Employers Aren’t Just Whining – the “Skills Gap” Is Real by John Mauldin, Mauldin Economics

Paul Krugman and other notables dismiss the notion of a skills gap, though employers continue to claim they’re having trouble finding workers with the skills they need. And if you look at the evidence one way, Krugman et al. are right. But this week an interesting post on the Harvard Business Review Blog Network by guest columnist James Bessen suggests that employers may not just be whining, they may really have a problem filling some kinds of jobs.

Unsurprisingly, the problem is with new technology and the seeming requirement that workers learn new skills on the job – you know, like when the student pilot has to take the helm of a 747 in a disaster movie. Perhaps there’s not quite the same pressure in the office or on the factory floor, but the challenges can be almost as complex. Most of us have had the experience of needing to learn completely new ways of doing things, sometimes over and over again as the technology for whatever we’re doing keeps changing.

The proverb about old dogs and new tricks is being reversed, as old dogs are required to learn new tricks to keep up with the rest of the old dogs, not to mention the new pups. It’s either that or go sit on the porch. What follows is not a very long Outside the Box, but it’s thought-provoking.

There hasn’t been much happening in Uptown Dallas chez Mauldin. Lots of reading, routine workouts, long phone conversations with friends, and the occasional appearance of offspring. The amount of material hitting my inbox has slowed down considerably as well, although I know that will change in a week as everyone comes back from holidays. And even if we’re not on vacation, there is a certain slack we seem to cut ourselves in late summer.

Growing up, Labor Day marked the beginning of a brand new school year. Even though many school districts have pushed the start time back a few weeks, Labor Day seems to be a sort of national mental reset button that tells us we must refocus our attention on the tasks in front of us.

So, even with a somewhat reduced schedule, deadlines loom, and I have to do research on secular stagnation. It’s an interesting topic, but the stuff I’m reading about it reminds me to wonder why economists and investment writers feel they have to write in a way that is utterly stultifying and bone-sapping. A course or two in creative writing, with a focus on the creation of a narrative and some attention paid to the concept of a slippery slope ought to be requirements for an economics degree. Not that I have one – and maybe that’s my advantage.

Have a great week, and enjoy these last few days of August.

Your worried about how our kids will deal with the changing work landscape analyst,

Employers Aren’t Just Whining – the “Skills Gap” Is Real

By James Bessen   |   10:00 AM August 25, 2014
Harvard Business Review HBR Blog Network

Every year, the Manpower Group, a human resources consultancy, conducts a worldwide “Talent Shortage Survey.” Last year, 35% of 38,000 employers reported difficulty filling jobs due to lack of available talent; in the U.S., 39% of employers did. But the idea of a “skills gap” as identified in this and other surveys has been widely criticized. Peter Cappelli asks whether these studies are just a sign of “employer whining;” Paul Krugman calls the skills gap a “zombie idea” that “that should have been killed by evidence, but refuses to die.” The New York Times asserts that it is “mostly a corporate fiction, based in part on self-interest and a misreading of government data.” According to the Times, the survey responses are an effort by executives to get “the government to take on more of the costs of training workers.”

Really? A worldwide scheme by thousands of business managers to manipulate public opinion seems far-fetched. Perhaps the simpler explanation is the better one: many employers might actually have difficulty hiring skilled workers. The critics cite economic evidence to argue that there are no major shortages of skilled workers. But a closer look shows that their evidence is mostly irrelevant. The issue is confusing because the skills required to work with new technologies are hard to measure. They are even harder to manage. Understanding this controversy sheds some light on what employers and government need to do to deal with a very real problem.

This issue has become controversial because people mean different things by “skills gap.” Some public officials have sought to blame persistent unemployment on skill shortages. I am not suggesting any major link between the supply of skilled workers and today’s unemployment; there is little evidence to support such an interpretation. Indeed, employers reported difficulty hiring skilled workers before the recession. This illustrates one source of confusion in the debate over the existence of a skills gap: distinguishing between the short and long term. Today’s unemployment is largely a cyclical matter, caused by the recession and best addressed by macroeconomic policy. Yet although skills are not a major contributor to today’s unemployment, the longer-term issue of worker skills is important both for managers and for policy.

Nor is the skills gap primarily a problem of schooling. Peter Cappelli reviews the evidence to conclude that there are not major shortages of workers with basic reading and math skills or of workers with engineering and technical training; if anything, too many workers may be overeducated. Nevertheless, employers still have real difficulties hiring workers with the skills to deal with new technologies.

Why are skills sometimes hard to measure and to manage? Because new technologies frequently require specific new skills that schools don’t teach and that labor markets don’t supply. Since information technologies have radically changed much work over the last couple of decades, employers have had persistent difficulty finding workers who can make the most of these new technologies.

Consider, for example, graphic designers. Until recently, almost all graphic designers designed for print. Then came the Internet and demand grew for web designers. Then came smartphones and demand grew for mobile designers. Designers had to keep up with new technologies and new standards that are still changing rapidly. A few years ago they needed to know Flash; now they need to know HTML5 instead. New specialties emerged such as user-interaction specialists and information architects. At the same time, business models in publishing have changed rapidly.

Graphic arts schools have had difficulty keeping up. Much of what they teach becomes obsolete quickly and most are still oriented to print design in any case. Instead, designers have to learn on the job, so experience matters. But employers can’t easily evaluate prospective new hires just based on years of experience. Not every designer can learn well on the job and often what they learn might be specific to their particular employer.

The labor market for web and mobile designers faces a kind of Catch-22: without certified standard skills,

1, 2  - View Full Page