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Saturday, April 07, 2018
The Future of America’s Economy Looks a Lot Like Elkhart, Indiana
By Bob Davis | The Wall Street
downtown street in Elkhart, Ind., Photo by David Kasnic
The capital of RV manufacturing, which once had the worst unemployment rate in the U.S., is now facing labor shortages and rising home prices and wages
ELKHART, Ind.—The self-proclaimed RV
capital of the world gives a glimpse of what the American economy looks like
when operating at full tilt.
High-school students around here
skip college for factory jobs that offer great pay and benefits. For-hire signs sprout like roadside weeds. And workers are
so flush that car dealers can’t keep new pickups on the lot.
At the same time, the strains are
showing. Employers can’t hang on to employees, and house prices are zooming.
The worker shortage prompted a local Kentucky Fried Chicken restaurant to offer
$150 signing bonuses. A McDonald’s failed to open for lunch last fall
because managers couldn’t corral enough hands at $8 an hour to serve the lines
waiting at the door.
Bust to Boomtown: Life in a Comeback City, Photo by David Kasnic
Ind., was once the poster child for the recession. Now the economy is booming
thanks to strong sales of RVs, the main industry here. And that's created a new
challenge: a shortage of qualified workers.
No place in the U.S. has seen a
labor-market turnaround like this metropolitan region of 110,000 workers, a mix
of blue-collar whites, Mexican immigrants and Amish. “It’s like 1955,” said
Michael Hicks, a Ball State University economist. “If you show up and
have minimal literacy skills, you can find a job here.”
Elkhart has unique economic
conditions—its good fortune is tied to a central role in the revival of the
recreational-vehicle market, where neither automation nor foreign competition
is a threat. But as the U.S. turns the page on a decade of postcrisis
underemployment, the region points to a future of labor shortages and fights
The jobless rate in the Elkhart
region plunged from 20% in March 2009, worst in the U.S., to just over 2% in
January, half the national average.
The local unemployment rate is actually closer to zero: some 9,500 jobs have
no takers. Each day, about 25,000 workers commute into Elkhart city,
population 50,000. A county economic development agency is hunting for job
candidates across Appalachia and as far as Puerto Rico.
The local jobs rebound is the
largest among 403 metro areas analyzed for The Wall Street Journal by Moody’s
Analytics. As the national unemployment rate
drops toward 4%, the Elkhart region has been at that level or below for 34
consecutive months. The rest of the U.S. might never match Elkhart’s
sizzling pace, but the region could show what lies ahead.
Average weekly wages overall were up
6.3% in the third quarter of 2017 from a year earlier, the Labor Department said, compared with a 0.6% decline
nationally over the same period. In Elkhart’s RV industry, which employs 12% of
local workers, average annual salaries in 2016 rose 17% to $68,000. Pay is
still going up.
Some job perks sound more Silicon
Valley than Rust Belt. LCI industries, an RV parts
maker, employs four “dream managers,” counselors who help workers
plan vacations or handle family problems. “We want people to have a deeper
purpose,” said one manager, John Ferguson, a former minister.
Another company, which makes
shelves, advertises a free health clinic to lure new hires.
it to No. 1
Chasing scarce workers has fueled
inflation elsewhere. Median home prices have risen about 6.5% annually over the
past two years, said Gary Decker, former president of Elkhart County’s board of
Realtors, about twice as fast as in past recoveries.
Elkhart city, located at the
junction of the St. Joseph and Elkhart rivers, is booming in a
conservative Midwestern way, said Arvis Dawson, a former Elkhart city
council member: “People here make enough money to buy a Cadillac, but they
Not at Zeigler Ford. The dealership
usually stocks a half-dozen Ford Expeditions, which sell for as much as
$85,000, and Lincoln Navigators that top out at $95,000. In February, the pricey SUVs were sold out. The Ford
dealer, which usually stocks 20 to 30 top-end F-150 pickups, had three on the
“All the high-line series have taken
off,” said Mike Simmons, a sales manager. The tight labor market has created
problems in his own office, which is short a full-time worker. The dealership
is making do with three part-timers.
Jayco Factory 44 looks like a giant
woodworking shop, punctuated with the rat-tat-tat of staple guns firing and the
buzz of electric saws. The site, which produces $475,000 Entegra motor
homes, belongs to Thor
Thor buys steel chassis, and Jayco
workers build the RV housing. Workers push the 45-foot-long motor homes by hand
along a rail system. The vehicles move from station to station, where
specialists assemble various parts by hand: cabinets, wiring, walls and roofs.
Amish ride their bicycles for the 5
a.m. start of the workday and head home to farms by 1 p.m. Thor, the region’s largest employer, takes extraordinary
steps to locate workers. The company seeks prospects in Youngstown, Ohio, and
other Midwestern cities with higher unemployment. It also hires county jail
inmates in work-release programs.
Looking ahead, the company invites
eighth-grade students to visit its plants, and sends finished RVs to tour area
The RV industry sets wages at levels
others find hard to match: Eight of Elkhart’s 10 largest employers make
RVs or RV parts. Workers are paid based on units produced. At full production,
that translates to as much as $90,000 a year for assembly workers at RV plants
and $100,000 for foremen.
The work is tough. The posting for
an assembly job at LCI industries says the work “requires walking, bending,
kneeling, stooping, crouching, crawling and climbing all day,” plus lifting
“items over 50 pounds.”
Older workers gravitate to less
demanding jobs at other RV firms that make parts and where the base pay is
around $15 to $20 an hour.
Lamont Blackwell, the manager of a
local McDonald’s restaurant, said he used to work at LCI for more money. “I
have thought about going back, but I can’t keep up,” he said. “I’m 40 years
old, and my body is breaking down.
Employees job-hop frequently in this
workers’ market. Turnover in the RV industry is roughly 100%, according to
local manufacturers. Bonuses of $500 to $1,000 are commonly offered to
new hires if they stay 90 days.
Rick Collins, president of Cleer
Vision Windows Inc., which makes windows for RVs, said that so few people stick
around for three months that he pays a $100 bonus for finishing four
weeks. The company buses in workers from out of town and generally
doesn’t require any pre-employment drug testing.
Mr. Collins also hires laborers from
work-release programs. He said demand is so high that even inmates are hard to
retain as workers after their release.
The Elkhart metro region
operates like an oil economy—a Kuwait in the cornfields—said Enrico Moretti, a
University of California, Berkeley, economist.
The RV industry sets wages and
standards to a level few competitors can match, making diversification
When bad times hit, they hit hard.
In 2009, RV sales fell by half, and so did RV employment. Organizers canceled the Elkhart RV show, the first time
in more than 50 years.
Signs of decline during the
recession were stark. Mr. Collins, of Cleer Vision Windows, employed about 40
people in 2009 and wasn’t hiring any more.
Even so, he said, day after day,
another 40 or so people lined up in his lobby and out the door, to fill out