Why Are Employers Struggling to Fill Jobs?

783af3a944ad479520b387ba941870cdMuch like Lazarus, the U.S. economy has made a spectacular comeback. Even as the skunk-like stench of the Great Recession lingers, the worst seems to be behind us (SEE FIGURE 1 BELOW)

Unemployment Rate


A snapshot of the good news:

  • U.S. employers advertised the most open jobs in April 2015 than any time in the last 15 years.
  • The economy added 280,000 jobs in May 2015, beating forecasts of 225,000 jobs.
  • Job growth occurred across the board, even in retail, suggesting growing consumer demand.
  • Wages are up 2.3%, the first increase since the recession ended.

Typically, an economic recovery after a steep recession would mean that newly created jobs would fill up rapidly. There is usually pent-up demand among the unemployed and underemployed, as well as those biding their time to move up.

Why then, are so many jobs going unfilled?

  • In a U.S. Chamber of Commerce study, 53% of leaders at smaller businesses said they faced a “very or fairly major challenge in recruiting non-managerial employees.” In a survey of Inc. 5000 CEOs last year, 76% said that finding qualified people was a major problem.
  • According to a March 2014 CareerBuilder study, 50% of the companies reported unfilled positions due to a lack of qualified candidates. In the IT field, that number rose to 71%.
  • The construction industry in Wisconsin has 80,000 unfilled jobs. Just to give you a sense of how the tide has turned after the housing bust, contractors have begun showing up at competitors’ worksites to lure workers with higher pay.
  • Even the manufacturing sector is now affected by worker shortages. According to the Wall Street Journal, 75% of manufacturers surveyed were having trouble finding skilled production workers.
  • These stats are not a post-recession anomaly. In May 2011, 3 million jobs were unfilled even as millions of Americans were still out of work.

These numbers are troubling since there is a cost when jobs go unfilled. The CareerBuilder study stated that it costs companies $14,000 in revenue for every position that remains unfilled for 3 months. According to indeed.com, for the top 10 companies in the Dow Jones Index, the cost of unfilled jobs costs the U.S. $75 million in monthly GDP.

We have a lot of available labor that accumulated during the recession, and we now have jobs being created. But, these jobs and workers seem too shy to break the ice. When Clinton (Bill, not Hillary) ran for President, the slogan was “It’s the economy, stupid”. The stats above make me ask: “Is the economy stupid?”

More and more employers claim that several American workers do not have the skills to fill these newly created jobs.

So, is there really a “skills gap” at play here?

No, there is not a “skills gap.” There is, however, a training gap for employees and perception gap among employers.

First, let’s review the “perception gap.”

According to a 2014 labor survey65% of new executive assistant jobs require a bachelor’s degree, but only 19% of currently employed assistants have bachelor’s degrees. Therefore, about 81% of current executive assistants are unqualified for their own jobs, based on the degree requirement.

I have seen several excellent admins who do their jobs well and it is impossible to tell the ones with a degree from the ones without a degree. But as they often do, employers erect artificial barriers that block qualified employees from applying for jobs. Furthermore, employers often demand higher qualifications, but balk at paying based on those qualifications. So the logic goes thus: employers want someone with a college degree for a job that does not require it, but don’t want to compensate based on the degree since the job does not require it. This makes complete sense if you insane, but that may account for the gap between perceived worker availability and job vacancies.

Rather than just blaming a “skills gap,” employers would do well to hire based on a skill/experience/degree matrix rather than focus on just one aspect.

This does not, however, let job seekers off the hook.

Many workers believe that closing the gap between skills required and skills available is easy: back to school. If only life were that simple, they’d call it football.

Our education system is ill skilled to prepare workers for the workforce. According to a McKinsey study, while 72% of educational institutions believe recent graduates are ready for work, only 42% of employers agree.

I am not trying to devalue education, but the fact is that colleges were not set up to deliver job training. They were set up to teach you to think and to teach yourself. Besides, it takes a lot of review and revisions to adapt academic curricula to cater to the thousands who attend college. Often college degrees are permanent monuments to temporary knowledge.

Additionally, the jobs that exist today did not exist in the same form a decade ago – how many iPhone programmers did you know in 2005? Not many colleges can deliver the skills at short notice to find a job.

Job seekers also find it hard to pick an area to develop expertise in, especially when market demand is so unpredictable.

A few years ago, getting trained in print design was an easy ticket to a marketing job. Thanks to Mr. Jobs, those jobs were quickly replaced by interactive design. As a result, there was a shortage for graphics designers. However, it is not easy for former print designers to overnight become experts in interactive design. Besides, who knew that the design landscape would change so precipitously? There were plenty of Flash designers who were suddenly unemployed, and had to learn JavaScript, HTML5, etc. to remain viable and employable.

U.S. employers clearly have a role to play. In 2011, only 21% of workers surveyed by Accenture had received any formal training at work in the previous 5 years. Matt Ferguson, CEO of CareerBuilder, surveyed more than 2,000 employers. While 80% say they were concerned about a skills gap, only 40% were doing anything about it. (SOURCE)

There are ways, however, for employers and employees to work on a training mechanism together. The following examples show a pattern:

  • As manufacturing in the U.S. rebounds, there is a shortage of welders and the average age of welders is 55. In order to increase labor supply, the American Welding Society encouraged its 70,000 members to tour high schools and explain the profession, spread the word about available high-paying jobs and even arranged for a nationwide exhibit on welding. As a result, in 2012-13, 80,000 kids completed welding courses up from 42,000 in 2009-10.
  • The state of South Carolina has worked with businesses to create apprentice programs so as to train its workforce. In 2007, only 90 companies participated and created 777 apprenticeships. In 2014, 670 companies participated to create 11,000 apprenticeships. The state has benefited from German companies like BMW and Bosch moving there, since those companies brought the German model of apprenticeships.
  • Shereef Bishay, once a lead software developer with Microsoft, has founded Dev Bootcamp, a for-profit enterprise that develops what Bishay calls “world-class beginners.” Rather than a degree, the school provides folks hands-on skills to get jobs. They learn from working professionals marketable skills like Ruby on Rails, HTML5, CSS and JavaScript.

While the labor supply and demand are out of sync after the Great Recession, writing off workers as unqualified or employers as stingy paymasters will solve nothing. “Skills Gap” is a fancy term, but the real solution is to invest in our workforce, and grow the number of market-ready employees. That way, rather than competing for a small yet qualified sliver, employers have a bigger collection of talent to pick from.

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