The assertions explaining their reported difficulties center on the idea that the academic achievement of high school leavers is inadequate or that there are not enough college graduates in practical fields like computer science and engineering. The recommendations from these reports include increased immigration and use of foreign workers as well as efforts to shape the majors that college students choose.
These reports have had a powerful influence on public debate about the state of the labor market as well as the performance of high schools and colleges. Virtually all of them are framed in terms of concerns about the economy, but it is difficult to escape the fact that the producers of many of these reports have a material interest in the outcomes of the policies they are attempting to influence. The arguments below examine the claims associated with complaints about the supply of skills in the US.
Oversupply and Undersupply of Skilled Workers
The arguments that there are problems with the supply of skills available in the labor market take various forms. The most extreme complaint is the idea that there are widespread shortfalls in the basic skills of future employees. The cause is usually attributed to the failure of the education system, especially K-12 public education, to provide students with these basic skills. We refer to that position as a “skills gap,” following its use in policy discussions. A second complaint focuses more on job-related skills of the kind associated with occupations, such as the common assertion that the U.S. is short on engineers or information technology specialists. We refer to this assertion as a “skills shortage.”
The final concern, which is much more commonly articulated outside the U.S., is the more general idea that at any given time, the supply of skills and the demand for skills could be out of synch in either direction – oversupply or undersupply. This situation could occur in specific labor markets, although with respect to educational credentials it is usually considered at the country level. We refer to it as a “skills mismatch.” A skill shortage is obviously a skill mismatch, and a skills gap could be a general form of mismatch. All these complaints collectively can be referred to as “skill problems.”
The most important action on skills in the 1990s was arguably the school-to-work movement, based in part on SCANS arguments, which asserted that the way to improve student skills and to increase employability was to bring school and employers closer together to smooth the transition from school into work.
School-to-Work Opportunities Act of 1994
In practice that meant apprenticeships, coop programs, internships, and other arrangements that would help students see the practical value of classroom lessons first by using more business and workplace examples in the classroom and second by seeing how those examples could be applied in at work. The School-to-Work Opportunities Act of 1994 (STWO) provided administrative and financial support to help build those connections (Stull and Sanders 2003). Joyce and Neumark (2001) find that 64 percent of schools had at least one school-to-work program with employers (the most popular of which was “job shadowing”), and 38 percent of students participated in school-to-work programs. Census data from establishments finds 71 percent of for-profit establishments reporting that they were involved in some school-to-work program with their local schools (Cappelli 2001). Because establishments represent the location where business takes place rather than the firm per se, this suggests quite extensive business involvement.
Most of the skills-related arguments following the 2001 recession came initially from consultants who asserted that soon there would simply not be enough people to meet labor demand. Those arguments were kicked off by McKinsey & Co’s “The War for Talent” study (Chambers, et al. 1998), which observed the smaller “baby bust” age cohort born in the 1970s and made it known that it would soon cause a shortfall in middle-aged employee talent, although why there would be a special need for middle-age talent was not clear. Similar reports followed, such as The U.S. Chamber of Commerce (2006:13), which assumed that the impending retirement of the baby boom cohort would lead to an absolute decline in the size of the labor force and a “severe worker shortage.”
American Society of Training and Development
If the SCANS approach was aspirational, the more recent arguments have been grounded in the present, asserting that there is currently a shortfall in the skills of the workforce. The American Society of Training and Development (ASTD), whose members hold jobs as trainers, in employee development, etc., asserted that view in a series of annual reports beginning in 2003. The most interesting part of their most recent report (ASTD 2012) is that the most important explanations members saw as causes of the shortfall in skills were management actions internal to the organization. Skills problem were self-inflicted by management. Other reports argue that there will be a shortage of skills associated with college education. The President’s Council on Jobs and Competitiveness, a business-led council, claim that the US would have a shortfall of 1.5 million college graduates by 2020, citing McKinsey & Co. as the source (Jobs Council 2012). In perhaps the most alarmist report, Carnevale, Smith, and Strohl (2010) conclude that the demand for college graduates in the US will fall short of supply by 3 million individuals by 2018. Harrington and Sum (2010)
Counter Argument
Unemployment has been steadily declining since 2009, when it was at 10 percent in October of that year, while it now sits at 4.4 percent, according to the Bureau of Labor Statistics. Economists consider this full employment, a sign of economic security. However, wage growth is stagnant. Josh Wright, chief economist at iCIMS, an HR software company in Matawan, New Jersey said, “Simple microeconomics 101 suggests that employers should be willing to pay up for scarce labor,” (Wright 17). He said that some argued the skills gap was to blame for elevated unemployment just a few years ago, and today’s full employment counters that argument’s persistence. Also, it could be a gap between what business leaders think they want and what they think is out there.
Conclusion
A final lesson for the US academic research community from the current discussion of skill problems is that in the absence of clear, objective research findings, it is easy for advocates to make claims that are simply assertions and claims that even casual acquaintance with real evidence would indicate are false. Perhaps the many organizations and foundations that have supported the advocacy-oriented approaches above might be persuaded to help change the debate by supporting real research on the role of skills in the US economy.
