Labor Shortage? Cities Are Paying People To Move, Businesses Are Dropping Drug Tests

Offering incentives to companies to create jobs is nothing new, but as employers across the country struggle to find skilled workers as a result of the labor shortage, local governments are trying something new by offering incentives direct to workers in an up-and-coming economic development strategy, the Wall Street Journal reports.

There are a number of examples. Hamilton, Ohio, promises $5K to new workers to help pay off student loans. Grant County, Indiana, offers $5K toward buying a home in the market. North Platte, Nebraska, not only offers cash, but a ceremony in one's honor to present the check, which can be as much as $10K.

Small towns face significant headwinds when it comes to demographics. The recession inspired young people to move to big cities for an opportunity. The number of people in their prime working years (ages 25 to 54) has grown almost 6% in larger metro areas since 2008.

By contrast, in the last 20 years, the number of prime-aged workers in small towns and rural areas has contracted by 15%, and that demographic hasn't grown much in smaller cities and suburbs. 

The problem tends to feed on itself. Employers who can’t fill jobs often leave for places where they can, thus pushing towns and rural areas further into a downward spiral.

It isn't clear yet whether these kinds of incentives will turn things around for small-town and rural employers, though there are anecdotal success stories, often involving people being persuaded to return to old hometowns after being away in larger cities.

“The mere fact that they’re doing what they’re doing highlights the headwinds they are facing,” Enrico Moretti, an economist at the University of California, Berkeley, told the WSJ.

Also, not everyone is persuaded that the problem, even in small-town America, is a dearth of skilled workers. Rather, it is the reluctance of employers to pay for those workers. 

Jobs may be going unfilled, but "at what wage?" Lawrence Mishel, former president of the Economic Policy Institute, a pro-labor think tank, told CNN last year. "Will employers start to make job conditions better to attract more workers? If they're not doing that, then they're not facing much of a shortage."

Separately, but also because of labor shortages, companies are reportedly dropping marijuana from the drug tests they give prospective employees, reports the AP. So far, there is no data on the trend, but there is a good deal of anecdotal evidence.

Such testing has been common for 30 years. But when labor can be hard to find, and off-site marijuana use is more acceptable and being legalized by the states, the move away from cannabis testing isn't particularly radical.

Even U.S. Labor Secretary Alexander Acosta said at a congressional hearing last month that employers should take a “step back” on drug testing. "We have all these Americans that are looking to work,” Acosta said. “Are we aligning our ... drug testing policies with what’s right for the workforce?”