A few weeks ago, I attended the annual conference of the National Association of Industry Specific Training Directors in beautiful Colorado Springs where I was invited to speak.
I gave a presentation on how we are just now entering a new revolutionary age of digital technologies in which there will certainly be winners and losers in terms of employment.
Mine was a stark view of the future, not necessarily pessimistic but not without controversy. I would guess that most economists would not agree with me. They would take a more traditional view that automation which eliminates the use of labor increases incomes, which in turn generates demand for new products and services, which in turn creates new jobs for displaced workers.
Well, I believe that theory holds partly true, but it doesn’t tell the whole story. Abraham Lincoln tells of half and full measures.
“I heard a good story while I was up in the country. Judge D was complimenting the landlord on the excellence of his beef. I am surprised,’ he said, that you have such good beef. You must have to kill a whole critter when you want any.’ Yes,’ said the landlord, we never kill less than a whole critter.’ “
In trying to figure out what’s true and what’s not, I’m not sure I can always offer the whole critter, but we’ll do our best. So bear with me.
A Regional Shortage
When I was attending the NAISTD conference, I learned that there is probably of shortage of 12,000 welders along the Alabama/Mississippi Gulf coast due primarily to the increase in ship building and marine fabrication in that region.
Now there is no reason for me not to believe that this is so. My friend, Ed Castile, director of the Alabama Industrial Development Training, one of the best state sponsored worker training programs in the nation, told me so. And his counterparts in Mississippi confirmed as much.
When I do site selection consulting for a corporate client and economic development consulting for a community, I’m looking for a sustainable pipeline of talent, resulting in both quantity and quality in terms of particular skill sets.
Generally speaking, it is those places that can provide the quality and the quantity, along with that often vague notion of quality of life (it’s different for different people) that will win out.
But here’s where I differ from conventional thinking, and I considered talking about this at this at the NAISTD conference. I happen to believe that fears of the much talked about “skills gap” in the near term are largely exaggerated.
Now that is not to say that companies don’t have trouble finding people for specific jobs in specific industries in certain locales. I’ve run across that before on site selection projects, as no community can be everything to everybody.
A Crisis in the Making?
But if you listen to business community (and I do), this a crisis in the making. In a U.S. Chamber of Commerce study, 53 percent of leaders at smaller businesses said they faced a “very or fairly major challenge in recruiting non-managerial employees.”
In a survey of Inc. 5000 CEOs last year, 76 percent said that finding qualified people was a major problem.
But before we get ourselves worked up, let’s look at the numbers. There were 4.7 million job openings in September, little changed from 4.9 million in August, which was a 13-year high, according to the U.S. Labor Department. We also know there are 9 million Americans actively looking for work. (We’re not counting the discouraged workers who quit looking.)
Politicians and employers explain this disparity by pointing to a skills deficit. But since 2007, the widening gulf between job openings and hiring has come primarily from the retail, hotel and food service industries, where no more than a high-school diploma is generally needed.
Stagnant wages raise further my doubts. If employers were really struggling to fill openings, don’t you think they would be willing to pay more? The fact is that high-school graduates have actually seen their wages fall over the past decade when adjusted for inflation.
What’s more, an increasing number of university graduates are taking jobs historically reserved for lesser-educated people. A Federal Reserve Bank of New York study found that roughly 44 percent of recent university grads are in a job that does not demand a bachelor’s degree.
The Real Problem
Last year, the Boston Consulting Group concluded there is no empirical data at the national level of an economy-wide mismatch between employers’ needs and people’s skills.
“Our research finds little evidence of a meaningful and persistent skills gap in most parts of the U.S., including in its most important manufacturing zones,” BCG stated in its report.
“The real problem is that companies have become too passive in recruiting and developing skilled workers at a time when the U.S. education system has moved away from a focus on manufacturing skills in order to put greater emphasis on other capabilities.”
So why the disconnect between manufacturers’ perceptions and reality?
“Quite often, the skilled workers are available, just not at a price employers are willing to pay, or companies do not bother to recruit at community colleges and vocational schools,” said Harold Sirkin, a senior partner with BCG and a co-author of the “U.S. Skills Gap” report.
“In other instances, experienced skilled workers with good academic training are available, sometimes in-house, but companies are unwilling to invest the time and money to train these workers to use new technologies or specific machines.”
The Blame Game
Here’s another clue that the skills gap is overblown: About 8 percent of executives surveyed said they were considering moving out of the U.S. because of issues related to skills. But almost five times that many were considering moving back to the U.S. because of the presence of skilled labor.
Says Peter Cappelli, an economist at the Wharton School’s Center for Human Resources: “The only evidence of the skills gap is employers saying ‘I’ve got a problem.’ ”
As a consultant, when a client tells me they have a problem, I have to take that to heart. Manufacturers typically blame the education system, saying that half their applicants can’t perform simple math or that applicants don’t have a good work ethic.
I get that. I hear you loud and clear. But you have to be prepared to step up to the plate to help yourself in developing a skilled workforce. Don’t just bitch without acting. Now why do I say that?
Now What Are You Doing About It?
The U.S. had 200,000 fewer active registered apprentices in 2013 than in 2003, according to the Labor Department. (The rate is also less than a 10th of Britain’s.)
What’s more, in late 2011, only 21 percent of U.S. workers surveyed by Accenture said they had received any formal training at work in the previous five years. According to Training magazine, the share of GDP spent on instruction fell from 0.52 percent in 2000 to 0.34 percent in 2012.
Matt Ferguson, CEO of CareerBuilder, surveyed more than 2,000 employers and estimates that 80 percent of them say they are concerned about a skills gap, but only 40 percent are doing anything about it.
There are sensible solutions at hand. They include starting in-house training programs, paying competitive wages, and working with local government entities and community colleges. But again, a minority of companies are actually taking matters into their own hands.
Instead of waiting for businesses to take the initiative, some community colleges are trying to address local training gaps.
Monroe Community College in Rochester, NY., helped local manufacturers find machinists by establishing an accelerated machining program. Faculty identified the needed skill gaps through intensive data research and surveying employers.
Perfect is as Perfect Does
Finally, many companies hold out for the “perfect candidate” and use screening software that filters out otherwise-qualified people who just don’t have the right title or buzzword in their online résumé. Or they might have six years’ experience instead of seven.
According to a 2013 Career Advisory Board survey of 500 U.S. hiring managers, 67 percent said they “don’t feel like they have to settle for a candidate without the perfect qualifications.”
Perfect is as perfect does, and I submit that’s not a real world view. Investing in your people, training them, giving them new skills to employ the latest technologies. That’s not without risks or costs, but can you ultimately afford not to do it?
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.
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