Wednesday, October 20, 2010

Help Wanted?

Interesting article that makes the claim that in the midst of high unemployment nearly 3.0 million jobs have gone unfilled because of skills and geographic mismatch. Skills mismatch implies a lack of synchronicity between labor supply and labor demand. For example, a massive surplus of low skill service industry workers exist, while skilled blue collar positions like mechanics, electricians and welders remain vacant. Various factors have contributed to this mismatch, the first one being that the real estate bubble created a mis-allocation of labor, in other words countless individuals who could have (for example) pursued a career in engineering or nursing were drawn towards real estate. The second one is that school curricula is overwhelmingly college-centered and offers little opportunities for students who demonstrate an aptitude for the trades. I also suspect that extended unemployment benefits have lowered incentives for many workers to either invest sufficient time and resources towards developing skills that are in demand or filling low skill, low wage positions. Last, but not lease, a three decade long contraction of the manufacturing sector eliminated many skilled positions and there has not been sufficient time for workers to become trained to meet the new demand in the (somewhat) rebounding manufacturing sector.

For various reasons, geographic mismatch may also figure prominently into the existence of unfilled positions. An example of geographic mismatch is seen in South Dakota, which with a 4.1% unemployment rate faces a labor shortage and Michigan with an unemployment rate of 12.8% faces a surplus of labor. Economic logic dictates that labor would flow to South Dakota, but two factors inhibit this: many individuals are unable to sell their homes, while others desire to remain in their communities.

Unfortunately no amount of stimulus spending or quantitative easing can address skills and geographic mismatch; gradually workers will have to abandon their hope of returning to moribund sectors of the economy or remaining in communities and states with a labor surplus. Individually more workers will have to develop the skills necessary to fill new positions in regions of the country that face a labor shortage. What the government can do is shift curricula to provide more opportunities for career development for students that are able and interested in skilled labor. Surely it is better to be an employed mechanic with $10,000 in student loans than an unemployed lit student with $50,000 in student loans.

Skilled worker positions go unfilled, despite high unemployment

Employers cannot find job candidates with the most sought-after ability

By John Schmid of the Journal Sentinel

Sept. 11, 2010 (60) Comments

The good news first: Pockets of economic growth are springing up all over the country. Going by job listings, companies are scrambling to hire managers with the savvy to navigate the new niches as well as the sorts of engineers and tradespeople who can perform in high-productivity teams.

Now the bad news: Despite long lines of long-term unemployed, those same employers paradoxically cannot find candidates with the most sought-after skills.

"We still have a very serious mismatch in Milwaukee," said Timothy Sullivan, chief executive of Bucyrus International Inc., the Milwaukee-area manufacturer of mining machinery and heavy equipment. Bucyrus has sounded an alarm for several years that it cannot find and train enough welders, once a common trade in Milwaukee's machine shops.

According to Manpower Inc., the global job-placement company, the nation has a gaping disconnect between openings and qualified candidates - a gap contributing to around 3 million unfilled U.S. jobs - which in turn hampers growth.

Manpower's research shows that the United States is fragmented like never before into myriad sectors that move in different speeds and directions, meaning candidates with sought-after skills can get multiple job offers at the same time that others with commodity skills wait for years.

"The issue is not a lack of candidates, but rather a talent mismatch," said Jonas Prising, Manpower president of the Americas.

"This increasing gap between the haves and the have-nots, in my view, is the biggest challenge facing the United States to remain competitive on a global basis," Prising said last week in an interview.

One in seven U.S. employers polled this year had difficulty filling key positions, according to the most recent Manpower poll. Milwaukee-based Manpower, whose stock in trade is matching employers and workers, expects the gap to widen at a time when organizations are pressured to accomplish more with fewer hands, meaning businesses and even governments are demanding ever-more specific skills and behaviors.

Talent shortages span a broad scale, from engineers who can contribute to global development teams to electricians, mechanics and other specialized machine-shop skills that have seen waves of retirees exit the workforce in recent years without a commensurate wave of apprenticeships to replace them.

Many express disbelief that such a disconnect exists, Prising said. "Some go ballistic and say you are crazy when you say there's a skills shortage," he said.

Employers throughout Wisconsin and the nation's industrial heartland feel the gap acutely. In Manpower's 2010 poll, the U.S. jobs that were most in demand were skilled trades - electricians, welders, mechanics, boilermakers and other skills that often require a at least two years of technical college. In 2009, the No. 1 in-demand occupation in the U.S. was engineers, which fell to No. 8 this year.

"We continue to be very disappointed and frustrated at Bucyrus in trying to fill almost 150 highly paid vacancies with skilled labor," Sullivan said.

Milwaukee has launched several innovative apprenticeship training programs in recent years tied directly to the needs of Bucyrus and other local industry.

"Notwithstanding all our best efforts in attempting to fix the system with recent improvements in workforce development, the pipeline is broken," Sullivan said. "The fact that virtually all (kindergarten through 12th grade) education in southeastern Wisconsin is based solely on a college prep curriculum, with no exposure to industrial arts, means we are not feeding the market with the right skill sets."

Not limited to U.S.
The disconnect is hardly limited to the U.S., according to Manpower, which polled 35,000 employers in 36 nations this year on global talent mismatches.

Each nation that advances in technology, innovation or productivity automatically begins to demand workers with those new and specific skills.

In a report called the "China Talent Paradox," Manpower's researchers explored how talent shortages can exist in a nation of 1.3 billion people. In its 2010 survey, 40% of Chinese employers surveyed said they had difficulty filling key positions.

Exhibiting a readiness to take extreme actions, Beijing's top leaders last week said they will explore a relaxation of the nation's "one child" policy - a population-control control measure imposed in the 1970s amid extreme poverty and rapid population growth. International human rights critics often decry the restrictions, citing forced sterilizations and abortions. But now China said it is focused more on the need for workers to replace an aging generation of laborers, leading to the announcement of a pilot program to loosen the multi-child ban in provinces with low birth rates.

Seeking a 'teachable fit'
The mismatch is such a defining issue that it will force new patterns of migration and immigration around the U.S. and other nations, according to Manpower.

Emphasizing that international labor must comply with visa law, Manpower prefers terms like "strategic migration" policies instead of politically charged terms like "immigration."

"I can post a job in the U.S. and a talented Indian will move to Des Moines," Manpower Chief Executive Officer Jeff Joerres said last week.

In a trend that's likely to repeat itself with increasing frequency, a Manpower report last month notes that some U.S. shipbuilders recruit experienced shipyard workers from Mexico and Croatia. "Skilled tradespeople are hard to find when and where they are needed. Their work can't be off-shored, but they can be on-shored," the report said.

Another change that seems pre-ordained, Manpower said, is a shift in the expectations of employers. This is a change that presents potentially huge opportunities for those looking for a paycheck.

Resigned they might not find the exact candidates they need, even from abroad, employers will begin to abandon the notion of the ideal candidate. Instead, they will seek the most "teachable fit."

This is a new breed of job candidate - folks who lack some qualifications "but whose capability gaps can be filled in a timely and cost-effective way." Employers who are willing to set up in-house training academies increasingly will look outside their traditional industries.

In an age of questionable results from stimulus spending, Manpower urges that the nation should redirect money to retraining. Testifying in February before the congressional Joint Economic Committee, Joerres told lawmakers that direct industrial subsidy "does not drive job creation."

***U.S. jobs most in demand, 2010

1. Skilled trades (mechanics, electricians, welders)

2. Sales representatives

3. Nurses

4. Technicians

5. Drivers

6. Restaurants, hotel staff

7. Management/executives

8. Engineers

9. Doctors

10. Customer support and service

Source: Manpower Inc.

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