You name the business pundit or educator. They’re all saying that the US labor market has a skills gap, a gap that has a heavy impact upon the unemployment rate. But how accurate, really, are those statistics. And more significantly, when you drill down into the jobs data what does it reveal?
The basics are scary. Four years after the start of the Great Recession, US business is making record profits. But we have a “jobless recovery” with unemployment stubbornly high. Two-thirds of manufacturing employers decry the lack of qualified applicants. Fast-growing companies say that finding really qualified candidates is a huge impediment to growth.
On the flip side, there are stories about employers who can’t find qualified applicants. Here’s one intriguing story from Peter Capelli: One of my favorites is a job ad for a cotton candy machine operator—if you’ve never seen cotton candy made, it is not rocket science—where the requirement for applicants was demonstrating prior success operating similar cotton candy machines. To test whether his company’s hiring standards were too high, a Philadelphia-area human resources executive applied anonymously for a job in his own company. “I didn’t make it through the screening process,” he notes.
I learned years ago that nobody, but nobody, understands the work marketplace from a macro/micro, employer/employee perspective better than Peter Capelli, Wharton’s GW Taylor Prof of Management and codirector of the National Center on the Educational Quality of the Workforce during both Bush and Clinton’s administrations. The statistics and the story above are from his brilliant, 100 page, readable analysis of what’s actually going on in the marketplace, Why Good People Can’t Get Jobs: The skills gap and what companies can do about it. If you’re in HR or a corporate exec, I recommend that you don’t let the sun set before you pick up your copy. You can read it in two hours. Use your red pen, but be ready to find yourself more than a little unhappy with what he has to say about companies, execs and HR departments. Nobody comes out unscathed. Obviously, I’m going to have to revamp my thinking and some of my approach. Aaargh!!
So why can’t good people get jobs? Among the conclusions which Capelli draws from his in-depth analysis of the data are the following:
- Higher productivity is a culprit. The simple math is that productivity was 6.7% higher at the beginning of 2012 than it was in 2008. Some of that is because companies work people harder—which has its limits. The new normal is partially impacted by higher productivity, which reduces employee need. And that's structural.
- Population and workforce keep growing. US population is 4% (140,000 new people per month) higher now than in 2008. Fewer jobs and more people aren’t in sync.
- Employers are unwilling to pay the market wage. They shop around to see who’ll do the work for a lesser wage.
- Employers are defining job requirements in such a way that applicants have to have done the job previously before they can get hired. This is a distinct departure from the past, getting past the HR folk because of the downsizing of HR groups.
- Employers ask employees to move geographically to get a new job, but they won’t/can’t guarantee the job will last. Put yourself in the employee’s shoes. Who wants to relocate when the job may not last long, and up jobless in a community with no contacts?
- Hiring software sucks. Really bad stuff. As Capelli’s anecdote above reveals, not a chance even in your own company.
- Employers now expect the feds, the states and the schools to do the training. In 1979, young workers on average received about 2.5 weeks of training with the company. By 2011, Accenture found that only 21% of employees had received any training whatsoever in the past five years. A huge proportion of training also used to be supplied by unions, but you know what business has done to the unions.
So overall, employers can afford to be picky, applicants need to be overqualified, and employers focus on the skills associated with work experience, not education.
In sum, software driven hiring is a mess. And employers are unwilling to do the training that they once took for granted. It's a training gap, not a skills gap.
This is too important a book for me to tell you everything Capelli has to say. Check the book list on the side of my blog to purchase it from Amazon.com. Capelli has built-in recommendations (very practical and feasible) for employers. And some very strategic recommendations for those in the job hunt.
Capelli's little monograph grew out of a Wall Street Journal article where he ruffled more than a few feathers (441 comments, but thankfully, not all negative) by saying rather bluntly, “The real culprits are the employers themselves.” So don’t pay too much attention to the business pundits or company representatives—about jobs or education.
Flickr photo: by Pat Rafferty