The Real Scoop on the Skills Shortage

There is a debate currently taking place in the U.S., Wisconsin and Milwaukee about the labor market. One view is that there is a “skills gap,” that available workers lack the technical or “hard” skills needed in labor market. The opposing view is that there is a lack of available jobs or a “jobs gap.”

As Southeast Wisconsin Area Director for the AFL-CIO’s Labor Education & Training Center, I have worked with thousands of job seekers and hundreds of businesses to make matches between workers and available jobs and I want to add to this debate. Overall, my experience supports that the skills gap is a myth as there is a standing army of highly skilled unemployed workers in Milwaukee who can’t buy a job. Nationally, there is a significant amount of data which shows there are few openings compared to the number of people seeking work. My examination of peer reviewed literature also finds no evidence of a broad skill shortage encompassing all labor sectors or even a major sector such as manufacturing.

However, there is an issue here that is far more nuanced than the skills gap versus jobs gap dichotomy and it deserves to be unpackaged and examined.  One assumption that needs to be shot down is that businesses are monolithic. They are not. They have very differing needs depending upon their number of employees, gross receipts, and where the business is positioned along the growth continuum. Large businesses have dominated the discourse on business needs which is presented in singular or monolithic terms, and does not distinguish their needs versus those of small and mid-sized businesses. Small business voices are not heard. This is critical as small businesses constitute the majority of employment vacancies in our nation.  Therefore, they should be getting most of the attention is this debate.

Another assumption to be challenged is that the skills gap argument is something new. It is, in fact, an old theme that has often used by business associations during recessionary periods going all the way back to 1962.

There are also definitional problems with notion of a skills gap. Is there a lack of quantity of job candidates, or a lack of quality of job candidates? As an example, the CEO of Milwaukee’s GenMet is quoted as receiving 1,051 applications and found only 25 people to be qualified. Of the 25 hired, 15 had to be fired.  Clearly this example points to a lack of quality, rather than quantity.  But, from the employer’s perspective, a shortage of workers exists regardless if it’s due to a lack of quantity or quality. So the term “skill shortage” is often used with a variety of imprecise meanings. The issue of quantity versus quality is important as it points to something other than a hard skills issue.

Employers consistently tell me they are looking for job candidates who will be a “good fit” with their company. They are concerned about “soft skills” such as demonstrating a good work attitude, showing up to work on time and demonstrating a willingness to go beyond what is normally required to meet the employer’s needs. These small and mid-sized employers consistently say they will provide hard skill technical training if I can help them find an employee who is willing to learn and has a good work attitude. These employers all strongly echo the need to find workers who have values in alignment with that of their companies and many have developed elaborate hiring processes focused on finding these soft skill matches. While it may be easy to dismiss this soft skill argument as an indication of a weak labor market, thereby giving employers the freedom to be more choosey in who they hire, there are serious implications as hiring for soft skills not only impacts job seekers but also government officials, seeking to develop workforce policy.

Many employers are finding that the majority of their job candidates are very young and inexperienced or workers who have been laid-off for a long time.  If an employer is unable to draw from the pool of actively employed workers, this is a strong indication that the wages being offered are not attractive enough to draw potential candidates from their current employment. I have had many employers tell me that they have good paying jobs starting at $15.00 per hour.  That’s less than I made over 30 years ago!  Employers tell me that they are paying “market rate” which is defined by the wages of competing or parallel businesses and setting wages in alignment with those other businesses. The problem with this type of market comparison is that it leads to Groupthink, which is defined by wiki as “a psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.” Markets adjust; and the labor market is no exception. The good news is that I have heard from several human resource professionals that they are working to adjust wages to become more attractive to broader pool of job candidates.

My experience is that the soft skills argument is part of the broader skills gap argument and the solution to the soft skills gap may actually be more related to low wages rather than any actual lack of specific skills.

Fred Schnook is South East Area Director, Labor Education & Training Center, 2338 North 27th Street, Milwaukee, WI 53210.