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Jun 29, 2022 IST Team

Skilled Labor vs. Unskilled Labor: Is there a middle ground?

Can some low-skilled workers step up to take more skilled roles as a way to save money?

The debate between price vs. quality is not new. In today's economy, businesses are constantly searching for ways to cut costs and increase profits. For many companies, this means hiring the cheapest workforce possible. However, there are some companies who believe that offering higher wages to skilled workers will ultimately lead to a better product or service. So, which is the right approach?

Construction project overruns are one of the biggest concerns in hiring an unskilled workforce, and many employers are rightfully asking if underpaying is actually hurting profit margins. Just 30% of all projects come within 10% of their budget (according to a KPMG poll), so it's more important than ever to keep track of expenditures and monitor project data in order to maintain cost and progress.

Let's look at the difference between skilled labor vs. unskilled labor and the pros and cons of each approach. 

Unskilled labor, defined by educational attainment

The official definition of unskilled labor refers to occupations that can be filled with a high school diploma or less. This labor is typically characterized by low barriers to entry, on-the-job training, and little experience required. Common unskilled jobs include manual labor positions such as construction laborers, janitors, and factory workers.

Unskilled labor positions are essential to industrial trades because they fill the gaps between highly skilled positions and the more general work required to complete a project. Unskilled workers are often willing to take on these positions due to the lower level of experience and training required. This pool of laborers can be the key to finding dedicated workers willing to learn and eventually become important, skilled team members.


Skilled labor, defined by experience or education

Skilled labor, on the other hand, requires at least some college education or specialized training. These positions often require a higher level of experience and expertise. Skilled labor refers to positions such as electricians and welders, experienced foremen, and field managers in industrial trades. Although many skilled industrial tradesmen have some form of college education, there are many workers with experience and skills but no formal degree.

In fact, in a study by McKinsey, workers without college diplomas often have the skills and training needed for higher-paid positions but are held back by an employer's educational requirements. For those who hire in the trades, you know that a degree doesn't define someone as skilled versus unskilled.

In IST’s 2022 Skilled Trades survey, workers identified pay as the #1 consideration in taking or keeping a job. With the need to increase pay for workers, many employers are reconsidering their approach to staffing different levels of workers.

Two schools of thought

One school of thought is that hiring a skilled worker will be cheaper in the long run due to their experience. To illustrate, an experienced welder is less likely to make mistakes that will require costly additional repairs, or lost time due to a failed inspection. Skilled workers also need less direction and oversight, which frees up time and energy for other workers.

Another school of thought is that a dedicated employee will produce higher quality work, regardless of skill or experience. That means that instead of underpaying a skilled worker with a lot of experience, you may be better off slightly overpaying someone with less skill.

Either way, underpaying at any position level is more likely to cause project delays and ultimately hurt profit margins.

So how do you create a loyal, hard-working base of employees who respect their bosses at every skill level? In a nutshell, blue-collar workers desire to have competitive wages, quality of life, and high morale in the workplace. They also favor companies that offer:

  1. Rigid safety protocols
  2. Positive team environments
  3. Opportunities to level up in the company

Offering higher wages and better benefits to skilled workers will ultimately lead to better production.

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Published by IST Team June 29, 2022
IST Team