Available workers, unfilled jobs and 8 percent unemployment- explaining the role of the skills gap. With the unemployment rate hovering near the double digits for the past few years, it would seem to follow that there just aren’t enough jobs to be had, right? Not so, according to many experts and industry organizations, who contend that a host of jobless people are coexisting alongside a multitude of open positions. The problem? The needs of employers and the skill sets of job seekers simply aren’t aligned.
Defining the skills gap
The Bureau of Labor Statistics reported that the amount of available jobs at the end of 2012 numbered 3.6 million, yet millions of Americans remain unemployed. Though the current labor landscape in the United States is complicated—numbers may be skewed by those who are recently retired, overqualified for their jobs or who’ve given up looking for work, the fact is that many skilled positions remain vacant. The mismatch between unfilled jobs and the pool of available candidates has been coined the “skills gap.” In short, the term skills gap refers to the concept that current candidates for hire lack the skills and experience to perform many of the jobs that are available.
The skills gap is most apparent in manufacturing, an array of health care jobs, and in STEM industries—those based in science, technology, engineering and mathematics. Vacant positions include those for “machinists, welders, industrial engineers and industrial machinery mechanics,” explains Justin Rose, principal of the Boston Consulting Group (BCG) in Chicago, whose parent company released new research on the skills gap in 2012. Also, “It’s widely established that there’s a skills gap in oil and [natural] gas extraction,” he adds.
According to a 2011 study by Deloitte and The Manufacturing Institute titled Boiling point? The skills gap in U.S. manufacturing, the shortage of workers for skilled production jobs is stunting the ability of manufacturers to innovate and grow: “Seventy-four percent of [survey] respondents indicated that workforce shortages or skills deficiencies in skilled production roles are having a significant impact on their ability to expand operations or improve productivity.”
How bad is it?
Just how large the skills gap is looming is up for debate. According to the Deloitte study, which polled a nationally representative sample of 1,123 executives across 50 states, upward of 600,000 skilled positions in the U.S. are unfilled due to under-qualified candidates.
However, the 2012 BCG study concluded that the skills gap exists on a much smaller scale. In fact, BCG reports that only 80,000 to 100,000 highly skilled manufacturing positions are unfilled, a fraction of the number that Deloitte reported. The discrepancy between the studies is due to differing research methodologies.
And while the Deloitte study might suggest that the skills gap is a nationwide problem, the BCG study indicated that skills gap-related unemployment occurs on a more localized level. According to BCG’s research, “only five of the nation’s 50 largest manufacturing centers (Baton Rouge, Charlotte, Miami, San Antonio and Wichita) appear to have significant or severe skills gaps.”
Rose, who is co-author of The U.S. Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback, adds that the skills gap “for the most part is concentrated in small manufacturing areas—it’s much more localized than conventional wisdom would [suggest].”
Who’s to blame?
As there are varying opinions on how widespread the skills gap is, experts also offer a range of ideas about why there’s a skills gap in the first place. For many, it’s simply a matter of candidates not having ample education or experience to succeed at skilled positions.
Peter Cappelli, author of Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It, sees it differently. He writes, “With an abundance of workers to choose from, employers are demanding more of job candidates than ever before. They want prospective workers to be able to fill a role right away, without any training or ramp-up time. To get a job, you have to have that job already. It’s a Catch-22 situation for workers—and it’s hurting companies and the economy.”
Cappelli, who also is the George W. Taylor Professor of Management at The Wharton School of the University of Pennsylvania and Director of Wharton’s Center for Human Resources, takes it one step further. “To what extent is the hiring process being held hostage by unrealistic hiring expectations, low wages and automated software that can crunch thousands of applications per second without perhaps truly understanding any of them?” he ponders in his book. “What could best bridge the gap between employer expectations and applicant realities, and critically, who should foot the bill for it?”
The Deloitte study also points the finger, at least in part, at hiring and training practices. “While they recognize the importance of recruiting and developing talent, many manufacturers depend on outdated approaches for finding the right people, developing their employees’ skills and improving their performance.”
Getting America back to work
Though experts may disagree on the finer points of the skills gap, most believe that closing it will take a consolidated effort among stakeholders. The Deloitte study says, “The manufacturing industry can’t solve all of its talent challenges on its own. Government agencies and educational institutions have roles to play as well, creating a clear path for students to receive the right skills and training to prepare them for a career.”
BCG notes that schools, businesses, governments and nonprofit groups already are working together on a range of programs to address the skills gap. Other programs include Quick Start, a training partnership between large corporations and technical colleges in Georgia; The Austin Polytechnical Academy, which boasts 65 industry partners and a manufacturing training center in Chicago; and the Center for Manufacturing Technology’s Custom Machine, a program that helps manufacturers evaluate new hires and train certified machine operators and computer-control programmers.
These collaborative programs, and many more like them, are working to help the United States gain the edge it needs to overcome the skills gap. “It’s [about] taking the best of those [efforts] and trying to roll out more,” asserts Rose. “The story is changing, and therefore we need to more broadly communicate the hopefulness of that story. I’m heartened that a number of stakeholders are working to solve the problem in a number of different ways.”
Editor’s note: University of Phoenix partners with more than 2,000 companies to identify the skills that students need to meet companies’ job requirements in order to connect students’ education to careers.