A Tale of Two Job Markets

Knoxville's skilled labourers find opportunities aplenty while high-tech professionals are left wanting

After 10 years of higher education, 15 years of research experience and 18 months of unemployment, Bill Davis tossed his Cal-Berkeley Ph.D., his resume and his professional pride in a filing cabinet drawer and signed up for a paper route.

Davis, a lanky 48-year-old with a wire-bristle beard and a wispy throw-rug of graying brown hair, lost his job as an experimental physicist with a small Oak Ridge firm in 1991.

It was the second time the native Oregonian had been a cutback casualty; he was forced out of Y-12's fusion energy division in 1984, but landed a position with Atom Sciences, a private company founded by former ORNL scientists.

But when Atom Sciences downsized in early '91, Davis found a far less hospitable market, short on jobs and beset with other displaced high-tech seekers. Within months, his unemployment benefits ended, his savings ran dry, and Davis began looking for work that didn't require a physics Ph.D.

"I wasn't exactly prepared for this," Davis says. "When my savings ran out, I started doing anything I could to earn a dollar. I mowed lawns, I did yard work, I helped an acquaintance remodel a house--I even catered a wedding."

The loss of income--and health insurance benefits--also shackled Davis's efforts to provide for his youngest daughter, 16-year-old Beth, who suffers from a variety of physical handicaps as well as a severe learning disorder. And while his wife, Sarah, eventually moved from part-time tutoring into full-time teaching, the couple often wonders whether the extra income compensates for the time lost with Beth.

Davis now works two jobs; by day, he's a lab technician at CSI in Knoxville, earning an hourly wage plus benefits. At night and on weekends, he abstracts technical information for another Oak Ridge company on his home computer. And although he works as much as 70 hours a week between his free-lance and full-time jobs, his annual income still falls well short of a year's salary at Atom Sciences.

"It's been disappointing," Davis says. "But there are an awful lot of other people out there ... doing jobs that need a lot less skill than they have. I would still love to have a research position close to physics, but I don't think that's practical today."

Economists call it "underemployment." Dr. Robert Greenberg, director of the University of Tennessee's placement services, refers to "disconnection"--the difference between what employers are prepared to offer and what highly educated professionals need and are willing to take.

Whichever buzzword you choose, it describes a puzzling, almost paradoxical local phenomenon--one that's seen rising fortunes for wage-earning laborers in and around Knox County even as it's witnessed careers run aground among professionals like Davis. It describes a single city with two dramatically different job markets.

According to state Office of Employment Security figures, the unemployment rate for the Knoxville metropolitan statistical area (including Knox and surrounding counties) dropped steadily over the last five years, from 5.4 percent in 1991 to less than 4 percent--the level of so-called full employment--in 1995.

What those statistics reflect is a generally healthy local (and national) economy--an economy finally recovering from early '90s recession, and spawning growth in the manufacturing and service sectors.

"The blue-collar downsizings of the 1980s are over," observes Joe Stegmayer, president of Clayton Homes, Inc. "Those workers have found jobs again, industry has revitalized after some slow growth, and lots of jobs have been created around Knoxville--especially in the area of services."

"Manufacturing has been on the rise in the southeast the last several years, and Tennessee is riding the crest of that wave," adds Dr. Matthew Murray, associate director of the Center for Business and Economic Research at UT. "The state has enjoyed exceptionally strong employment growth. It's outstripped the nation in that regard, to the point that we're starting to gobble up the available labor force."

What the numbers don't show is that the recovery held fewer benefits for college-educated workers than for their less well-educated counterparts, and that other factors, such as the region's heavy reliance on federal employers, have contributed to a shrinking market for certain classes of professionals.

"What Knoxville really has is lots of $5 to $8 per hour jobs," says Terry Callahan of the Office of Employment Security. "It's not uncommon to see very educated people, people with master's degrees and Ph.D.'s, working for $7 or $8 an hour. When you get up into the career-type jobs, there's a definite shortage. It's pretty crowded up at the top."

Callahan and other observers point to several factors that have made job-seeking increasingly difficult for even well-credentialed members of certain professions--accountants, middle managers, most engineers, scientific researchers, etc.

Topping the list are massive government, corporate and even small-business cutbacks:

* In 1993, the Tennessee Valley Authority began phasing out more than 2,600 jobs, including many engineering, managerial and administrative positions. Nearly 350 of those jobs were based in Knox County.

* Since 1992, Lockheed Martin, the private company contracted to run Department of Energy facilities in Oak Ridge, has reduced employment by more than 1,000 across three divisions, with more cutbacks expected. Those losses were accompanied by more cutbacks in the private sector among the many high-tech firms that rely on federal contracts.

* Homegrown media giant Whittle Communications folded in 1994-95, eliminating more than 700 white-collar (administrative, editorial, marketing, etc.) jobs from the Knoxville market.

Compounding the problem, says Greenberg, is the presence of a large university pumping out thousands of graduates every year into an area that, with its four-season climate and rural/urban amenities, turns many of its visitors into settlers.

"To a point, this condition is common in towns with large universities," Greenberg says. "You've got lots of grads who want to stay in town but a local market that isn't going to absorb that many new faces. That's the reason we see so many college grads working at hourly positions that don't really require their degrees."

Greenberg notes that among a recent crop of seniors registered with the UT placement office, less than a third of the business graduates and only about one-fifth of the engineering graduates found jobs in the Knoxville area. (By contrast, among liberal arts graduates, majors more amenable to going with the flow, about one-half remained in or around Knox County.)

For professionals who stay in Knoxville, the competition is fierce. Local TVA spokesman Frank Cason reports that it's not uncommon for the agency to receive more than 100 resumes for an advertised engineering position. The president of a small local headhunting firm (who prefers not to be identified) says she recently passed along more than 60 resumes for a junior quality engineer's position, and more than 50 for an accounting job.

"Unless it's a very specialized job, I usually have a lot more resumes than jobs to fill," she says. "In this market, people are going to have to consider themselves independent contractors. They're going to have to sell themselves to potential employers and show companies just what they can add to their bottom line."

In most cases, she adds, that means accepting salaries that don't meet their expectations.

"People who were used to making $50,000 a year are going to have a hard time convincing another company they're worth that much," she says. "I deal with a lot of people who are looking for more money than I'm able to find for them."

At headhunting firm Snelling and Snelling, General Manager Greg O'Connor estimates that he sees at least 10 candidates for every engineering or accounting position he fills. Many of those applicants are experienced professionals who, though jobless, are unwilling to uproot households or leave family and friends.

"You've got guys who've been with a company 20 years, and don't know anything else," O'Connor says. "These people will wait and wait and use up all their savings. It's falling to us to do bigger sales jobs with the companies we work with."

Charles Lowe was living in a cheap Fort Sanders apartment and working at a fast food restaurant when he discovered that his girlfriend Lisa was six weeks pregnant.

"I knew it was time for me to straighten up and get ready if I was going to have a kid," Lowe says. "And the first thing I needed to do was to get a better job."

Lowe, 22, had taken shop classes when he was a student at Central High School, so he answered a classified ad soliciting entry level welders. Days later, he was earning $6.90 per hour as a welding trainee at Plasti-Line, Inc. in Powell. He received a raise of more than $1.50 before his 90-day training and probationary period had ended, and now earns more than $10 per hour in a permanent full-time position.

In addition to his hourly wage, Lowe has full health insurance benefits and looks forward to a sizable raise, as well as two weeks of paid vacation, when he celebrates his first anniversary at Plasti-Line.

He and Lisa also look forward to a September wedding, and to making a down payment on a house sometime next year.

"I actually have a bank account now," Lowe laughs. "We just bought a new kitchen table, a VCR, a TV and a new rocking chair for my baby. I'm doing 10 times better financially than I ever have before."

Lowe's circumstances aren't unusual. According to most industry leaders and employment service recruiters, workers looking for jobs outside the professional ranks all but have their pick of high-paying manufacturing, clerical and service positions. It's what economists call an "employee's market," and it's forced many local companies to offer new incentives to a class of workers they may have once taken for granted.

"There's a tight labor market for blue-collar jobs right now," says Jennifer Holder, marketing director for Staffing Solutions by Cobble. "We've had to rethink the way we recruit and advertise to get new workers."

According to Bill Cobble, president of Cobble Staffing Companies, hourly and blue-collar employers are now confronting the down side of a business cycle that, from the corporate perspective, peaked in 1991.

"Around '90 and '91, there were plenty of workers and not enough jobs," Cobble says. "The economy gradually absorbed that bubble of people. Then, around 1994, we started running into worker shortages, and it got to where you couldn't fill certain low-skilled positions no matter how many advertisements you ran."

Cobble cites demographic trends, like fewer untapped pockets of women and minorities, as factors in the worker shortage. Murray echoes those themes and also points to rampant industrial growth statewide, fostered by low taxes and land values, minimal regulation and proximity to population centers.

Murray says most of that growth has taken place near the state's major metropolitan areas, although the surrounding counties, rather than the cities themselves, are often responsible for creating most of the jobs. Around Knoxville for example, industrial growth in Blount and Anderson counties, and tourism/service growth in Sevier County, have kept pace with or outstripped growth in Knox County.

Those expansions exerted a powerful upward push on wages and have all but put an end to minimum-wage-only jobs. Cobble says the minimum threshold for temp service jobs had already risen from below $5 per hour to nearly $6 per hour when he sold a portion of Cobble Personnel to Staffing Solutions last year, and most local fast food restaurants now start new employees at nearly a dollar an hour more than the $4.35 minimum.

"We don't even try to touch anything that's less than $6 per hour now, and most of our jobs offer even more than that," says Holder of Staffing Solutions. "You can't do enough advertising to get people interested in $5 per hour wages."

The scarcity of workers and corresponding wage inflation have also given economic development officials reason to pause. Although the outlook hasn't reached crisis proportions, many industrial recruiters admit that the dearth of low-cost labor casts a foreboding shadow over their efforts.

"Our problem right now is finding qualified workers," says Jim Cooper of Melton Hill Regional Development in Anderson County. "We've pulled in 23 manufacturers in 11 years, and the labor pool has taken a beating. It's causing some recruiting problems, but not to the point where people are scared off in a big way."

Plummeting professional stock and the concurrent rising fortunes of less-schooled workers have also made for an economic and social dynamic that has blurred many of the lines that once separated two distinct labor populations.

Even as highly educated workers lower their expectations and take jobs that offer fewer perks and less prestige, many factory workers are pulling in wage and benefit packages that are competitive with the salaries earned by their better-dressed counterparts sitting at desks in other parts of the building.

O'Connor says he expects nearly half of the engineers who file resumes with Snelling to change their career expectations in order to stay in the area--to the point that many of his food service placements, especially managerial positions, come from the ranks of disillusioned would-be and former engineers.

And although their new jobs will probably entail longer hours, lower paychecks and more physically demanding work, O'Connor says the professional converts place a higher premium on stability and peace of mind.

"There are lots of Oak Ridge people who are tired of wondering whether they'll lose their next job at the end of the year," O'Connor says. "They're seeking permanence, and they're willing to make major changes instead of pulling up roots."

LeRoy Beasley, president of the Tennessee Valley Authority Engineering Association, says many of the engineers sliced off TVA payrolls in recent years were forced to seek other careers, working for motels or managing sandwich shops.

And still other professionals are seeking professional jobs through temporary services--jobs that may end on a week's notice, or that may not provide benefits.

"The fastest-growing area of temp services are in the professional and technical fields," says one job service employee. "The work force is increasingly contracted out, especially the parts that aren't part of a company's normal business, like accounting or human resources. It's a much different landscape than it was 10 years ago."

In the meantime, many area manufacturers are offering increasingly hefty incentives, and struggling to stay abreast of any changes in the status of their blue-collar work force. Camille Babb, director of human resources at DeRoyal Industries, says her company responded to an increasingly competitive labor market by hiring a compensation analyst, and implemented a 401K plan, as well as special pay structures for certain divisions, at his behest.

"People in the semi-skilled positions will leave for even very small bumps in pay," Babb says. "If you're not keeping up with the changes, you'll be left behind."

Clayton Homes' human resource personnel have had little trouble finding capable new employees, Stegmayer says. But he also admits that Clayton has been willing to pay for performance--with double-figure hourly wages at some area plants, with a 401K plan that sees Clayton match employee contributions dollar for dollar, with an expansive health plan, and with automatic raises whenever business improves (the company has averaged 23 percent annual growth since 1991.)

"I don't know if I'd call the wage situation competitive, but certainly wages have risen over recent years," Stegmayer says. "And we have been heavily incentive-oriented."

While analysts and business leaders seem to agree on what the local labor market looks like, they all have different ideas about how its complexion will change in the coming years.

According to Murray, Knoxville's blue collar outlook hearkens back to Econ 101 and the law of supply and demand: workers will migrate to the area as long as jobs are plentiful, and current competitive advantages will gradually disappear (Melton Hill's Cooper notes that Anderson County plants are already attracting factory hands from southeastern Kentucky).

"The trend will likely continue for many years to come," Murray says. "Eventually, the population grows, taxes increase, labor costs bid up, disincentives arise and things will level off."

What will happen to the area's disenfranchised business class is a chancier guess. Murray says the problem is structural unemployment--job losses related to long-range trends rather than short-term business cycles--and compares it to the squeeze placed on Tennessee manufacturers (of textiles in particular) in the 1980s, when many factory jobs moved overseas.

"You might speculate that we're squeezing the other end of the corporate budget now," Murray says. "It takes a while for these sorts of job losses to work their way out of the system."

According to a recent Wall Street Journal survey, Knoxville's pool of underemployed college-educated workers bodes well for its future. Citing Oak Ridge and TVA cutbacks, the publication said Knoxville has been a "metropolitan also-ran" in recent years, but predicted better times as the region's private interests take advantage of a "brainy work force" and abundant natural resources.

But according to consultants at DRI/McGraw-Hill, a California firm commissioned by DOE to assess the economic prospects of the 16-county East Tennessee Resource Valley, the region may see dramatic downturns in most of its key industries in the early part of the 21st century. And one of the ways DRI consultants believe local industry can stave off disaster is by harnessing more of the human and technological resources left in the wake of cutbacks.

Whether these analyses hold any grain of truth, or whether they're just floundering recognition of the underlying problem, remains to be seen. What is clear is that one way or another those untapped resources won't remain dormant forever.

"My eldest daughter is in college, and I really have no interest in placing Beth in any other Tennessee school system," says Bill Davis. "I feel constrained to this area right now. When they're both finished, I may well have very different feelings."

© 1996 MetroPulse. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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