'Skills Mismatch' Causing High Unemployment? Not Quite
One popular explanation for the stubbornly high unemployment rate is that businesses want to hire -- but they simply can't find workers with the right skills to take the jobs.
On Sunday, the Washington Post reported that there were as many as 600,000 jobs unfilled in the manufacturing industry, and that factory owners are having an increasingly difficult time filling spots, despite millions of jobs lost in the past decade.
But some labor and manufacturing experts say the real story is far more complex than a "skills mismatch." And some say that the basic premise -- 600,000 unfilled jobs -- paints a deeply misleading picture.
"I do not find any credible evidence of anything approaching a shortage in manufacturing workers anywhere in the country," said Andrew Sum, a professor of economics at Northeastern University who specializes in education and the labor market.
The Bureau of Labor Statistics also calculates job openings in manufacturing -- and its numbers are less than half those cited by the Post, which attributed its figures to the Manufacturing Institute, an industry trade group. According to the government data, last year the average number of vacancies was less than 230,000. There are seven to eight times that many unemployed manufacturing workers, Sum said. The Post reported that the shortage of skilled workers has also pushed up wages. But here, too, Sum said, the evidence does not match up.
Since the beginning of the century, manufacturing wages for production workers have barely increased, Sum said. And in the last two years, as employers have said they've been having difficulty filling spots, wages have declined slightly.
"If there was a big shortage of workers, than we should find wages rising. But this just isn't the case," Sum said. "That doesn't mean that specific companies won't ever have trouble finding a machinist, but when you add it all up, it doesn't amount to very much."
Some academics and labor advocates say a problem with the skills mismatch argument is that it shifts the blame for the jobs crisis onto workers who lack skills, and away from cash-rich companies declining to hire. The supposed mismatch also relaxes debate on the need for fiscal stimulus policies to increase payrolls.
"The point of the argument is to then say: 'We don't need to ramp up demand or infrastructure investment. We need to fix people,'" said Paul Osterman, a professor of human resources and management at the M.I.T. Sloan School of Management. This rhetoric, Osterman added, fits well with another priority for business owners: "Firms are always interested in shifting the costs of training to the public sector," he said.
Over the past 30 years, experts say, most in-house training programs at manufacturers have disappeared. The programs have never been entirely replaced, even as private and public training programs have been created, with a wide range of success in employment placement. Recently, more companies have looked to states to train their workforces.
North Carolina, for example, spent $1 million to develop a custom curriculum at a community college for workers at a Caterpillar plant. The primary beneficiary, The New York Times reported, was Caterpillar itself.
In President Barack Obama's proposed 2013 budget, he would invest $8 billion to support job training partnerships between community colleges and businesses, a proposal that generated genuine excitement among those seeking a way out of what is sometimes called "the jobless recovery."
But while many applaud job training programs at community colleges, the schools have been overwhelmed with students in recent years, and most experts say Obama's funding is not near enough to help the more than 21 million Americans who are unemployed or underemployed.
"Many students do well in job training programs and better efforts at getting young and unemployed workers into some of the better programs would be good policy," said Lawrence Katz, a professor of economics at Harvard University. "But it is probably not realistic to think this will have a large effect on unemployment."
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First Posted: 02/21/2012 7:09 pm Updated: 06/14/2012 6:05 pm