Does the skills gap really exist?

skillsGAPIn the last year or so the employment market has begun to pick up to the extent that it is a good time to be job hunting if you have a desirable skillset.

That hasn’t stopped accusations from employers of a skills gap existing in the labor market however, and many have bemoaned the difficulties they face in recruiting the talent they need.

Alas, a recent report from Iowa State University suggests that there is little wrong with the skills on offer from the workforce, but that the problem is that employers aren’t willing to shell out enough for that talent.

A lack of evidence for a lack of skills

“First, when employers say there’s a skills gap, what they’re often really saying is they can’t find workers willing to work for the pay they’re willing to pay,” the authors say. “If there was a skill shortage people would be working longer hours and workers would be getting higher wages. Researchers have yet to find that evidence in several categories where people are arguing that there’s a skills gap.”

There are also regional shifts appearing.  For instance, the study found that skilled people are increasingly moving to cities, which makes it difficult for businesses in smaller or more rural areas to find the talent they need.

Despite the various issues underpinning the war for talent, leaders of both business and politics continue to pin the blame for any challenges on the failures of the education system.

Measuring skills

A major part of the challenge is actually accurately measuring skills in the first place.  Two positions at rival manufacturing companies may look similar for instance, yet in reality have little in common.

“The traditional firm may still do things the old way, while the modern firm is adopting new technology. How each firm defines the same occupation and the skills needed for that job might be very, very different,” the authors say.

Simple measures such as comparing education stats with employment data doesn’t do the trick and it becomes like comparing apples with oranges.

It leads to studies comparing things like degree competition rates with the educational requirements for various occupations, despite those jobs often being filled by people with apprenticeships, on the job training or the many other ways of learning.

Workplace demand

To try and get a more rounded picture, the authors set out to explore how demand for workers has changed during the recent recession.  They found a distinct shift before and after the recession, with the largest number of job losses occurring in low/medium skilled jobs.

The authors also looked at enrollment rates at colleges to try and understand if middle skilled employees were signing up to bolster their talent (as you would expect if a skills gap existed).  Alas, no such increase manifested itself.

“Understanding all these factors is important so that public officials don’t overreact or try to fix a problem that doesn’t exist,” they say. “It’s taken as a given that we have an enormous backlog of unfilled skilled positions, but there really is no credible evidence that is so in Iowa.”

The authors are at pains to point out that they’re in no way trying to diminish the claims made by employers of difficulties in hiring the talent they need, but they hope that their analysis provides a more detailed picture of the situation to begin tackling any issues that do exist.

“There’s no evidence of market failure, social failure or any other kind of failure,” they conclude. “If employers can’t find the resources to fill the need, they may need to move where more labor is available.”

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One thought on “Does the skills gap really exist?

  1. Certainly an interesting new perspective on it. The whole issue of pay is something that has long irked me, especially here with the tax credits seeming to prop up poor wages.

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