Our next big challenge: Addressing America’s job skills gap

GREENSBORO, N.C. – The Labor Department recently reported that average hourly earnings in the US rose by 2.9 percent last year, the best annual performance since the recovery began. Many economists expect the trend to gain momentum this year, as a tighter labor market forces employers to pay more to hire and retain workers

A recently released report from the Conference Board documents emerging labor shortages in a wide range of industries across many regions of the country. The US Bureau of Labor Statistics also reported that there are over 5.8 million job openings in the country.

Joe MagnoIn November, North Carolina’s unemployment rate was 0.6 of a percentage point lower than last year. The good news is that the number of people employed increased 21,059 over the month to 4,637,823 and increased 128,899 over the year. The bad news is that the number of people unemployed increased 6,234 over the month to 242,990 and decreased 25,327 over the year.

A recent report (2016 Employer Needs Survey) completed by the Labor and Economic Analysis Team for the NC Works Commission clearly identified some salient issues.

  • 39% of employers have had difficulty filling at least one position over the past year, particularly in manufacturing and construction industries.
  • A lack of work experience, education, technical skills, and soft skills were the top reasons given by over half of employers experiencing hiring difficulties.

What does all this mean?

  • Demographics – 79 million Baby Boomers need to be replaced. Many held technical jobs in STEM areas that are now vacant. Retiring Baby Boomers are vacating jobs faster than young workers can replace them, especially in occupations that employed workers who came of age in the 1950s and 1960s, such as the skilled trades, manufacturing and health care.
  • Labor Productivity – Productivity has fallen more dramatically in the past decade, and the deployment of automation and other labor-saving technology has yet to fully catch up. Jobs require more education and career skills than ever before. Automation has eliminated most low- and middle-skill jobs.
  • Education – Our educational institutions are struggling to keep up with the demand for skilled human resources, and as new products and manufacturing practices are introduced the need to train and educate workers becomes more of a challenge. The digital workplace requires thinking and problem-solving abilities.

These trends are causing some employers to settle for hiring workers who are less-qualified, with less consistent work histories and educational attainment, and hopefully some may try to provide more on-the-job training for new employees. This new jobs deal helps explain why the current U.S. unemployment numbers just don’t add up.

Some Additional Thoughts to Ponder

Most employers are providing fewer opportunities for on-the-job training than they have in the past. Yet, they are still looking to hire workers with skills and experience. The result is that the responsibility for developing skills is shifting from employers to job seekers. This shift creates an imperative to develop an education system, especially at the community college and post-high school level, and training programs that recognize the skills and credentials that are needed by employers.

Employers must collaborate with educators to better identify the skills they need to fill the jobs available and help map career pathways from entry-level to middle skill jobs and beyond. The health care, advanced manufacturing, and IT industries should provide more work-based opportunities such as apprenticeships and internships as well as training for their existing workforce so they can advance in their careers.

Based upon this information public and private sector leaders need to align investments for education and training that fit with employers’ workforce needs and their current open roles. This can be done in conjunction with community-based organizations that are on the frontlines of trying to help people get back to work.

Without taking these important steps, this skills gap threatens U.S. economic growth and holds back a workforce eager to be productive while earning a good wage.