Posted on 03/30/2014 5:12:07 PM PDT by SeekAndFind
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. No wonder no one wants to work for them….So why doesn’t GenMet pay more? In other words, why doesn’t it respond to the law of supply and demand by offering starting wages above the burger-flipping level? Because GenMet is competing in the global economy. It can pay more than Chinese-level wages, but not that much more.
In other words, this company in question doesn’t have a skill gap problem, they have a business model problem. They aren’t profitable if they have to pay market prices for their production inputs (in this case labor). It’s no surprise firms in this position would be seeking help with their “skill gap” problem – it’s a backdoor bailout request.
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. In a sense, outside of some professional services fields, today’s companies, despite their endless talk about talent, don’t actually recruit talent at all. They are recruiting people with specific skills and experience. That’s a very different mindset.
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.
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. In fact, if you look at the highly educated people who might say telling people to move in order to find work is evil awful, they are actually the most mobile people there are. Clearly the highly skilled see the value in pursuing opportunity through migration. We need to extend the same opportunity to those who are currently stuck in place.
A third problem is that a significant number of adults in this country are simply unemployable. If you’re a high school dropout, a drug user, etc. you are going to find it tough slogging to find work anywhere, regardless of skills required.
Watching the Chicagoland documentary and seeing what kids in these inner city neighborhoods face, a lack of machine tool or coding skills is far from the problem. Similar problems are now hitting rural and working class white communities where the economic tide has receded. Heroin, meth, etc. were things that just didn’t exist in my rural hometown growing up – but they sure do now.
These aren’t skill problems, they are human problems. And the answer isn’t simply job training. These problems are much, most more complex and they are incredibly difficult to solve. They need to be tackled by very different means than a job skills problem.
If you want more info that documents that there is no skills gap, google around and find plenty of economists crunching the numbers to show that’s the case. But I hope this gives you a sense of some of the trends that explain why there can be persistent unemployment with many job openings without recourse to a skills gap to explain it.
Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.
2) Our society has decided that hard work is unnecessary, so kids want easy degrees and low expectations. They have no work ethic, skills, or patience. They become unemployable right from the start and never recover.
Bad feedback loop -- workers who are not employable, and companies which cannot provide a decent incentive as to why a worker would really want to be employable.
Gonna be a rough ride.
I found that hilarious also: I could think some manager who had no understanding of technology had a policy of always asking for X years of experience, even in a technology that just emerged.
The ad says: compensation: $16.00/hr
The position is PM/Maintenance Tech - 2nd Shift
In your opinion, how much should the compensation be for the skillset described?
In my observation, companies are totally unprepared to hire anyone who has not done the EXACT same job somewhere else and therefore does not require training. If the company makes blue, left-handed widgets and the applicant has experience in blue, right-handed widgets - no good!
My son just finished his first six months at Wal-Mart.
He had a nice performance review. Why? He came in 10 minutes early, stayed late if needed, was polite and helpful to the customers, and completed his assigned tasks on time or with time to spare.
Many companies are not really serious about hiring. If a genius who will work for $35K comes along, they will take him, otherwise they’ll keep looking.
When business starts to boom, and they need people to meet the demand, then they sing a different tune. Those oil wells out in the Dakotas, they need rig men and truck drivers, and they attract them from all over the country by paying whatever is necessary. They’ll take less-than-perfect guys if they’re willing to show up and work.
My wife’s company scours the horizon for Machinists and solid mechanics. There is a major skills gap.
What I learned in college though was “never beg for a job.” In order to get the job, you have to act like you don’t really need one.....if you start begging they will humiliate you royally - they will go down your resume and essentially tell you that a trained monkey could have done the jobs you have done (which, at the time I graduated from college, was true).
It’s not just high school dropouts and drug users that have a tough time getting jobs....the brainy, nerdy types have especially difficult times answering “what was your most satisfying experience/biggest disappointment/and (other than for the money), why do you want this job?”
Part of that has been incompetent HR personnel and incompetent managers who cannot comprhend what they are asking for is ludicrous. We used to see IT advertisements with programming language experience that when all added up would have required the job seeker to have been working with those software languages since before FORTRAN and COBOL were invented.
Another part of the resume experience requirements creep is due to companies deliberately making impossible requirements to make sure only their pre-selected in-house or foreign job candidate would be allowed to phony qualify for a position that had to be advertised to the public.
Between $28.00 and $32.00
Not a bad article, really. Nails a few things directly.
“There IS a skill gap. “
I think the author was saying that the problems are not the lack of sills, but hat there is a lack of investment by those desiring the skills to obtain them, and I totally agree with that as a fact.
The difference is that people will and can do the jobs but where is the motivation to do so? Supply & Demand requires a demand and demand requires paying such that the supply wants to meet the demand.
The author is pointing out that people are not dumber than they were yesterday, business and colleges and dumber.
Let’s face it, why would anyone spend the countless hours learning computer programming for the $75k-$120k salary when they can do practically nothing and be a project manager for even more money? We’ve turned ‘manager’ into a career field and not a position of higher responsibility. “What do you do, Mr. Smith?” “Why, I am a manager.” “Anything else?” “Nope, I just manage stuff.”
A degree in “Business Communications” or “Marketing” plus a 3 week wonder PMI project manager credential = $100k+ and be the boss. A degree in engineering plus thousands of hours studying the latest technologies = $100k+ and be the subordinate. Hmmm...which one to choose.
$30/hr is the range I pay mine.
That’s insane. They’re delusional.
Yep.
That ad nailed the problem.
Young, hard-working men with 2-3 years experience should be able to support a family. (Not rich, just enough to handle a small home, wife, and a baby)
I can see starting them out at $16/hr for a three month training period. (This way you aren’t stuck with someone who doesn’t have what you thought they had or who washes out after two weeks)
But, then you raise it to something reasonable (with benefits) and you put that in the ad.
Please don’t forget that this job requires:
• Knowledge of blueprint reading.
• Knowledge to maintain and repair electrical components of machinery
They want an electrician with 3 years experience for $16 an hour??
About double what they're offering.
If hiring was done by shop personnel these issues would go away. There is only a skills gap because HR buffoons say there is. They have rediculous hiring matrices that few people would ever get through. Irony abounds now that I am self employed. Companies that never would have hired me now pay me 3 to 4 times as a contract engineer and hire my company to manufacture parts for their aircraft. Even after 10 years of this they would still never hire me.
Anyone who is interested should learn machining. Good money to be had and all the old farts are retiring with few, if any, replacements.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.