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Skills gap hobbles US employers
Drew Greenblatt has been looking for more than a year for three sheet-metal set-up operators to work day, night or weekend shifts.

The president of Marlin Steel Wire Products, a company in Baltimore with 30 employees, Mr Greenblatt says his inability to find qualified workers is hampering his business’s growth. “If I could fill those positions, I could raise our annual revenues from $5m to $7m,” he says.

Policy moves by the US Federal Reserve reflect a view that most unemployment is not the result of a skills mismatch. But even those who believe that today’s unemployment problem is primarily cyclical say closing the “skills gap” will be essential if Americans are to enjoy stable work and rising wages.
He is offering a salary of more than $80,000 with overtime, including health and pension benefits. Yet in spite of extensive advertising, he has had no qualified applicants. He is trying to train some of his unskilled staff but says none has the ability or drive to complete the training.

Mr Greenblatt’s predicament speaks to one of the biggest economic debates about today’s 8.6 per cent US unemployment rate: is it merely a cyclical problem that will shrink as demand recovers? Or is it something deeper and more structural, a “mismatch” between the skills workers have and those companies need?

The idea there is something structurally wrong with the US workforce is controversial among economists but has a certain resonance with the public. Since the emergence of Japan as a technology and manufacturing powerhouse in the 1970s, Americans have been anxiousthat they were losing their competitive edge to better-educated, harder-working rivals.

Economists trying to figure out whether unemployment is cyclical or structural have turned to what they call the Beveridge curve: the relationship between unemployment and the job vacancy rate.

Vacancies, the number of unfilled positions, have risen by 35 per cent since their trough in June 2009 – but the unemployment rate has remained stubbornly high. If there are jobs but people are not filling them, it may be because their skills are not up to scratch, say those who fear structural unemployment.

But a preponderance of economists argue this is a misreading of the data. A recent San Francisco Fed paper finds that vacancies are high relative to hiring across a broad range of industries, including those such as construction, where recent job cuts mean that there is most unlikely to be a skills shortage.

The authors suggest companies may not be trying very hard to fill jobs, while workers in receipt of unemployment insurance may not be trying that hard to find them.

Policy moves by the US Federal Reserve reflect a view that most unemployment is not the result of a skills mismatch. But even those who believe that today’s unemployment problem is primarily cyclical say closing the “skills gap” noted by Mr Greenblatt will be essential if Americans are to enjoy stable work and rising wages.

Ben Bernanke, chairman of the US Federal Reserve, told an audience in Jackson Hole, Wyoming, in August that the US had to “foster the development of a skilled workforce” if it was to enjoy good longer-term prospects. The US education system “despite considerable strengths, poorly serves a substantial portion of our population,” he said.

US companies that are growing say an unqualified workforce is already a significant barrier to hiring.

In a September poll of owners of fast-growing, privately held US companies undertaken by the non-profit Kauffman Foundation, the inability to find qualified workers was cited as the biggest obstacle to growth. Some 40 per cent of respondents said they were being held back by the skills gap, compared with just 13 per cent by lack of demand.

Posted by: 2011-12-14
http://www.rantburg.com/poparticle.php?ID=335245