Why the Skills Gap 'Crisis' Is Overblown
Even though unemployment remains high, there are 3.9 million vacant jobs, a figure that has actually risen as unemployment has begun to decline. Is the so-called skills gap to blame?
In reality, there is no evidence of a large-scale national gap. Four regional branches of the Federal Reserve and former chairman Ben Bernanke looked into the skills "crisis" and came up empty-handed. In fact, most studies conclude “current skills mismatches are limited.”
To the extent the researchers did find gaps, they attributed them to the usual ebb and flow of the economy. Bernanke’s conclusion in 2012 was, “These patterns do not support the view that structural factors are a major cause of the increase in unemployment.”
Then there’s this from the Boston Consulting Group: In mid-2013, BCG analyzed national wage and job data, supplementing the study with a survey of manufacturers. BCG found, of the 50 biggest manufacturing areas in the U.S., only five were suffering serious skills shortages (Baton Rouge, Louisiana; Charlotte, North Carolina; Miami; San Antonio; and Wichita).
BCG said that if there was a big mismatch between skill levels and jobs that needed filling, the few workers ready to take in-demand jobs could force employers to pay more-lots more. But from 2005 to 2010, U.S. manufacturing pay just about kept pace with inflation; and there was no increase in hours worked.
As one of the researchers, Justin Rose, puts it, “When we look at the hard numbers, none of them are so dramatic that you get the sense that this is a major, major issue right now.” 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. “The only evidence of the skills gap,” says Peter Cappelli, an economist at the Wharton School’s Center for Human Resources, “is employers saying ‘I’ve got a problem.’ ”