Employers from across the country have struggled to find workers with the right skills to fill open positions. A problem made increasingly worse by how younger adults are being trained.
The millennial generation is in a unique position in its economic history. These workers started entering the workforce while the country was struggling to recover from a severe economic downturn. They were also raised in a period which highly encouraged four-year liberal arts degrees over other types of education and training.
The economy, as a result, now has a younger workforce that is unable to fill many good and well-paid jobs. Employers are in increasing need of technical skills like science, technology, engineering, and mathematics (STEM). They also need workers with bachelor and post-secondary degrees in business and healthcare.
“That’s where we’re seeing the biggest job growth, and the most value for the major,” Georgetown University researcher Andrew Hanson told InsideSources. “All those fields with narrow specializations like healthcare and business, for example, there’s just been enormous growth there. And there hasn’t been enough talent that we’ve developed in order to keep up with that.”
Hanson adds that younger adults who get trained in those fields can expect competitive wages, as well. The lack of skilled workers in those industries means companies have to provide higher wages to attract talent away from competitors. More students are actually being trained in those fields even though the gap has been widening.
“We have increased the supply of higher skilled workers, but the demand for those skills has increased even more,” Hanson said. “Employers are willing to pay a lot more than they used to in order to attract that talent. For various reasons that have been occurring in the education system, we haven’t been able to keep up with that demand.”
The skills gap issue doesn’t seem to be an isolated occurrence either. The Manpower Group, a human resources consultancy, found in its annual talent shortage survey that 40 percent of employers worldwide reported a lack of workers with needed skills. The shortage of skilled labor has increased steadily since 2010.
PNC Financial Services found in a report last year that the demand for STEM skills is going to explode over the next few years. The report also found that 38 percent of global manufacturers are having difficulty finding workers with the skills they need to fill vacant positions.
The Bureau of Labor Statistics (BLS) recently reported that job openings had increased to six million. At the same time, new hires decreased. The BLS also found in a 2015 report that the country is projected to produce one million fewer technical workers than are needed over the next decade.
Mercatus Center research fellow Michael Farren notes that the issue primarily stems from the growing need for specialized skills as opposed to more traditional schooling like a liberal arts degrees. Industries are in increasing need of very particular skill sets that can be as narrowly focused on an industry or single company.
“There’s been some recent academic research regarding this,” Farren told InsideSources. “What it seems to indicate is that the skills gap is more a unique skills gap to a particular company or industry in terms of its workers not having the exact right skills.”
The economy also has a growing need for workers who are able to handle blue collar positions. The issue isn’t necessarily that there is a growing demand for these types of jobs like there is for technical skills. Instead, the issue is that workers with those skills tend to be older which means they are leaving positions open when they retire.
“The number of blue-collar jobs overall is going down mostly because of automation in the manufacturing sector that is leading to significant employment declines,” Hanson, who also serves as a senior research analyst at The Georgetown Center on Education and the Workforce, said. “But there are still a significant number of good jobs in those fields, and there’s a lot of turnover because the baby boomers are reaching retirement age.”
Hanson adds that the trend is particularly evident with manual jobs which become harder to do at an older age. He also notes that blue collar skills aren’t emphasized enough in schools. Students are instead setup and often pushed into four-year degrees which result in a useless skill set.
“We’re just funneling people into four-year colleges that have a liberal arts education,” Hanson said. “Those blue collar fields just aren’t emphasized through most of our education system from high school through college.”
Farren notes that a four-year degree can still be very beneficial for students. The issue is ensuring there are other avenues to help make sure students are able to pursue skills that are in demand. Training that is specific to a particular industry, for instance, can help meet the need for specialized skill sets.
Many community colleges have programs specifically aimed at developing technical skill sets. These programs are designed so students can study and practice their skills in real world circumstances. Hanson notes community colleges alone just don’t have the ability to train enough students to meet the market demand.
“The community technical colleges that do offer those programs typically don’t have the capacity to train as many workers as we need to fill those jobs because they tend to be more expensive,” Hanson said. “They require hands on experience. The system really isn’t designed for classroom based learning.”
President Donald Trump has looked towards apprenticeships as a potential solution. He signed an executive order June 15 aimed at increasing the number of apprenticeship programs. The executive order rolls back regulations so that companies, unions, and industry groups alike can more easily create their own apprenticeship programs.
Trump has also received criticism for supposedly undercutting job training elsewhere. His proposed budget May 23 would cut some established federal job training programs significantly. CNN and a number of other news outlets highlighted the apparent inconsistency.
“Apprenticeship programs are something people are trying to expand,” Hanson said. “There’s a lot of work being done to expand those, but at the moment they’re really not at the capacity we need to fill all the job openings that are available.”
The Government Accountability Office (GAO) found in a 2011 report that the federal government spends about $18 billion annually on job training programs. Former President Barack Obama, for instance, invested $90 million into a federal program focused exclusively on apprenticeships.
“I think that’s a good way forward because you’re not just learning these specialized skills that the employers themselves need, you’re also gaining workforce experience at the same time,” said Farren.
He adds that apprenticeship programs also provide real world experience. The programs can help to develop both technical skills and what is known as soft skills. Soft skills refer to those basic habits and behaviors that are generally expected of all workers, such as knowing how to deal with customers and bosses.
“The education system has gotten more and more specialized turning out graduates with higher and higher skills,” Farren said. “If we spend more time in school, as the millennial generation has, then we have less time to gain workplace experience. That might contribute to some of the gaps in soft skill that many employers have noted.”
Many businesses have internal job training programs to ensure their employees have the skills they need. These programs have the added benefit of providing the skills employers actually need. Farren notes that government should make it easier for companies and other to setup job training programs.
“What we should be focusing on as a holistic, sustainable solution to the skills gap is to lower the cost of acquiring new skills,” Farren said. “We start treating training, particularly training for new jobs, as investments in human capital.”
Keiser University chancellor Arthur Keiser notes that students also have to take more responsibility for themselves. He adds that they have to do their research to figure out which field to study in order to get a job. The hope would be that students who are more deliberate with their studying will have a more fruitful career.
“Education is still a very good value for those who take advantage of it,” Keiser said. “At the same time, the student has to be responsible for understanding what they’re getting themselves into. The disclosures that we are required to make, part of the rules, we make all kinds of disclosures.”
Hanson adds that another pathway to potentially addressing the skills gap issue is to start moving everybody towards a post-secondary credential. He also notes that we should do more to expose students to possible career pathways while they are in middle school.