Is there a “skills gap”? Many economists and policy wonks have debated whether or not persistent unemployment is related to a lack of workers with just the right training to fill today’s jobs. JP Morgan’s Jamie Dimon famously wrote an argument in favor of a lack of skills as the major problem, which Paul Krugman then proceeded to tear apart. The arguments continue back and forth with little resolution.
So is there such a problem? The short answer is “no”, but the long answer is “yes”. An excellent piece by James Besson in Harvard Business Review (HBR) un-asks the question neatly and shows that there is indeed a problem developing the right skills in a changing economy – but it’s not something we can fix simply by changing what kids learn in college. It’s much more endemic to a dynamic, open economy all around.
Let’s start with the easy arguments. The most commonly cited statistics are the 3.2M long-term unemployed and the 4M jobs that are unfilled. But these figures don’t necessarily mean there is a “skills gap”. Long-term unemployment has been a feature of the last recession, and is finally starting to fall rapidly as the employment picture improves – did the “skills gap” finally close? And the 4M jobs open at any time represents only one month’s inventory of jobs, as we’ve shown before. The labor market is very dynamic right now, churning very rapidly.
So most of the arguments against a “skills gap” appear to be more solidly grounded than those in favor of one. So why is this term still thrown around?
Just because the conventional arguments aren’t sensible doesn’t mean that there isn’t something there. A highly dynamic economy always has a problem with new skills, and it’s one that is very hard to both define and correct.
A survey of employers conducted by Manpower Group, an HR consulting firm, showed that 38% believe they cannot find the skills that they need to fill the jobs they have open. That, on the face of it, is evidence enough that there is a skills gap and very much stands on its own.
Then again, it reflects the dark side of the dynamic labor market, which is that employers are slow to hire new employees and expect very little in the way of loyalty. Gone are the days when new skills were developed on the job as the employer invested in their most valuable asset, the skills of their employees. And that comes directly from a dynamic job market in more ways than one.
Consider, as HBR does, the need for graphic designers. Less than a generation ago much of the work was done by hand for print publications. Today, those skills are useless as software tools organize the work directly for online publication. Anyone in the field had to learn a completely new set of skills to be able to compete.
The profession of writing went through a less dramatic but similar change. Who was employed to do SEO before the year 2000?
These new skills have to be learned quickly by those in the trade. Older workers are going to have trouble adapting, but will probably find the ability to do what needs to be done given time. Then again, who certifies a completely new skill? Who even writes the standards against which certification occurs? The process takes years, even decades.
This is why a Depression, like the one we are in, takes so long to come out of. An entirely new economy that replaces the one that failed does not come together overnight no matter what.
So is there a “skills gap”? As long as there is a very dynamic economy, there will be. But that doesn’t mean employers get to complain about it too much. Traditionally, the cure for such a problem came from the companies that need specific skills, such as the era when industry titans like Henry Ford made welders out of farmboys.
There is indeed a shortage of certain skills and there will be as long as the economy is churning jobs as rapidly as it is. The piece in HBR is worth reading, too, because it changes a debate from a series of talking points to a serious examination of the economy and where public policy shapes the free market. If we want to live up to our highest ideal, where everyone has the ability to rise based on their talent, we need to pay attention.