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Ask the experts: skills gap

This week our program focuses on jobs and the often discussed “skills gap” many say exists in the U.S. We report that twelve million Americans are jobless and looking for work but just what kind of work and where to find it does not yield a definitive answer. Some are of the opinion that the skills gap is not as wide as others may argue and therefore, how best to solve this problem is also an issue of contention. We’ve asked two experts to give us a better perspective on how outside issues affect or do not affect the problems of unemployment and matching workers with jobs.

Dr. Anthony P. Carnevale currently serves as Director of the Georgetown University Center on Education and the Workforce. He has a wealth of experience working at the intersection of education and employment policy.

Among his leadership positions, Dr. Carnevale has served as Chair of the Human Resources Sub-Committee of the White House Commission on Productivity under President Ronald Reagan, as Vice President for Public Leadership at the Educational Testing Service (ETS) and as Director of Human Resource and Employment Studies at the Committee for Economic Development (CED). During his time at ETS, he was appointed by President George W. Bush to serve on the White House Commission on Technology and Adult Education. And while at CED, he was appointed by President Bill Clinton to chair the National Commission on Employment Policy.

Fred Dedrick is the Executive Director of the National Fund for Workforce Solutions (NFWS), a public/private initiative investing in regional workforce funding collaboratives throughout the United States. These collaboratives organize and invest in industry partnerships that provide low-wage workers with the skills to advance into family-sustaining careers while enabling employers to better compete in today’s global economy.

Previously Dedrick served as Pennsylvania’s Deputy Secretary for Workforce Development where he was responsible for overseeing the Commonwealth’s workforce development programs. Earlier in his career, Mr. Dedrick was Director of Workforce Development for the Reinvestment Fund (TRF), where he served as President of the Regional Workforce Partnership. Dedrick has a bachelor’s degree from the University of Notre Dame and an MPA from Princeton University’s Woodrow Wilson School.

Is there any correlation between the decline of American Union negotiation powers and the skilled worker gap?

Anthony P. Carnevale: American unions’ bargaining power lay not with their ability to provide the highest skills for its members; rather they guaranteed the highest wages.  The skilled workers gap is a complex issue that is also related to:

  • Structural employment, where the jobs lost in one sector of the economy, like construction and real estate, disappear for good, while other sectors, like healthcare and education, expand so fast the pool of qualified labor can’t keep up.
  • Curriculum mismatch and the inability of postsecondary institutions to keep up with progressive technology growth in industry;
  • Production lags between graduation rates of new students in the future and current demand by industry.

While the decline of American unions clearly correlated with the reduction in wages for skilled blue-collar production workers, the connection between the former and the skilled worker gap is less evident.

Wages for blue-collar unionized workers were at their highest when unions were strongest.

As a result, blue-collar production workers were often paid wages that were above their marginal product.  Union membership therefore guaranteed a premium to its members and facilitated middle-class wages to those who worked in the production classes – even those with a high school diploma as their highest education level attained.

As the world changed, and innovation –particularly the computer – became ubiquitous to many traditional occupations, the demand for skills favored those with post secondary education. This skills biased technological change inadvertently melted away the premium offered to union membership (with mostly high school education) in favor of workers with post secondary education, especially as computers both substituted and complemented production occupations.

Fred Dedrick: There are many reasons for America’s “skills gap” including: rapidly changing advanced technology, new business practices, an out of date and underfunded adult public workforce system, the high cost of education, short-sighted decisions by individuals, and, yes, the inability of workers to negotiate for greater investments in their skills and the wages that follow from higher productivity — often advocated by unions.

Some argue the “skills gap” has been overstated, is there evidence of this?

AC: Though the problem of the skills gap is not to be flouted, it is also very much overstated.  The most cited number on the size of the “skills gap” is the Help Wanted Online’s estimate of “real time” job openings obtained from internet postings. At any one point in time, between 3 and 4 million internet jobs postings are recorded on a monthly basis. If we filter from that estimate, the number of job postings that are new and non-recurring – the net new postings—the number of jobs that go consecutively unfilled is closer to about 2.1 million.

At the most recent Democratic Convention, former President Bill Clinton explained the paradox of the pools of unemployed existing side by side with high numbers of jobs postings as a “skills mismatch” issue. While there’s no denying that some of the unemployment we observe is due to skills mismatch, the greater problem today still lies with the cyclical downturn. Economists are in surprising agreement that skills mismatch alone accounts for less than one-third of the total number of unemployed. Fed economists state that roughly 30 percent of the change in the unemployment rate due this last recession can be attributed to skills mismatch, (Sahin et. al. 2012).

FD: Like many overused generalizations, the “skills gap” depends on how you define it, where you look for it, what industry you are discussing and what occupation you are talking about. In the American south, where advanced manufacturing is a relatively recent growth industry, the skills gap is very real and offering higher wages will not suddenly develop hundreds of machinists and welders. However, in other sections of the US, higher wages could very possibly close a portion of the manufacturing skills gap by drawing in more qualified candidates, formerly unwilling to offer their high skills for relatively low wages.

But there’s also the problem of retirements, where some places can experience a decline in overall manufacturing employment but an increase in the “skills gap” because they are trying to replace highly skilled and experienced workers with individuals with much lower skills.

And then there are sectional differences. Despite the need for thousands of skilled workers, North Dakota is bringing them in. Of course, not everyone can pick up their family and move to where higher wages are being offered. (Especially if there is no housing!)

In health care the skills gap is sporadic, dynamic and geographically diverse. Newly graduating nurses cannot find work in some cities because the nursing schools responded to a nationwide call for the expansion of nursing programs and now some hospitals can be very picky-demanding years of experience. In rural communities the situation is different. Complicating all this is the evolution of skill requirements and scope of practice for nurse aides, medical assistants, LPNs, care coordinators, etc. And then there are all the lesser-known allied health professions…

Those who say there is a skills gap are not exaggerating the problem but they can also be off target if they choose to make overly broad statements about it.

Much is made of the American education system and its lack of emphasis on STEM (science, technology, engineering, and math education) learning- would pressure on our schools to focus on these subjects help address the skills gap in our workers?

AC: A Nation at Risk in 1983 put the blame squarely on the school system and used data to show that many teachers were not adequately trained in mathematics or science. Oftentimes, they did not possess the associated certification or were not trained in the major that they were now teaching students. Arising out of this disparaging report, many reforms that spoke to national standards and a more “inquiry-based” approach to instruction were both proposed and implemented with mixed results.

Yet, strictly speaking, STEM jobs account for about 5 percent of all jobs in the economy. STEM competencies, however, valued outside of traditional STEM jobs – account for 40 percent of all jobs.  Despite this fact, there is no evidence that the skill gap of our workers is all STEM.

There is also no evidence that channeling more and more people into STEM courses, curricula and degree programs is necessarily the optimal use of scare resources. Persistence in STEM has a lot to do with opportunity as well as individuals’ personal interest and values. For example, STEM students and workers divert because their underlying STEM competencies are valued outside of STEM careers—especially in jobs that are more lucrative.  In addition, STEM students and workers often have interests and values that cannot be satisfied in STEM jobs, leading them to careers outside of the field.

Finally, technical courses such as those in a STEM curriculum need to be taught in context. Though we are fairly certain that certain true STEM competencies such as critical thinking, problem solving and deductive reasoning are highly valued in the workplace, we are still not certain about designing the best curricula to teach these skills.

FD: If any school-system in America is not already completely aware of the need for STEM learning and its advantages, they should shut down. The problem is that we are not a command and control society. Most of those students attracted to STEM go on to college and eventually do little to address the skills gap. What we need is a career and technical education system that is intellectually and emotionally exciting, whereby kids are not forced to take subjects but become motivated to take STEM courses because they see the connection to what they want to be or do. These are individuals who want to go into advanced manufacturing, or health care or IT.

With more and more exportation of jobs to countries such as China and India already happening, is the focus on the jobs most suffering from a skills gap futile?

AC: Certainly not. Just as the skills gap has been overstated, so too is the notion of all our jobs being lost to China and India – or more popularly the BRIC countries (Brazil, Russia, India and China) also overstated—especially within the last few years. The skills gap is a combination of two things – excess demand for skills and insufficient supply of skilled talent; and we are still running relatively higher on the former and lower on the latter.

Many of these countries have growing markets of their own and they also compete heavily to retain their own talent. Thus one of the major reasons for “outsourcing” of jobs – relatively lower wages– is no longer as relevant to US industry as domestic demand in foreign countries is slowing bidding up wages there.

In addition, thousands of foreign students we train here annually that are repatriated after graduation.  US immigration policy post-September 11, heavily favored the return of internationally trained students to their country of origin, save for specific STEM occupation where policy has been more flexible to foreign talent.

This is also concern for classified, technical work related to national security for which US citizenship is a requirement – particularly in the STEM field.

FD: Jobs are actually coming back from China and India and more will come back in the future because the wage gap, while still pretty wide, is being overcome by other factors: lower energy costs, a healthier climate, less expensive transportation, proximity to US customers, access to business services, fewer language barriers, and unions willing to take lower wages, etc. No, this effort is not futile, in fact, it is more necessary now because the playing field is becoming more level.

What, in your opinion, is the best “real world” example of the private or public sector addressing the gap between jobs and worker ability?

AC: Sector-specific workforce and education programs that link the training of participants to the needs of employers are a key component of the new community college mandate, and probably the best attempt to address the gap. Though many community colleges already do this through specially designed courses, internships, and apprenticeship program, there remains room for improvement.

FD: Without a doubt the best examples of communities addressing the skills gap are those where local leaders are banding together to organize industry partnerships. Working with an intermediary organization — a group of philanthropic funders, a workforce investment board, a community college — these partnerships bring together companies or health care institutions into a collaborative effort to define the skill requirements of an industry and then, working with their intermediary, to design a strategy to address their immediate and long term needs.

These employer partnerships provide what we call “industry intelligence” which is crucial to making smart investments in skills. It builds on data and analysis but brings in the critically important “real world” perspective of workers and management who are on the shop floor, in the ER, or dispatching trucks. By focusing on the aggregated needs of many companies, communities can begin to build a “talent supply chain.”

They think strategically about how to deliver a set of workers with the right skills for today’s employers, but they also think about the supply of trainees for the future. They push aggregated demand for skills back into the high school and even to the schools feeding the high schools. This “chain” also helps those who are out of school because it better defines credentials and pathways to careers. The Southwest Alabama Workforce Development Council (SAWDC) in Mobile, Alabama is a perfect example of this type of organization, which was a result of the collaboration of the National Fund for Workforce Solutions and local stakeholders.