Skills Gap: Real or Myth?

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Many corporate executives and politicians in Illinois purport that the state’s workforce does not have the skills necessary to compete in the modern economy. According to the conventional wisdom thousands of job openings go unfilled each month because people looking for a job allegedly lack the skills that employers need. Many employers contend that jobs are readily available and that the main reason that workers remain unemployed is that they are unqualified. One executive, Tim Sullivan, the former CEO of Bucyrus International, Inc. and special advisor to Wisconsin Governor Scott Walker, even went so far as to assert that states “don’t have a jobs crisis, we have an education crisis” (Levine, 2013). Nationwide, manufacturers have also made this claim. A 2011 report by the Manufacturing Institute and Deloitte alleged that there are about 600,000 unfilled job openings in manufacturing across the United States, and the primary cause is a shortage of skills among American workers (Morrison et al., 2011). In a national survey of 1,123 manufacturing executives, 74 percent responded that a lack of skilled workers was making their firm less productive or was hindering their ability to expand production (Morrison et al., 2011). The general consensus of a skills gap in the manufacturing industry has even reached the highest level of U.S. government, with President Obama echoing the concerns of manufacturers. ... However, while employers are claiming a skills gap, the Illinois economy is simultaneously experiencing sluggish growth with only slightly improved prospects for robust job placement. Indeed, the following labor market outcomes have not returned to pre-recession levels in Illinois: real wages, labor force participation rates, the working-age unemployment rate, hours worked per week, full-time employment status, the poverty rate, and the percentage of Illinois residents with health insurance (Manzo & Bruno, 2013). Contrary to perception, there is little labor market evidence of a “skills gap” in Illinois for manufacturing workers. Relying on a multi-year examination of state data covering employment projections, worker credentials, job openings, wages, and hours worked, this briefing paper refutes the skills gap contention. Instead, the main problem facing the Illinois economy remains weak aggregate demand. The primary public policy focus should thus be accelerating economic growth, promoting high-quality job growth, and raising worker wages. Scarce public resources should not be diverted away from these aims and spent on solving a problem that does not exist.

Linky.

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There is apparent unanimity among Wisconsin business executives and policymakers that the state faces a “skills gap:” thousands of jobs going unfilled because too few Wisconsin workers possess the skills, education, and training for them. This skills mismatch, it is argued, is the central reason why unemployment remains high, even as job vacancies remain unfilled. This widely held view, however, is incorrect. This paper examines major academic studies as well as data from the U.S., Wisconsin, and Milwaukee labor markets and finds no evidence to support the skills gap thesis.

Linky.



Very widely held belief stated again and again by politicos.

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