The Great Skills Gap Myth: Can't American Companies Find Qualified Workers?

http://www.freerepublic.com/focus/chat/3139114/posts

03/30/2014 | Aaron M. Renn
One of the great memes out there in trying to diagnose persistently high unemployment and anemic job growth during what is still, I argue, the Great Recession is the so-called “skills gap”. The idea here is that the fact that there are millions of unfilled job openings at the same time millions of people can’t find work can be chalked up to a lack of a skills match between unemployed workers an open positions. To pick one random example out of many, here’s the way US News and World Report put it last year:

Some 82 percent of manufacturers say they can’t find workers with the right skills. Even with so many people looking for jobs, we’re struggling to attract the next generation of workers. The message about the opportunities in manufacturing doesn’t seem to be reaching parents and counselors who help guide young people’s career ambitions.

We face two major problems – a skills gap and a perception gap. Today’s modern, technology-driven manufacturing is not your grandparents’ manufacturing, yet for many, talk of the sector evokes images from the Industrial Revolution.

What’s interesting about this is that the “skills gap” continues to have tremendous resonance in public policy discussions I come across although it’s very easy to find many mainstream press articles that challenge it. So I want to take my shot at the problem.

Is there a skill gap? In select cases I’m sure there’s a mismatch in skill, but for the most part I don’t think so. I believe the purported inability of firms to find qualified workers is due largely to three factors: employer behaviors, limited geographic scope, and unemployability.

Let’s be honest, it’s in the best interest of employers to claim there’s a skills gap. The existence of such a gap can be used as leverage to obtain public policy considerations or subsidies. So there’s a self-serving element.

But beyond that, several behaviors of present day employers contribute to their inability to hire.

1. Insufficient pay. If you can’t find qualified workers, that’s a powerful market signal that your salary on offer is too low. Higher wages will not only find you workers, they also send a signal that attracts newcomers into the industry. Richard Longworth covered this in 2012. He explains that companies have refused to adjust their wages due to competitive pressures:

In other words, Davidson said, employers want high-tech skills but are only willing to pay low-tech wages.

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2. Extremely picky hiring practices enforced by computer screening. If you’ve looked at any job postings lately, you’ll note the laundry list of skills and experience required. The New York Times summed it up as “With Positions to Fill, Employers Wait for Perfection.” Also, companies have chopped HR to the bone in many cases, and heavily rely on computer screening of applicants or offshore resume review. The result of this automated process combined with excessive requirements is that many candidates who actually could do that job can’t even get an interview. What’s more, in some cases the entire idea is not to find a qualified worker to help legally justify bringing in someone from offshore who can be paid less.

3. Unwillingess to invest in training. In line with the above, companies no loner want to spend time and money training people like they used to. I strongly suspect most of those over 50 machinists and such we keep hearing about learned on the job. Why can’t companies simply train people in the skills they need? When I started work at Andersen Consulting in 1992, we weren’t expected to have any specific skill. Instead, they were looking for general aptitude and spent big to train us in what we needed to know.

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4. Aesthetic hiring. This one I think is specific to select industries, but in some fields if you don’t have the right “look”, you’re going to find it difficult. For example, the NYT Magazine just today has a major piece called “Silicon Valley’s Youth Problem” talking about this very issue. Hip, cool startups see their working environment and culture as critical to success. And that’s true, but those cultures aren’t very inclusive, which is why many Silicon Valley firms are continuously under fire for various forms of discrimination. When they’re trying to be the hot new thing, the last thing an app startup wants is some 55 year old dude with a pocket protector cramping their style, no matter how much of a tech guru he might be.

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You frequently see the skills gap phrased in terms of specific geographies. For example, a state. Rhode Island has X number of unemployed people and Y number of unfilled jobs. So what do we do to match them up?

This type of thinking is too limited. I attended an hour brainstorming session on the Rhode Island skills gap a while back and not once did anyone suggest anything that crossed the state boundary. One person mentioned these technical high schools in Boston that produce grads with exactly the skills the market is needing. His idea was that Rhode Island needed to create these types of institutions. Not a bad idea, but I was struck that nobody thought about sending these Rhode Island employers who can’t find workers on the one hour drive to Boston to go hire some of those grads directly out of Boston’s high schools. Problem solved. And maybe while bringing some young, fresh blood into the state to boot.

Similarly, no one ever suggested that an unemployed person in Rhode Island might seek work out of state. Realistically, America has often solved unemployment problems through migration. People need to be willing to move to where the job opportunities are.

[One problem is that many people own a home, and would have a hard time selling it, at least for what they owe. And if you move, you lose your support network, which has been proven to be helpful to good health. I read a study once BI (before internet) that found that communities are held together by the people who have their roots there.]

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