A critical eye on the ‘skills gap’

The Free Press, Star Tribune, and USA Today ask questions

There’s no shortage of uncritical reporting on the notion that employers, and particularly manufacturers, can’t find enough qualified workers even in a time of high unemployment.

Last week, even the auto industry was complaining about not being able to find enough qualified workers. A Crain’s Detroit Business headline said, “Auto leaders at Management Briefing Seminars still lament shortage of labor — especially skilled labor.”

The story got that headline despite reporting this in its second paragraph:

Employment in the automotive sector has fallen 51 percent since 2000, recovering only 15 percent since 2010, said Kristin Dziczek, director of CAR’s labor and industry group.

Even with a pool of hundreds of thousands of auto workers no longer in the industry, automakers complain of a labor shortage. Something doesn’t quite add up.

Which is why this Detroit Free Press story on the same panel was wise to focus on the skeptical reaction to those assertions. Its headline said, “Shortage of skilled workers is a myth, say auto management experts in Traverse City,” and it’s one of a handful of recent stories that ask harder questions about why employers say they can’t find workers.

The Freep quotes Michigan State professor Dale Belman saying that “there is not a lot of evidence there is a lack of skills” and putting the blame on “reduced employer training and over-searching for the exact fit.” It quotes a community college president agreeing.

USA Today pushed back on the skills-gap meme last week too, noting a stat that shows how companies have gutted their training programs over the last several decades.

The shift from extensive training began after the 1980 recession as companies became more cost conscious and intensified in the Great Recession of 2007-09. Firms also grew weary of paying for workers to gain skills only to watch them soon defect to competitors, says Susan Cantrell, an Accenture consultant.

Industry only has itself to blame for any lack of loyalty from employees, who have been laid off, outsourced, and offshored for so long that they’d be silly to count on a company for the long term (and don’t talk about “unstoppable” forces like globalization, which were spurred on by intentional political choices made with the support of business).

But that last sentence from the Accenture consultant is something of a tell. What do you have to do when you want to keep employees who get job offers elsewhere? Give them more money. Bosses never want to do that, and they sure don’t when the headlines are telling them there’s 8.3 percent unemployment out there.

The Star Tribune focused on this, more or less, the other day in a story that pointed to the job market for welders to show how, contra the law of supply and demand, wages aren’t rising:

To judge from the job listings, welders are in high demand.

Manufacturers across the Upper Midwest will tell anyone who listens that they have jobs to offer — 2,580 welding positions in Minnesota alone — but not enough solid applicants. They point to a “skills gap” between the jobs available and the people out looking for work.

Textbook economics says this should be good news for anyone who can strap on a helmet and make the sparks fly. If good welders truly are hard to find, employers should pay more to get them on board.

Yet that isn’t happening, leading some economists to question whether the skills gap is really the issue.

Unfortunately, the rest of the story is pretty weak—it never gets around to talking to those economists, for instance—but it does note that real wages for Minnesota welders are still below 2005 levels despite the current high demand for their services.

But it at least asked a critical question so often missing from skills-gap pieces.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum. Tags: , , , ,