Bruce Murphy
Murphy’s Law

Does Wisconsin Really Have a “Skills Gap”?

Journal Sentinel stories continue to insist we do, but a new study says no.

By - Jun 11th, 2013 10:10 am
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Tim Sullivan, former CEO of Bucyrus International, Inc.

Tim Sullivan, former CEO of Bucyrus International, Inc.

It’s been fascinating to see how the issue of the “skills gap” plays out in the press. Yesterday’s Milwaukee Journal Sentinel had a front-page, top-of-the-fold story telling us the Metropolitan Milwaukee Association of Commerce is working to attack “the region’s skills gap” — the alleged mismatch between the skills of area workers and the jobs employers need to fill. Others, including many academic researchers, suggest no gap exists and companies simply refuse to pay a competitive wage. Little of that research has made its way into the newspaper, but yesterday’s story, lo and behold, began to give some ground on the issue.

For years, the newspaper’s answer had been clear cut, with a dozen or so news stories that told readers there was a skills gap, and particular attention paid to one of the theory‘s key proponents in Wisconsin, former Bucyrus International CEO Tim Sullivan. He wrote a long report for Gov. Scott Walker that suggested, among other things, that the state’s education system needed to be changed to address the issue. The Journal Sentinel did a couple editorials touting the report, which was released in August 2012.  Yet when a study was released in February 2013 by UW-Milwaukee researcher Marc Levine that seemed to blow large holes in the skills gap theory, the JS offered no news coverage or editorial discussion.

In March I did a column noting this and suggested the Journal Sentinel wasn’t sharing the whole story with its readers. I also cited a 2012 survey by Manpower of U.S. employers who have trouble filling job openings which found that 54 percent of workers turned down the job because they expected higher pay. When the Journal Sentinel reported on that survey, its story (by reporter John Schmid) did not include that statistic.

Yesterday’s JS story, again written by Schmid, offered the paper’s first news coverage of Levine’s study, albeit four months late and buried on the story’s jump page. And in the story’s final paragraph, Schmid included the figure from the Manpower survey he hadn’t previously reported.

Did my column have some influence on the paper? Perhaps. Or maybe doubts were raised by a far-less-prominent story that ran in early April: Milwaukee Area Technical College held a job fair that could have introduced companies needing welders to 50 job candidates, but “few employers” showed up, as the Milwaukee Journal Sentinel reported. If companies are so in need of welders, why didn’t they come to the job fair?

Schmid, however, ignored this event in yesterday’s story, even as he laid great emphasis, once again, on a supposed shortage of welders. He also noted that GenMet Corp. in Mequon is “one of the companies that have complained the loudest about the inability to hire skilled metalworkers,” but ignored a New York Times story that found this company was offering a starting wage of $10 an hour.

Schmid also ignored a new study by the LaFollette Institute which concluded there was little evidence of a skills gap in Wisconsin.  The report got some coverage in the Business Journal and Madison’s Cap Times, but there was no apparently no room to discuss it in Schmid’s 1,300 word, 35 paragraph story.

The LaFollette study reviews recent reports about Wisconsin’s skills gap and notes that Levine’s report “makes the most comprehensive use of economic data.” By contrast, a 2012 report by Competitive Wisconsin which concludes Wisconsin will face shortages of workers, “does not provide enough information to replicate the analysis,” while Sullivan’s report contends there’s a skills gap but “does not attempt to numerically measure the skills gap.” This latest study ultimately concludes that its own analysis of economic indicators “does not provide evidence that a skills gap exists large enough to be detected by those indicators.”

Schmid reports that the MMAC intends to create a pilot program for welders in conjunction with MATC. But MATC already offers a welding degree and, as his story notes, works closely with representatives of Milwaukee companies. Schmid writes that the MATC’s welding program “has come under heavy outside criticism in recent years,” which strikes me as a tad exaggerated. Yet this is now turning into a true-ism for the paper, though it has done no story examining the program and its alleged failures.

What Levine and many academic researchers have suggested is that a lack of workers for certain jobs suggests the companies are not offering enough money and workers are holding out for more, which is exactly what the Manpower survey found. It’s a simple case of supply and demand. Schmid offers some evidence that there has been a shortage of welding applicants in the last year, but is this because there aren’t enough trained welders available (which Levine’s study deputes) or because companies aren’t offering a suitable wage?

Curiously, Schmid’s story never directly addresses this but toward the end of his article notes that wages in Wisconsin declined by 2.2 percent in the most recent 12 months period. He offers no statistic on welding wages in Wisconsin yet contends the 2.2 percent decline is relevant and is due to global pressure on wages. Perhaps, but it’s worth noting that many American companies are enjoying historically high profits and that American CEO salaries have for many years been much higher on average than in other countries for comparably-sized companies. If companies need to reduce costs to compete globally why aren’t they trimming (or simply holding the line on) salaries in the executive suite?

There are increasing signs that American companies are moving jobs back to the U.S. because of problems they’ve encountered overseas. They will continue to need good American workers, in welding and other fields. There may well be some occasional mismatches between workers’ skills and jobs that need to be filled, but the clear conclusion from researchers who’ve studied this is that it’s not a widespread problem in this state or the nation. Yet Schmid in particular and the newspaper in general are leaping to the conclusion — largely based on anecdotal evidence — that there are wholesale problems with training of workers by institutions like MATC.

Short Take 

-Last week I wrote about the Republicans’ questionable elections bill which appeared to be fast-tracked for passage. The bill was widely criticized, and remarkably, GOP legislators backed off — at least for now — on the bill and are instead pushing a bipartisan proposal that would allow online voter registration on a secure state website up to 20 days before an election and would also double the dollar amount allowed for donations to state politicians. The latter measure is a bad idea and will simply drive donations higher for incumbent politicians of either party. But the website registration is a good idea that will drive the turnout for all voters, Republican, Democratic and independent. And at this point its almost a miracle to see any bill with bipartisan backing.

Categories: Murphy's Law

11 thoughts on “Murphy’s Law: Does Wisconsin Really Have a “Skills Gap”?”

  1. Stacy Moss says:

    This is what I don’t get……why talk about this in a vacuum?

    Shouldn’t a job gap be filled in part by migration? Don’t people sometimes move for work? Isn’t that what brought people off the farms to Milwaukee? What’s keeping a young welder from South Chicago from coming to Milwaukee?

  2. Tom W says:

    Bruce, I know I’m old and cynicism raises its ugly head sometimes but the “skills gap” is really a “skin color” gap. See those welders they keep looking for keep showing up at the door but they’re the wrong color! They don’t match the expectations of their “HR” departments and they come with baggage like welding courses from (ew, yuck) MATC! Many years ago the complaint was that Metcalf Park had this big unemployment problem because the residents, especially those who were Black and Male had no job skills and/or no willingness to learn. Five years later my conclusion having set with CEO owners and managers of companies IN THAT NEIGHBORHOOD who had never had a black employee, was that the problem was as American as apple pie. Decent, family supporting wages with health benefits and a willingness to train new employees “into the company culture” will solve this problem when and if we confront race as a, no perhaps THE continuing issue. It’s not fun to think about nor as sexy as some high tech solution but we are in this together. peace, tw

  3. Omri says:

    Stacy, people do move for work, but it’s a big leap to make, one that has to be driven by very nice incentives, but more importantly, this is the 21st Century, and people don’t commit to one company any more than a company commits to its workers. People commit to cities. Boston is full of IT workers because that’s where companies come to set up IT shops, and companies set up IT shops in Boston because that’s where the IT workers are. Each firm might fire you at any time, but others are hiring, and they’re all a short bike ride away. Each worker might turn out to be a bad fit, but others are ready to take his place, and in an environment like this, you can fire him and not even feel all that bad about it.

    It would take more than one company to lure a welder to Milwaukee. It would take a critical mass of companies. And it would take a critical mass of welders to lure a company to Milwaukee. Not an easy thing to make happen, especially in a city that suffers malicious interference from the state government.

  4. Vanessa says:

    Why would a person re-locate for a job that does not pay a competitive wage? Thank goodness for the report. There might be a skills gap in some instances but it’s likely only a part of the problem. A skilled welders generally start at upwards of$20.00 an hour and if this welder is a fabricator or (highly) skilled he or she can command and receive higher and that’s why a person wouldn’t’ move from South Chicago or anywhere else for some of these jobs.

  5. Omri says:

    That is an issue, Vanessa, but you can’t really expect the CEO of a company to know that skilled labor answers to supply and demand…

  6. Bill Sell says:

    I’m alternately amused and dismayed that never in these discussions, including the distinguished columnist, is the skills gap addressed as a transit problem. Yet we do understand, don’t we, that jobs are available sometimes a distance (in miles or hours traveled) distant from a large unemployed population. Tim Sullivan knew this back in 2009 when he stood up with Governor Doyle and said he could hire 700 new workers if the bus system actually worked to bring them to his factory (in South Milwaukee). Now, in addressing the “Skills Gap” under the watchful eye of the current governor, Tim appears to have had a case of amnesia. His powerful speech of 2009 in the presence of one governor may well be waiting for a governor who does not bend reality to suit agenda.

  7. tim haering says:

    Excellent analysis, Bruce. I agree, “a simple case of supply and demand.” But the flip side of the low-pay coin is that employers are probably not offering better wages because demand for their welded widgets is also soft. Like my old macro prof “Wild Bill” HOlahan impressed on us, the supply-demand curve is always moving. And from what I hear daily on CNBC, corporations’ “historically high profits” come largely due to cost-cutting, not record revenue.

    Re: online registration: I think everybody votes who wants to vote. Nothing anyone can do aside from door-to-door vote gathering is going to draw more votes for the partisan knuckleheads who run these days. So long, Bob Ziegelbauer.

  8. Vulgarone says:

    Skin is not the issue. I am a recruiter, so I have first hand knowledge. It’s job history and pay expectations. They are told at MATC, WCTC, Moraine Park, etc… that they should earn $20+. Not happening in most cases, they can’t read prints, don’t understand symbols, poor at TIG, can’t do thin aluminum.

    Don’t play the race card. My best welder isn’t white buddy.

  9. Ryan Kastelic says:

    Excellent article Bruce. Over the last couple of years I have had three individuals come into my office who happened to be certified welders. None of them could find work anywhere. Apparently each time they applied they were told that they needed at least two years of experience. If there is a skills gap it exists because these businesses are either unwilling to hire entry level workers or they unwilling to pay experienced welders anything more than an entry level wage. Sorry Mr. Sullivan but if I’m a welder with at least 2 years of experience why should I eke out a living earning $10 dollars per hour in Milwaukee when I can go to North Dakota or Pennsylvania and make a fortune?

  10. Andy says:

    Once again, people outside of manufacturing are trying to write the story on what is going on with the workforce and claim the skills gap does not exist. The skills gap existed long before the recession. When I was a recruiter for skilled positions it was extremely difficult to find workers to fill skilled positions who were qualified. Using the welder example, a kid right out of school who said he was a certified welder could not pass a basic welding test. Companies would have open testing to find anyone with not even the skill, but just the potential, to become a welder. The tech school programs were in sufficient then, and I’m sure they continue to be.

    As far as wages, the few companeis willing to take on inexperienced people would yes, pay them far less. Few workers realized though, that if they put in their time for a couple years that they could get those higher wages, even if it meant searching at another company. After all, they then had the experience necessary.

    It’s mighty convenient for the La Follete and Levine’s studies to ignore some very important statistics. I’d really like to know what the skilled workforce unemployment rate is, not the general unemployment in the state. I’d also like them to point out how the average skilled workers wage in WI is higher then almost any other state.

    To say that American companeis are making larger profits then ever is assuming this applied to Wisconsin manufacturers. This also assumes that they too, as mentioned in an earlier comment, didn’t have to do so through trimming expenditures.

    Finally, it’s incongruous to claim that supply and demand only applies to local wages, and not also applied to supply and demand globally, or even across state lines… let alone to the price of the products actually being produced. Fortunately, there are some products that it just doesn’t make economic sense to produce overseas. Unfortunately, there arn’t enough of those products to create a manufacturing vacuum in Wisconsin where we can ignore all outside influences and competition.

    I just don’t understand why some of our leaders and a hand full of economists refuse to believe what is being said from the industry itself. I’d be fascinated to see Prof. Levine or Mr. Murphy spend a couple days with a small manufacturing business owner and walk in his shoes to see the conflicting challenges they have.

  11. Bill Sell says:

    Andy, as I said, a real-life manufacturer was saying in 2009 that he needed transit service to gather employees. Now he doesn’t mention it. It might be that some manufacturers (who could be an authority on his/her own shop) go quiet when speaking against government policy (transit cutting) might lead to consequences. I have seen the business voices deliver “in no uncertain terms” that transit is essential; I have seen them go quiet when this issue was polarized for the political convenience of its opponents.

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