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The Great Skills Gap Myth: Can't American Companies Find Qualified Workers?
New Geography ^ | 03/30/2014 | Aaron M. Renn

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.

Employer Behaviors

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.

Limited Geographic Scope

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.

Unemployability

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.


TOPICS: Business/Economy; Education; Society
KEYWORDS: skillsgap; workers; workforce
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1 posted on 03/30/2014 5:12:07 PM PDT by SeekAndFind
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To: SeekAndFind

i have seen more and more companies ask for a lot of years’ experience and skills, padding a position that doesn’t pay for what they are demanding a person has to have in order to get an interview. they do it on purpose. it lets them get a person with most of whgat thgey want but then lower the salary because they are missing a couple “must-have” skills.


2 posted on 03/30/2014 5:22:23 PM PDT by Secret Agent Man (Gone Galt; Not averse to Going Bronson.)
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To: SeekAndFind

I got about a third of the way through that malarkey before I decided the author knows not of what he speaks.

There IS a skill gap. Particularly in the skilled trades: plumbers, pipefitters, welders, electricians, carpenters, boilermakers, and on and on.

I know this from personal experience after having worked with construction contractors for decades. They complain that young people don’t want to get into the trades because they don’t want the manual labor; as a demographic, they would much prefer playing with technology all day.

Therefore, if I were a mature skilled tradesperson, I would sell myself to the highest bidder. Good ones ought to be able to pull $70k - $100k per year, and their market value seems destined to rise in the foreseeable future.


3 posted on 03/30/2014 5:23:23 PM PDT by be-baw (still seeking)
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To: SeekAndFind

I got about a third of the way through that malarkey before I decided the author knows not of what he speaks.

There IS a skill gap. Particularly in the skilled trades: plumbers, pipefitters, welders, electricians, carpenters, boilermakers, and on and on.

I know this from personal experience after having worked with construction contractors for decades. They complain that young people don’t want to get into the trades because they don’t want the manual labor; as a demographic, they would much prefer playing with technology all day.

Therefore, if I were a mature skilled tradesperson, I would sell myself to the highest bidder. Good ones ought to be able to pull $70k - $100k per year, and their market value seems destined to rise in the foreseeable future.


4 posted on 03/30/2014 5:23:32 PM PDT by be-baw (still seeking)
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To: SeekAndFind

I think the third reason is probably the biggest. Most jobs, unless it is really complex, have duties that can be learned with 6 months to a year, and most employees can probably be made to be productive enough that the companies can make a profit from their work within a few weeks.

The companies, for whatever reason, decline to train. I think a lot of it is due to a highly subsidized education system that it is cheaper for companies to pay the taxes to subsidize education rather than pay for the training themselves.


5 posted on 03/30/2014 5:24:06 PM PDT by Jonty30 (What Islam and secularism have in common is that they are both death cults)
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To: SeekAndFind

The FIRST year Java got big they were asking for 5 years of Java programming experience.

IT IS A SCAM.

I’ve seen this 1,000 times.


6 posted on 03/30/2014 5:26:34 PM PDT by gaijin
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To: SeekAndFind

As an employer the only “skills gap” I see is the lack of the skills to get up, take a shower, show up for work on time every time and Saturdays when we need it. Oh yes a positive work attitude too. If you can master these skills you not just have a job you will have a career.

We had a meeting with the local school board. The wanted to know what we were looking for in High School graduates. I told them this and they just stared at me.

One teacher pulled me aside an said that what I want is what he has wanted in students for the last 15 years.


7 posted on 03/30/2014 5:28:28 PM PDT by Mikey_1962 (Democrats have destroyed more cities than Godzilla)
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To: be-baw

You are correct.

I know several companies looking for technicians to install and repair fuel dispensing equipment from manufacturers like Gilbarco and Wayne. The guys doing it now are gray-hairs, not far from or past retirement.

Welders are always in short supply, too.

Younger guys just don’t want to show up every day or get dirty, regardless of pay.


8 posted on 03/30/2014 5:32:47 PM PDT by jjotto ("Ya could look it up!")
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To: be-baw

I agree with you in regard to skilled trades, and probably some other specialized areas that require a combination of education and experience that is in short supply.

I have seen the first point in action, and while I also empathize with the employer who says he can only afford to pay a certain amount for the job to be done, he also has options, one of which is to outsource the entire function to a low-cost country. Some will say he’s cheap, others say he’s offering what the job is worth - but either way it has nothing to do with skills.

The guy should have made his last point first, as this is the heart of the so-called “gap”. It’s less about skills and more about habits, and attitude. I’m not generalizing, but when you’ve grown up in a home where no one has ever held a job, your entire world-view is based around an entitlement culture, and you’re basically weighing the value of a job vs. the alternative of sitting around all day living on the public dole, there’s a skills gap, alright. But it’ll take more than job training to fix it.


9 posted on 03/30/2014 5:33:52 PM PDT by bigbob (The best way to get a bad law repealed is to enforce it strictly. Abraham Lincoln)
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To: Secret Agent Man

Exactly; when I was 22, I was looking through the job ads and a lot of simple secretarial/receptionist positions required a degree and quite a few years of experience.


10 posted on 03/30/2014 5:34:02 PM PDT by CorporateStepsister (I am NOT going to force a man to make my dreams come true)
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To: SeekAndFind

It’s been my experience that OJT is far superior to hiring experienced but unemployed workers. Hire at a living wage and train in house with some control over the work practices and attendance of the employees. Of course, the government will have to give businesses the leeway to hire the best available entry level employees, set reasonable work rules, and control the content of the training programs. Of course, this is impossible and companies are scratching to make a profit in spite of the governments control and obstruction.

Oh, by the way, isn’t the UAW doing great running GM?


11 posted on 03/30/2014 5:34:15 PM PDT by JimSEA
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To: be-baw

We really need to stop this ‘tradition’ of looking down on people who work with their hands. Used to be that if you wanted a middle class life, you HAD to know a skilled trade.


12 posted on 03/30/2014 5:34:51 PM PDT by CorporateStepsister (I am NOT going to force a man to make my dreams come true)
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To: SeekAndFind
These aren’t skill problems, they are human problems.

That's a stupid statement.

If you can't do the job, you ain't got the skills.

A lot of companies are jerks. No question. But who is going to spend big bucks training people that can't do math, can't show up on time, or even consistently. IOW, ignorant with no work ethic.

13 posted on 03/30/2014 5:35:48 PM PDT by ChildOfThe60s ((If you can remember the 60s.....you weren't really there)
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To: SeekAndFind

I’ve heard this siren call for my entire life.
Meanwhile, many large companies (especially) reject some very, very, VERY well-qualified job applicants .. often without so much as an interview... and sometimes without even saying No.

(The situation is only made much worse, of course, by the Great Obama Depression, but the kinds of hoops job applicants often have to try to jump through ... can be ridiculous. The companies lose out not getting some excellent and very capable workers....Meanwhile, some of these companies’
foreign competitors do not seem to suffer from nearly the same degree of this self-inflicted damage...?)


14 posted on 03/30/2014 5:36:22 PM PDT by faithhopecharity ((Brilliant, Profound Tag Line Goes Here, just as soon as I can think of one..))
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To: faithhopecharity

It’s not about hiring “the best”.

It’s about hiring “good enough” for the least amount of money.


15 posted on 03/30/2014 5:37:03 PM PDT by dfwgator
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To: faithhopecharity

I don’t know how old you are, but I was a hiring manager in a Fortune 50 company from the late 80s thru the 2000s, and I never had a lack of qualified applicants, and never let an open req. go unfilled. But what I did see - and see much more nowadays - are candidates who don’t seem to care all that much if they get the job, have unrealistic expectations with regard to everything from salary and benefits to the horror of having to live in a four-season climate, miles from the hip-cool urban centers favored by the elite youts. Why? Because they’ve got the option of just going back home, living in mom’s basement, where there’s cable TV, free wi-fi, and all the comforts, plus the freedom to do whatever they want to do.

I’m sure we are both right to some extent, as it’s not a monolithic problem. But don’t write off his last paragraph.


16 posted on 03/30/2014 5:45:09 PM PDT by bigbob (The best way to get a bad law repealed is to enforce it strictly. Abraham Lincoln)
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To: dfwgator
It’s about hiring “good enough” for the least amount of money.

BTTT

17 posted on 03/30/2014 5:48:14 PM PDT by bigheadfred
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To: be-baw

The skills gap is prevalent in the design fields, too. Had a draftsman who was a college grad but still could not add fractions. As you may be aware, section and elevation drawings should generally match up but his often did not. The descriptive information on the section drawings was often replete with misspellings in addition to inconsistent dimension strings.


18 posted on 03/30/2014 5:51:15 PM PDT by 12Gauge687
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To: bigbob

yes, though I must plead that I have no parents’ basement available (never did), and I also have a very positive work ethic.
I do see many more people in the last few years who have an “entitlement” attitude ... which I would certainly never hire! Its amazing just how pernicious or destructive that attitude is ... I know I was never willing to even consider hiring anyone with that poisonous attitude... (but again, I have a very positive view about work...)

.....


19 posted on 03/30/2014 6:00:11 PM PDT by faithhopecharity ((Brilliant, Profound Tag Line Goes Here, just as soon as I can think of one..))
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To: SeekAndFind

It’s about money. Companies want to pay the same wages as 25 years ago. Here is an ad from the ST. Louis, MO craigslist:
http://stlouis.craigslist.org/mnu/4389762283.html


20 posted on 03/30/2014 6:04:38 PM PDT by MCF
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