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June 12, 2012 8:15 AM There’s Not Really a Skill Shortage

By Daniel Luzer

Part of the reason politicians and pundits offer for increasing the college graduation rate is that the country needs more skilled employees. This might be an exaggeration.

Saying America has a skills shortage isn’t exactly a controversial opinion. Everyone “knows” this now. As Motoko Rich wrote in the New York Times in 2010, “The problem, the companies say, is a mismatch between the kind of skilled workers needed and the ranks of the unemployed.” And according to a piece in The Economist earlier this year, “America’s problem with training was laid bare in a report published last year by Deloitte, a consultancy firm, and the Manufacturing Institute. It identified 600,000 positions that were going unfilled because there were too few qualified skilled workers.”

But, according to an article by Matthew O’Brien at The Atlantic:

We would expect wages to be rising much faster in sectors where employers can’t find enough qualified workers if a skills mismatch really was holding the economy back. But that hasn’t really been the case. The chart below from the Chicago Fed tries to quantify how big an impact there’s been from a skills shortage. The answer: not much.

O’Brien provides a chart of demand for jobs, based on online help-wanted ads for various positions. This is what job demand looks like:

StructuralUnemployment.png

If companies really couldn’t find enough high-skill workers, the gray line above would look different from the blue and black lines, which represent demand for low and medium skill jobs, respectively. Instead, all the lines look the same. As O’Brien explains, “this is what a general shortfall of demand looks like.”

But this skills shortage myth is likely to persist, largely because skill shortage reports always seem to come from employer surveys.

Employers might think they want more skilled workers. They might even believe such workers are hard to find, but it looks they’re not actually trying to hire such people. [Image (originally) via]

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • TeamAmercia on June 13, 2012 3:59 PM:

    Krugman has written a lot about this. There really isn't much evidence at all about a skills shortage. He notes, that there have been job cuts across the board, where if there was a skills mismatch, there would be some booming industries, which doesn't appear to be the case.

  • Left Coast Mel on June 13, 2012 4:59 PM:

    As some one looking for employment, I have found that employers want specific experience along with specific skills, which severely limit the number of applicants. What this is really about is business wanting to avoid the expense of training its own workers and being able to do so in a tight labor market. They are creating the "shortage" by limiting to pool to people who can just step right in and do a very specific job.

  • Eisbaer on June 13, 2012 7:08 PM:

    Let's assume, for the sake of the argument, that there really IS a "skills shortage" in the macroeconomy. (I don't really think that this is the case for the reasons stated upthread, but let's just assume so for a minute). On a microeconomic level, there are few incentives -- and plenty of disincentives -- for people to get these new and "desirable" skills. For many, that may mean spending time and money for additional education and training -- which, in reality and in many such cases, means additional debt to finance such training (which, if in the form of educational loans is all but impossible to discharge in bankruptcy). And given the rapid pace of technological advancement these days, how does one know in advance that one's new "skill surplus" will not have become obsolete? Or that the jobs aren't going to be done by people in India or China?

    There once was a time when such risks and costs were borne either by society at large (through Pell Grants, the GI Bill and more generous educational financing), by employers (through on-site training or generous tuition reimbursement), or where the costs were borne by individuals themselves the risks were less (when student loan debt COULD be discharged through bankruptcy). So even if this skills "shortage" really existed, there's precious little commitment to it from our elites and plenty of downside risk to individuals themselves.

  • Anonymous on June 14, 2012 12:59 AM:

    This is total bullshit. What the "skills shortage" is "shortage shouting". The "shortage" is just an excuse to hire and demand more H-1B and other foreign workers. We need to ELIMINATE the H-1B, and then employers would again (like 10 years ago) train workers, retain workers who had skills. Today, the H-1B and other cheap labor has removed the training process from the labor pool. END THE H-1B.

  • Neil B. on June 27, 2012 1:31 PM:

    I can believe what OP wrote. But you know, employers just love to trot that trope that they can't find good help these days, etc, as a wage-pressure club against labor and to diddle public opinion.

  • beb on June 30, 2012 2:41 PM:

    Previous discussions about the shortage of skilled workers have tended to discover that the wages offered in these cases were well below average. So the problem wasn't the lack of skilled workers but workers willing to work for that little. Even today one sees signs in restaurants asking for "experienced waitresses" only. Restaurants may want more waitresses but they're not so much that they're willing to train them.

  • Anonymous on July 08, 2012 7:45 PM:

    There are many jobs that people simply do not wish to do. I work in a career that requires me to be on my feet all day long. Most people will not take this job, and my employer has to beg people to work there. I cannot begin to count how many times I have heard young able-bodied people claim they can only work at a desk, because of "bad back" or some other flimsy medical excuse. I have one leg shorter than the other and I work on my feet for twelve hour shifts. I no longer feel sorry for people who are jobless, a lot of them are simply lazy. Everyone I know wants a desk job in a cool, comfortable office - well, guess what? Those jobs are going away, and what's left is in scarce supply. Don't even get me started on all the people who avoid subjects like math, but want to make a lot of money with a liberal arts degree.

  • POed Lib on July 09, 2012 6:53 PM:

    This is a lie. There is no skills shortage. Take IT. You can go from a "highly qualified work force" to a "unqualified work force" in one minute - you upgrade the version of the IT product from 1.7.1.5 to 1.7.1.8. VOILA!! "The work force is unqualified in Version 1.7.1.8". This happens over and over. It's a big big lie to allow employers to fire people at will, and to call for increases in the slave system called the H-1B system. The H-1B system also allows the employer to fire expensive older workers (if you are over 35 in IT, you are old) with young wetback slaves. The H-1B system (WHICH IS NOT AN IMMIGRATION SYSTEM, BTW - IT IS A TEMPORARY VISA) must be abolished.