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Some experts remain skeptical of the ‘skills gap,’ both sides of debate agree on solutions

January 04, 2018
By: Robert Ksiazkiewicz

In 2016, a study – Skill Demands and Mismatch in U.S. Manufacturingfound that approximately 75 percent of manufacturers showed no signs of hiring difficulties.  This study and others (including a 2015 study from Iowa State University) are reigniting a long held economic development debate over the ‘skills gap’ – a contention that there is a mismatch between the abilities employers seek in candidates and the capabilities of workers developed by the educational/workforce development systems. Challenging the conventional wisdom put forth by employers, pundits, and policymakers, these studies seem to indicate that the problem does not lie with the U.S. workforce development and educational system. Instead, the problem stems from two primary issues at the firm level:

  • A lack of employer-sponsored training; and,
  • A lack of competitive wages.

The primary concern for skills gaps skeptics revolves around the decline in employer-sponsored training. Historically a hallmark of the manufacturing industry, many firms have abandoned those efforts. The use of online hiring platforms has only increased this issue by filtering out many workers without specific resume items.

While Presidents Donald Trump and Barack Obama both announced commitments to expand the availability of registered apprenticeships across the country, the number of registered apprenticeships has declined by nearly 42 percent over the last decade. In 2005, there were approximately 490,000 people participating in registered apprenticeships according to the U.S. Department of Labor. By 2015, that number dropped to under 288,000 individuals. In addition to a sharp decline in registered apprenticeships, employers also are increasingly less likely to provide employees with training.

Those that argue against the systemic prevalence of the skills gap contend that, at the firm level, employers may be directly causing their own hiring problems because they are seeking over-qualified candidates – especially for entry-level positions. This may happen by filtering out potential candidates because they do not have the requisite educational achievement, resume buzzwords, or work experiences.

In many cases, this filtering out – typically through online hiring platforms – will lead to a pool of candidates that, while having the proper credentials, may not have the specific skills necessary for the specific position. For example, many positions will require a bachelor’s degree without a clear linkage between the achievement of a bachelor’s degree and the skills required for the position. This causes many viable candidates to be knocked out of the pool.

The researchers also contend that the greatest struggle to find qualified employees is centered in firms in highly clustered regional industries, or that demand highly specialized skills. Due to the competiveness of these labor markets, skills gap skeptics contend that these positions will always be tougher to fill, thus increasing the need for employer-sponsored training. Skeptics contend that increased employer-sponsored training would help address the issues faced by individual firms. The researchers contend that too often firms chase ‘plan A candidates’ at the expense of overlooking other worthy candidates that simply need some training. To increase the pool of candidates, employers should focus less on filtering out potential applicants based on their buzz words and other resume items, and instead target individuals that have the aptitude to fulfill the position with some training.

While some skills gap skeptics focus on the employer-sponsored training, others contend that the skill gap exists due to the stagnation of wages. While these firms seek over-qualified candidates, they focus less on paying those individuals a fair market-rate. This leads to qualified applicants seeking careers in other fields or other regions of the state/country.

A different issue faced by rural firms is the brain drain. Iowa State researchers found that the state’s educational/workforce development system is not to blame for its skills gap; instead, the problem lies with qualified workers moving from rural regions to its urban core. In many cases, these individuals are moving because of a lack of open positions or suppressed wages for the positions that are open.

While the debate will continue over the true nature of a skills gap and where the responsibility lies, both sides of the debate seemingly agree on two specific solutions. First, public-private partnerships play a vital role in addressing this issue. Institutions of higher education, nonprofit organizations, and government entities must work with local employers to develop training that addresses the existing and future needs of those firms. Second, industry and government must reconsider the credentials and educational requirements needed for positions. Researchers suggest that industry should focus on better identifying the skills necessary to succeed at an entry-level position (not every position needs a four-year degree). To support this, government should focus on developing alternative pathways (outside of the four-year system) to develop those skills.