US skills gap a zombie idea that refuses to die

Skills myth shifts attention away from soaring profits and bonuses

Some employers complain that they’re finding it hard to find workers with the skills they need. But show us the money: if employers are really crying out for certain skills, they should be willing to offer higher wages to attract workers with those skills.

Some employers complain that they’re finding it hard to find workers with the skills they need. But show us the money: if employers are really crying out for certain skills, they should be willing to offer higher wages to attract workers with those skills.

Tue, Apr 1, 2014, 01:00

A few months ago, Jamie Dimon, the chief executive of JPMorgan Chase, and Marlene Seltzer, the chief executive of Jobs for the Future, published an article in Politico titled “Closing the Skills Gap”. They began portentously: “Today, nearly 11 million Americans are unemployed. Yet, at the same time, four million jobs sit unfilled” – supposedly demonstrating “the gulf between the skills job seekers currently have and the skills employers need”.

Actually, in an ever-changing economy there are always some positions unfilled even while some workers are unemployed, and the current ratio of vacancies to unemployed workers is far below normal. Multiple careful studies have found no support for claims that inadequate worker skills explain high unemployment.

But the belief that America suffers from a severe “skills gap” is one of those things that everyone important knows must be true, because everyone they know says it’s true. It’s a prime example of a zombie idea – an idea that should have been killed by evidence but refuses to die. And it does a lot of harm.

Think about what we would expect to find if there was a skills shortage. Above all, we should see workers with the right skills doing well, while only those without those skills are doing badly. We don’t. Yes, workers with a lot of formal education have lower unemployment than those with less, but that’s always true. The crucial point is that unemployment remains much higher among workers at all education levels than it was before the financial crisis. The same is true across occupations: workers in every major category are doing worse than they were in 2007.


Wage increases
Some employers complain that they’re finding it hard to find workers with the skills they need. But show us the money: if employers are really crying out for certain skills, they should be willing to offer higher wages to attract workers with those skills. In reality, however, it’s very hard to find groups of workers getting big wage increases, and the cases you can find don’t fit the conventional wisdom at all.

Careful surveys of employers – such as those recently conducted by researchers at both MIT and the Boston Consulting Group – similarly find, as the consulting group declared, that “worries of a skills gap crisis are overblown”.

The one piece of evidence you might cite in favour of the skills-gap story is the sharp rise in long-term unemployment, which could be evidence that many workers don’t have what employers want. But it isn’t. We know a lot about the long-term unemployed, and they’re pretty much indistinguishable in skills from laid-off workers who quickly find new jobs. So what’s their problem? It’s the very fact of being out of work, which makes employers unwilling even to look at their qualifications.

So how does the myth of a skills shortage not only persist but remain part of what “everyone knows”? There was a nice illustration of the process last autumn, when it was reported that 92 per cent of top executives said there was a skills gap.

The basis for this claim? A telephone survey in which executives were asked, “Which of the following do you feel best describes the ‘gap’ in the US workforce skills gap?” followed by a list of alternatives. Given the loaded question, it’s amazing 8 per cent of respondents were willing to declare that there was no gap.

Unfortunately, the skills myth is having dire effects on real-world policy. Instead of focusing on the way disastrously wrongheaded fiscal policy and inadequate action by the Federal Reserve have crippled the economy and demanding action, important people piously wring their hands about US workers’ failings.

Moreover, the skills myth shifts attention away from the spectacle of soaring profits and bonuses even as wages and employment stagnate. That may be another reason corporate executives like the myth so much.

So we need to kill this zombie, if we can, and stop making excuses for an economy that punishes workers. – ( New York Times service )

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