Help Wanted

April 29, 2016

HIGH Demand For Skilled Workers LOW Demand For UNSkilled Workers A state program that tackles both those problems has created 500 local jobs, but proponents believe it could help even more

Northern Michigan’s economy is starting to look good again. Hotel rooms are filling up, people are flocking to restaurants and streets are busy with shoppers who have enough spare cash to buy novelty T-shirts.

Despite these positive signs, it remains tough for locals without specialized training to find jobs that pay enough to afford rent without taking an extra job or two.

A state program designed to train people to earn a decent wage has added hundreds of new positions to the local economy, but the pace of the program has slowed and some would like that to change.

PHOTODETECTOR MAKERS WANTED

A few years ago, Traverse City’s Electro- Optics Technology, Inc. needed people to make things like photodetectors, optical isolators, fiber collimators and other laser technology you’ve never heard of. It appeared it would take a type of worker that didn’t exist in northern Michigan. The company hired dozens of entry-level workers anyway and, beginning in 2011, those workers started to become 21st century skilled technicians. That happened via training at Northwestern Michigan College (NMC) and was paid for through a payroll diversion program. Now, the program has reached its cap and officials hope to see it expanded so that its success can be replicated elsewhere.

The Michigan New Jobs Training Program came along at a time of unemployment and bleak prospects, but it’s proven to be a tool that could help strengthen and diversify northern Michigan’s economy in good times, too, said Marguerite Cotto, vice president of lifelong and professional learning at NMC.

Even as the recession recedes, there are still a lot of people looking for jobs that pay a meaningful wage.

“We were among the first generation of community colleges where the board took action to allow us to participate,” Cotto said. “We’ve been in this from the very beginning.”

The program works by diverting employees’ payroll taxes from state coffers to a community college to pay for their specialized instruction there. It’s meant to bolster local economies by creating employees who receive a better wage, and Cotto said that’s what’s been happening in Traverse City.

“The employee is local and the employee in that new job is now investing their earned dollars in paying local rent or local mortgage, local food; those jobs would perhaps not exist in the number that they do without some component of this program playing a part in that,” Cotto said. “After the training has been paid off, the state gets the tax revenue.”

HIDING IN PLAIN SIGHT

Robert Blake, human resources coordinator at Electro Optics, said his company has grown from 36 to 86 employees since they started participating in the program.

That’s not all because of the training, but the program had a lot to do with it. He said 46 new positions have been created through the training and Electro employees have completed 160 courses.

Finding qualified employees is one of the biggest challenges for a company like Electro Optics.

“We do very technical work here,” Blake said. “We don’t expect our assemblers to come in with knowledge of photonics. It’s very hard to find those individuals in this area.”

So rather than find them, Electro made them, with help from NMC. The program was established in 2008 and is available to each of the state’s 28 community colleges.

The Electro story shows how the program can create skilled workers, Cotto said. The company needed people who could work with lasers. There is no laser school in Traverse City, so NMC came up with a work-around.

“We had to find and train the person that would be their trainer. We did not have the skill set in house for the laser training that they needed, but we found the person,” Cotto said. “It was an Intermediate School District teacher who was interested in lasers and willing to go to New Jersey to get certified.” She hopes the experience will show other companies that they can find qualified workers in an environment where those people are not immediately apparent.

“We’re hoping that their growth attracts other similar businesses to make kind of a corridor of like-minded industry in the region,” Cotto said. “We now have much more interest in lasers in our physics classes because they can actually see the path of getting a job in town.”

500 NEW JOBS

The trouble is that the program has reached its cap. That means it only funds new training when existing contracts run out, said Kent Wood, director of government relations at TraverseCONNECT.

“The program’s been very successful and what they’ve found is that’s created quite a big waiting list,” he said.

Wood said it works better than traditional government training programs which offer funding for a particular type of training at a given time. This program enables employers to get money to train employees whenever they are ready to hire more people and expand.

“There aren’t too many restrictions. It allows the community college and the employer to sit down and say, ‘okay, what do you want to do?’” Wood said.

That approach appears to be successful so far, according to a 2013 study by the Anderson Economic Group. The program’s economic impact on the state was $76 million in additional employee earnings and 2,266 added jobs in 2012. The study predicted additional earnings through the program will increase to $143 million and it will add 4,768 jobs.

“Locally, it’s directly created over 500 jobs over the course of the last five or six years or so. I can’t really think of another program out there that’s had that kind of measurable impact locally,” Wood said.

That study also found the program generated $3.3 million in extra state and local tax revenue in 2012, and the money paid out for training had no net fiscal impact to the state.

That doesn’t mean it is politically easy to increase the program’s cap, however, which is set at $50 million available for training at any one time.

A SMALL SCHOOL IN NORTHERN MICHIGAN

Wood would like to see the $50 million cap on the program increased or eliminated. The program was scheduled to be phased out beginning in 2018, but last year, it was extended for five more years. Despite that gesture, legislators find it difficult approving measures that, on paper at least, divert tens of millions of dollars of tax revenues, even in a state with an annual budget of $54 billion, Wood said.

As with other tax-offset financing plans, there is always concern that the economic stimulus that’s attributed to the program would have happened even if the program didn’t exist, he said.

Cotto said the program quickly became enormously popular around the state, and the bulk of the available money was claimed almost entirely early on, leaving everyone else to fight for the rest.

“There was a huge contract by Grand Rapids Community College with a major industry that was coming in to the Grand Rapids area, and that contract alone locked up close to $30 million of the available $50 million that treasury was willing to set aside,” Cotto said. “And it created a huge panic because we’re a small school in northern Michigan.”

Wood said the program should be expanded because it addresses two critical challenges faced by the region: lack of skilled workforce and too big a pool of unskilled workers.

“It is essentially killing two big road blocks to economic growth here with one stone,” he said.

He said he also hopes employers other than manufacturers take advantage of the training.

“It’s not just one industry that’s experiencing things, these troubles,” he said. “It’s every industry that’s in one way or another experiencing that skills gap.”

HELP FOR THE ENTRY-LEVEL

Marcy Hermann, human resources manager at Cherry Capital Foods, said she is hopeful the added training will help her growing company. For the last few years, the local foods distributor has tapped into customers’ demand for food grown or raised nearby, and they’ve expanded roughly 40 percent per year, adding new employees rapidly.

Cherry Capital is using the training to educate managers in leadership and efficiency. They only recently enrolled and they have just two employees involved. Hermann said they’d like to get more enrolled, as it takes specialized training to develop employees beyond entry level.

“It’s really important when you have a business that deals with something like food,” Hermann said. “We are growing in sales and growing in people.”

Cotto said the program is designed for a business like Cherry Capital, which needs to develop people into highly-skilled, well-paid employees as it grows.

“We’re really interested in what’s happening with some of the food processing pieces,” she said. “If you look at Cherry Capital Foods and others, there are two big tiers. You have people who are coming in with engineering backgrounds looking at the larger system … and you have a lot of entry level jobs that are minimum wage, and it’s going to take a while for that to mature.”

Richard Wolin, director of Michigan Manufacturers Technology Center North at NMC, said he sees possibilities for the program to expand to all kinds of occupations.

He said the NMC program has issued $3 million in training contracts so far and it’s created 513 jobs. That means each job has cost $5,848 in diverted payroll taxes to pay for the training.

A lot of employers are interested, he said, though some are challenged by the requirement that new jobs pay 175 percent of minimum wage.

“I really hope to be able to reach out to a larger variety of businesses and organizations. We do have a variety now, but it’s predominantly manufacturing,” he said. “It can be used by any company; the real challenge is the wage threshold.”