Between now and 2018, about 17% of the current electric power workforce in the Pacific Northwest is expected to retire, and it is becoming more challenging to fill open positions. What are employers to do?
By Alan Hardcastle and Sally Zeiger Hanson
A staggering 60%+ of the electric power workforce in the Pacific Northwest of the U.S. is aged 45 or older. About 17% of the current workforce is expected to retire by 2018. And employers anticipate having to work much harder than in the past to fill available positions.
These results are just the tip of the iceberg from a study released in October by researchers from the Washington State University Energy Program. This 2013 labor market study sought to uncover the workforce challenges electric power employers in the Pacific Northwest face. The study was conducted as part of a $5 million U.S. Department of Energy Smart Grid Workforce project grant administered by the Pacific Northwest Center of Excellence for Clean Energy. Quantitative and qualitative data were collected from 16 regional electric power employers in Idaho, Montana, Oregon, Utah and Washington that collectively employ nearly 28,000 workers (see Table 1). Data were collected on five craft and four professional utility occupations (see Table 2).
The study results reveal the current and future employment and workforce education needs of these electric power employers, while also noting the shifts that have occurred since completion of similar a report in 2008, just as the U.S. entered a major recession. The results identify important findings that have implications for regional, state and local economic and workforce development policymakers, energy employers, and workforce education and training providers.
Understanding the situation
The majority of employers participating in this study manage hydro assets in the region, which is also the nation's largest source of hydroelectric power. There are 55 operating hydroelectric projects on the Columbia River and its tributaries, and about half of the electrical power generated in the Pacific Northwest comes from hydro sources.
The 16 employing companies that participated in this study employ a total of nearly 9,000 full-time-equivalent (FTE) workers in the nine occupational groups mentioned earlier. This accounts for nearly one-third of total employment at those organizations.
These employers indicated that many of the recruiting and hiring challenges they faced in 2008 are still prevalent today: A shortage of qualified applicants still exists, and employers continue to have difficulty attracting and retaining the best talent for open positions. In 2008, employers were noting a shifting labor pool, with fewer experienced workers in local and regional labor markets. To adjust, employers started recruiting from further away, exploring additional industry sectors for potential new hires and offering higher compensation packages. These steps were identified as an undesirable - but necessary - break from past hiring practices.
The context for labor recruitment and hiring has changed markedly since 2008, however. For instance, the economic recession that began in 2008 has expanded the available labor pool considerably, but several employers report that consequently they are receiving more applications from unqualified job-seekers than ever before. One employer described receiving 500 applications for one craft-level job; of those, 250 met the company's basic hiring qualifications and only 56 were able to pass employment testing for the position.
Nationally, future labor supply has been a rising concern for years, as the baby-boom generation ages. For all industries in the five states combined, 37% of the workforce is made up of employees under age 35, and just 20% of the workforce is age 55 or older. In contrast, for the five states' utility sectors combined, just 20% or fewer employees are under 35, while 30% or more are 55 and older. More broadly, more than 60% of utility workers across the region are 45 years of age or older. These dynamics suggest that the supply of less-experienced workers will not match the demand generated by future retirements among more-experienced workers.
The recession was also a game-changer for potential retirees, many of whom chose to delay their departures until their retirement portfolios recovered. Although this trend slowed the loss of experienced employees, it also constrained hiring at the entry level, which could exacerbate future skill gaps. However, even with the recession, the companies surveyed expect turnover of 1,522 experienced employees due to retirements in the next five years, representing 17% of the total in these nine occupations. While that forecast is lower than for 2008, the losses in some occupations are substantial: About 26% of electricians and more than 20% of power engineers are expected to retire by 2018, and these occupations are already difficult to fill. And, employers indicated that they expect to need to replace nearly all of the positions vacated through retirement.
The retirement effect is also a central feature of the future energy workforce because companies say that during the next three years they anticipate little growth in terms of new positions in the nine occupational groups (exclusive of retirement replacements). Employers expect to increase hiring in these occupations by 48 FTE, a gain of just 0.5% (see Table 3 on page 10). In fact, only three of the 16 employers surveyed expect to hire any new staff. The new hiring that is projected is led by power engineers (2.2% growth) and mechanics (2% growth). This trend is consistent with the findings of the 2008 study, which forecast only modest new job growth in craft occupations. The recession likely contributed to a 10% drop in craft employment between the 2008 and 2013 study; only electrician employment grew over that time (18%).
In short, while the recession increased the overall labor pool, most employers continue to struggle to attract, recruit and retain qualified applicants, especially at the middle levels of experience. To fill openings, employers typically look within the energy industry first, attempting to attract qualified candidates from other companies or energy-related contractors. Some employers have found qualified candidates on the open market, such as those who were laid off due to weak energy demand after the recession. In other cases, economic contractions and layoffs in other industry sectors, such as manufacturing or construction, boosted the availability of qualified applicants in some craft occupations, especially electricians and mechanics. In general, however, recruiting, hiring and retaining qualified employees continues to be difficult, especially for power engineers and several craft occupations, including electricians, mechanics and some technician occupations.
Across the board, employers remain concerned about the lack of ethnic and gender diversity in the qualified labor pool. Bilingual workers, especially in customer service, are more essential as the Spanish-speaking population continues to grow. Many companies have stepped up their efforts to attract a more diverse workforce by working with student groups and professional associations and by actively seeking to attract minority candidates. Competition for qualified applicants is intense, as ethnic minorities and women are aggressively sought by employers inside and outside the energy industry.
Moving into the future
The electric power industry needs to develop a pipeline of new talent for the future. The pool of qualified applicants is small, and employers are looking longer and further away to meet their hiring requirements. Future demographic changes are likely to reduce the pool of qualified candidates further, and electric power employers will be forced to adjust and treat it as more of a job hunter's market. Increased competition for a smaller pool of qualified applicants is likely because other industry sectors and companies - ranging from Amazon and Intel to Schweitzer Engineering Laboratories - are also eager to recruit and hire new talent with similar skill sets for their organizations.
To meet its workforce needs, the electric power industry as a whole must be willing to adapt to a future in which the shifting values and expectations of young people - who are both energy consumers and the source of future labor - will continue to shape the industry. As one employer noted: "The different values, work ethic, and expectations of younger employees will create challenges in our workforce." Millennials (also known as Generation Y, born between 1980 and 1999) are influencing the labor market and electric power organizations in profound ways. It seems likely that the expectations of the younger generation with regard to flexible work environments, ongoing learning opportunities and career mobility, and access to the latest technologies and communications tools (such as social media and mobile devices) represent some pervasive trends. A tighter future labor pool and more career options available for talented young workers may compel employers to adapt their organizations in order to attract, develop and retain a talented workforce.
Many employers described their work with K-12 schools, teachers and students to inspire and attract young people to the industry. Strategic efforts to build greater awareness among students about the opportunities in the electric power industry - and to dispel the myths that have cast the industry and craft work in a negative light - are needed to generate enthusiasm among young people about the industry and to leverage their growing interest in promoting a sustainable environment and a clean energy future. Outreach to students in grades kindergarten through 12 enables employers to share information with educators and students about the many career opportunities that exist in the industry.
Similar to the 2008 study results, employers primarily offer training that is developed in-house or by product vendors and do not rely on colleges and universities as sources of training and skill upgrades, especially for existing employees. Most employers do provide student scholarships, internships or other resources to colleges, and employees often serve on college and university boards and committees or act as guest teachers and speakers. Online educational options are expanding for topics such as project management, communications and leadership, and general skills such as common computer software use. Budget constraints have led many employers to reducing support for off-site training or lengthy academic programs, relying instead on training delivered at the facility or online to control costs.
Several employers reported that while apprenticeships are an obvious pipeline for new talent, the recession has led them to reduce the number of new participants in these programs during the past several years. Indeed, the data shows that the total number of craft apprentices at these organizations dropped by 33% between 2008 and 2013. The results raise some questions about the adequacy of apprenticeships for supplying new workers. Craft occupations have long relied on mentoring and on-the-job training as the primary methods to impart employee knowledge and skill, but employers are now looking to the open market to recruit experienced craft workers, using apprenticeship as a supplemental strategy for new hiring and development rather than as the primary approach. Although employers are applying a more systematic approach for workforce succession planning than in the past, some employers continue to be informal and limited in their approach; many said they should be doing more to address labor and skill gaps now and in the future.
Strategies and solutions
Employers are adapting to labor and skill gaps through many strategies, ranging from more aggressive recruiting and outreach to restructuring jobs and enhancing incentives for key employees to delay retirement. Other important strategies identified and recommended by the surveyed employers and study authors include:
- Building and expanding partnerships between industry, labor, education and government to leverage limited budgets and promote collaborative actions that benefit all stakeholders;
- Enhancing education and training system capacity and responsiveness to ensure industry's needs are being met, while helping to maintain and enhance innovative programs that adapt to future changes in the industry;
- Adapting to the future labor pool, which will require employers to identify future needs while recognizing that intensified competition for a talented workforce may require recruiting and hiring practices that are more responsive to the talents, interests and characteristics of a younger and increasingly diverse labor pool; and
- Supporting regional and state policies that are responsive to the industry's workforce needs, expand results-oriented best practices, and restore or extend investment in postsecondary education, training, apprenticeship and internships, while also promoting science, technology, engineering and math (STEM) competencies, career exploration and work-based learning opportunities in K-12 programs.
In summary, weak economic conditions have forced electric power employers to limit or reduce entry-level hiring and apprenticeships. This trend presents future risks and challenges to hiring, recruiting and developing new employees as retirement turnover increases and internal promotions generate new demand to fill entry-level positions. Energy employers continue to report difficulty filling open craft and professional positions, and for most energy jobs the internal development of new employees can take many years. New technologies and restructuring may reduce future labor requirements in some areas, but the electric power industry has also become more complex, and it will continue to depend heavily on a knowledgeable, skilled workforce.
Read or download the report at http://cleanenergyexcellence.org/resources. For energy workforce research produced by the WSU Energy Program, visit: www.energy.wsu.edu/ResearchEvaluation/WorkforceDevelopment.aspx.
Send new hires to the Waterpower Hydro Basics Course
The Waterpower Hydro Basics course, organized by the Hydro Training Institute and held during HydroVision International 2014 in Nashville, Tenn., in July, is a great opportunity to get training for your new hires. This two-day course is designed for invididuals new to hydro, both new hires and experienced professionals moving into hydro, or those wanting to expand their areas of expertise.
The highly-qualified faculty members who teach this course represent consulting companies, utilities, federal power producers and regulatory agencies. Topics covered include an overview of hydro, harnessing the water, equipment basics, hydro in a power system, day-to-day operations, hydropower and natural resource stewardship, how projects are regulated and communicating hydro's value.
For more information or to register for this course, visit www.hydroevent.com/waterpower-hydro-basics-course.html. Attendees who work for a power producer can register for the Power Producer Training program to receive a discounted rate for this course and full conference registration for HydroVision International.
Alan Hardcastle, Ph.D., is senior research associate and Sally Zeiger Hanson is workforce research associate with the Washington State University Energy Program, which conducted the study discussed in this article.