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Apr 30, 2014 - 8:45am

Mind the Gap: Skills Gap Weighs on U.S. Jobs Growth


"Mind the Gap" painted on the London Underground
"Mind the Gap" painted on the London Underground

It’s one of today’s most vexing economic puzzles: why do U.S. employers have an estimated 4.2 million open jobs when 10.5 million Americans are still out of work?

One answer is the “skills gap,” a mismatch in which job seekers lack the skills or qualifications for the jobs employers need to fill. According to a CareerBuilder poll published in March, 54% of employers say they’re unable to find qualified applicants for open positions.

Among the top areas in which employers have trouble matching jobs to applicants, the survey says, are computer and mathematical occupations (with 71% reporting difficulty filling positions), architecture and engineering (70%), management (66%) and health care (56%). 

Workers aren’t the only ones who suffer from the skills gap. CareerBuilder notes that it can be costly to leave positions empty, resulting in declines in customer service, employee morale, work quality, and revenues. Leaving a job vacant for three months or longer can result in a $14,000 loss for a company, the study estimates.

“The skills gap is an issue that is not going away anytime soon,” says Matt Ferguson, CEO of CareerBuilder and co-author of The Talent Equation. “There is a growing disconnect between the skills employers need and the skills that are being cultivated in the labor market today. This causes workers and companies to miss out on realizing their full potential and, in turn, causes the economy to fall short of its potential.”

How Big is the Skills Gap?

Yet to suggest the skills gap may be weighing negatively on the labor market is to invite controversy. While business leaders and potential hirers point to the skills shortage as a key challenge, left-leaning commentators declare the gap is a “myth.”

For example, economist Paul Krugman derides the “skills gap” concept in his New York Times column, arguing that it’s tantamount to “blaming workers for their own plight.” Krugman also suggests the skills gap idea was being propagated by business executives so they could keep more for themselves—a decidedly conspiracist take.

But Marlene Seltzer, CEO of Jobs for the Future (JFF), argues that critics like Krugman overlook the real evidence of a skills gap, pointing out that job seekers and workers would benefit from a renewed focus on skills development, training and education.

“While there is no question that job creation is critical in getting the U.S. economy moving again, Krugman’s claim of a skills gap myth flies in the face of reality,” Seltzer writes. “Numerous studies have shown that there are regions and sectors across the country facing a shortage of skilled workers, especially for middle-skill jobs. More importantly, there is broad consensus that the future prosperity of the United States will involve the creation of high-skill, high-wage jobs that require postsecondary credentials.”

Meanwhile, researchers from the Massachusetts Institute of Technology (MIT) carve out a possible middle ground, suggesting the skills mismatch may be less severe than media accounts suggest. The MIT findings do suggest, however, that shortfalls in math and reading competence could have serious implications for future innovation.

“[The MIT researchers are] not saying we’re going out of business—that this is a disaster,” Paul Osterman, professor of human resources at the Massachusetts Institute of Technology, says in Forbes. “They’re saying it’s a concern. And in the long run, particularly with the large number of retirements that are coming, it could get worse.”

What Can be Done?

Of course, the skills gap doesn’t entirely explain the slow-motion jobs rebound. Many employers are also anxious about adding to their payrolls with so much looming uncertainty sparked by the mandates, rules and taxes under Obamacare, as well as the endless growth of regulations. Nevertheless, the skills gap is undoubtedly another contributing factor to the climate of uncertainty.

But there may be a renewed focus on fresh approaches to address the skills gap. JFF’s Seltzer calls for a wide-ranging response from the private and public sector to focus on helping workers develop new skills for today’s economy.

“Fortunately, there are significant reforms and innovations underway across the country that are bringing together community colleges and universities, community organizations, philanthropy, and business groups to redesign education and training systems,” Seltzer writes. “These efforts involve new education and technology delivery models that accelerate learning and lead to careers in these high-demand fields…The whole premise of these efforts is a deep belief in the potential of individuals and their ability to succeed.”

And those groups are stepping up to meet the need. One notable effort is J.P. Morgan Chase’s “New Skills at Work” initiative, a $250 million, five-year project to provide funding and develop partnerships with local leaders in 10 cities to develop effective approaches skills training for workers.

Another intriguing possibility gaining ground is the revival of the apprenticeship model for job training. In the Wall Street Journal, Peter Downs, editor of St. Louis Construction News and Review, urges U.S. employers to embrace this old-school yet innovative approach to help young workers develop the skills they need to compete.

Even President Obama is getting on board, recently announcing that the government will expand job-training and apprenticeship programs with a $600 million effort to equip workers with the skills sought by employers.

One thing all observers agree on is the need for cooperation and coordination between the public and private sectors to address workers’ needs for new skills.

“The onus is on businesses and the public sector to work side by side to identify where there is a deficit of talent and reskill workers to close the gaps within their communities,” CareerBuilder’s Ferguson says. “This is not a problem that can be solved overnight, but it can be solved.”

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