cost benefit of company-funded training to getting paid a steadily increasing wage, and the Construction industry is clearly the leading example of how to hire in a low unemployment environment. The proof is in the numbers: According to the latest jobs report, total employment increased in July by 1.6% compared to last year. The Construction industry grew their payrolls by 4.4%. 

Written by

Jeffery Marino is a Los Angeles-based writer who previously covered emerging job market trends using proprietary ZipRecruiter data.

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