There's a Skilled Trade Labor Shortage. Can We Fix It?
How franchises are working to boost their workforce.
Opinions expressed by Entrepreneur contributors are their own.
Back in Vinnie Sposari's day, plumbing was considered a good, honest living. Before shop classes started disappearing from high schools and four-year college was championed as the only respectable career path, Sposari could put a classified ad in Sunday's paper and have six or eight résumés on his desk by Monday. Good résumés, too. But those days have gone the way of print newspapers.
"Very, very rarely will you get a licensed, skilled plumber calling you," says Sposari. He's 55 now and spent his career rising up in the plumbing business. He started straight out of high school and soon founded Sposari Plumbing. In 1992, he bought into a plumbing franchise called Mr. Rooter to "learn the business side of things," and today he owns Mr. Rooter territory throughout western Washington, covering 3.8 million people, with 65 employees and 30 trucks. He's watched the skilled labor shortage coming for a long time, but it's only the past few years that have started to really hurt.
"When the computer age hit, maybe 20, 25 years ago, all of a sudden it wasn't sexy to be a tradesperson," says Sposari. "But back then, there were people my age still in it. Now we're seeing those people aging out, and there's nobody to backfill them. That's why we're having such a crunch now."
Then there's the lingering misperception that skilled trades and higher education are two different things -- something people like Sposari want to change. It takes four to six years to earn a plumbing license, not unlike a college degree. And in some ways, a trade education is a better deal. Workers can be paid on the job while they learn and then "graduate" into the workforce with higher starting salaries and without the burden of student debt.
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To save his profession, Sposari has begun thinking differently. Finding a licensed plumber had become a needle-in-a-haystack problem. "So we opened it up to the entire haystack," he says. He now hosts biweekly career nights to try to educate the local workforce on just how good plumbing can be and has implemented a 12-month paid training program so he can give new hires of any background $15 to $18 an hour to start. Once in a truck, he tells them, his plumbers make $60,000 to $80,000 yearly. With time and experience, some even make $200,000.
Will it work? It's a bigger question than one plumber in western Washington can answer. As the country's largest trade franchises are finding, success will require changing more than just careers -- it will require changing society at large.
How big is this problem? Here's one way of looking at it: A Deloitte study found that the skills gap may leave an estimated 2.4 million positions unfilled between 2018 and 2028, with a potential economic impact of $2.5 trillion.
And here's another way to look at it: Neighborly, the world's largest franchisor of home service brands, is hearing about this problem from its franchisees almost daily.
"Franchisees say they have constrained capacity. They have more jobs than they have people to do them, and that is holding them and us back," says Mary Thompson, Neighborly's COO. Her company owns 22 home service brands, including Mr. Rooter, Mr. Electric (electrical services), Glass Doctor (glass repair and replacement), and Aire Serv (heating and air-conditioning services). In total, Neighborly has 3,700 franchisees, 850 associates, and more than $2 billion in annual sales. A skilled trade labor shortage impacts its bottom line -- and Thompson feels that pain as more than just an executive with 25 years of franchise experience. She's also a licensed plumber.
"It's the hardest test I ever took," says Thompson. "Harder than any college exam I ever had."
Indeed, it isn't easy to become a licensed tradesperson, which is also part of the problem. The process takes time and commitment, and must meet the rigorous legal criteria required of technicians who work with complex, potentially dangerous systems. With fewer attempting the feat in the first place, and baby boomers retiring in record numbers, franchisees are left with a unique hiring gap that can't be filled overnight -- and they're losing business because of it. A recent National Association of Home Builders survey showed 81 percent of members experienced delays in completing projects due to the shortage.
"I sent out an email to a group of our franchisees yesterday and said, "How many jobs do you feel you missed because you don't have technicians?' " says Steve Truett, president of Aire Serv, which has almost 200 franchise locations across North America servicing residential HVAC systems. "One said they felt they missed as much as 10 to 20 percent of their business in the summer months. Another one, a larger company, may miss 30 calls a day during peak season because they can't get to them."
Truett sees the problem as generational. "Traditionally, we'd see more seasoned technicians that grew up in the trade, maybe their dad was in the business or they went to a trade school," he says. Each generation would follow the last -- benefiting from good jobs that can't be outsourced. But now, Truett says, that generational inspiration isn't being passed down. "For every three people that retire from the trades, only one person is entering on the other end. Somewhere along the way, people started looking down their nose at trades, like they were beneath their kids, and it just shouldn't be that way."
So for franchisors like him, the first solution seems straightforward: They have to do what their retiring tradespeople have not, and introduce this career to a new generation.
About three years ago, Neighborly began an unprecedented effort to help its brands address the shortage. It began by surveying all franchisees about their pain points and then zeroed in on the biggest: Franchisees said they didn't know how -- or didn't have the time -- to find the people they need.
Addressing this problem would be tricky, because franchisors have to be careful about how they help franchisees with hiring. It's the result of a wonky regulation known as "joint employer." Five years ago, the National Labor Relations Board threw the franchise world into a panic by declaring that McDonald's might be liable for federal labor law violations at its franchises. The reason, it said, was that the McDonald's corporate office had indirect control over its franchisees' employees and therefore functioned as those employees' second employer. In response, many franchises scrambled to distance themselves from their franchisees' hiring and HR practices, lest they be found similarly liable. The franchise industry has railed against the concept of joint employer ever since. "Because of this, it's now a lot harder for brands and business owners to work together on anything employment related," says Stephen Worley, senior director of communications for the International Franchise Association.
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Thompson, the Neighborly COO, was of course aware of all this, but she still wanted to find a way to help. Neighborly couldn't hire or recruit on behalf of Mr. Rooter franchisees, but it determined that the company could onboard vendors who provide tools to franchisees. So that's what it did, forming relationships with a wide range of useful companies. One of the most successful has been CareerPlug, a company that makes hiring software. Now when Sposari or any Mr. Rooter franchisee needs to hire a new employee, they can use CareerPlug to distribute their posting, prequalify applicants, and communicate with them efficiently. Today, 70 percent of Neighborly brand franchises use the service.
Neighborly also created a scholarship program to bring women into trades, covering tuition, books, travel, and fees for women enrolled in accredited trade or technical schools, whether they work for Neighborly brands or not. ("Last I checked," says Thompson, "only 1.5 percent of all licensed plumbers are women.")
But Neighborly, along with other like-minded companies, is also thinking about this problem more broadly. That's why, in May, it joined a collective called Generation T. It was founded by Lowe's, the hardware chain, and aims to change the narrative about trade jobs. It currently has 60-plus members, who are coming at the problem in various ways. Apparel brand Timberland Pro, for example, launched a campaign in the fall of 2018 called "Always Do. Never Done." Bosch Power Tools North America, through a community fund it created, is providing scholarships for Chicago-area high school students who are interested in the trades.
These measures may help, but Harvard professor Todd Rose believes they'll have only a limited impact. That's because the skills shortage goes deeper than just hiring practices and advertising campaigns, he says. It goes to what we as a society value and believe -- and, even more important, what we think everybody else values and believes.
"We've defined success at a societal level so narrowly," says Rose. And now, he says, that has resulted in a trade skills deficit.
His research backs him up. Rose is also the cofounder of Populace, a social impact think tank that studies the science of individuality. In September, his group released a poll that he calls "the largest study ever of how Americans view the life they want to live, and what goes into it." The first results were unsurprising. For example, the majority of people surveyed said they value things like relationships, fulfillment, and character more than they value fame or money. But then things get interesting. According to the data, most respondents believe they're in the minority. They think that the majority of Americans value different things -- particularly, that other people value status above everything else.
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The true majority, in other words, believes it's in the minority. As a result, the majority is afraid to say what it believes. Economists have a term for this gap: preference falsification. And Rose says it might be leading people to prefer college over trade school.
"Not only from an economic standpoint, [trades] are really important, valuable jobs that will provide stability and opportunity to a wide range of people. But when you combine that with this incredible shift toward a much more personal and nuanced view of success for individuals, you realize there's never going to be a one-size-fits-all there," says Rose. "So this race to go to college is about as useful as saying everyone has to be a plumber."
How do we change that perception -- making people feel comfortable pursuing success as they define it? Rose believes franchises are uniquely positioned to play a role here. They can offer a path to management or even business ownership for individuals who may or may not have a degree, or outside training, but are passionate about the work. That means they can offer multiple versions of success at once. Someone can train in a trade and, if they want, eventually transition into a higher-status role.
Research is clear that we perform better in jobs we care about, when we're engaged, motivated, and feeling like what we do matters. But that formula is different for each of us, according to Rose's research. To be clear, he received a doctorate in education from Harvard; he's hardly anti-college. But he argues that attending college is not for everyone (no matter how intelligent), rarely predicts future performance in the workplace, and so far has clocked a staggering $1.5 trillion in student debt. The way he sees it, our culture needs to start recognizing the inherent value in varying pathways to success based on what we each uniquely value -- and then we need to start admitting that out loud.
"You can't just backdoor your way into some of these jobs, because they require real training," says Rose. "So what worries me is that many people are forgoing the kind of training that would actually lead to a more secure and fulfilling life in order to play a game they don't even want to play but think they have to."
When tradespeople think about the shortages in their industry, they see a strange disconnect. You'd think people would value trade workers. Every homeowner cares deeply about their house. Everybody needs working toilets, heat to stay warm, and lights to see. So isn't the provider of those services valuable?
"What we do affects the quality of people's life on a day-to-day basis," says Truett, Aire Serv's president. "If you live in Texas in August and your AC goes out, or if you live in Wisconsin in January and your heat goes out, that can be a matter of life and death."
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Truett wonders if the solution lies in schools, where many students first develop visions of their professional lives. If trades were more respected in schools, he thinks, he might have an easier time convincing kids that his company can provide a career.
A few years back in Texas, however, he sat through a high school graduation ceremony that seemed to capture his problem. As each of the students was called up to receive a diploma, the announcer shared where they were headed -- typically college, or the military. Of the 404 graduates, fewer than 10 hadn't chosen one of those options.
By contrast, he recently read about a high school that held a celebration day for graduates going into the trades, similar to what some schools do for athletes on National Signing Day.
"I thought that was fantastic, that they were celebrating, because we need that," he says. "We need people to look at the trades in a different light."