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What if the "Skilled Worker Shortage" is a Myth?

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One of the fundamental precepts of the school "reform" movement is that the students of today are not ready for college or the workplace. This then is one of the reasons the US has lost its competitive edge, and even is to blame for unemployment rates, because our "job creators" have millions of jobs that are unfilled, and our graduates are simply unprepared for these positions. People like David Brooks call this a "structural issue."

Maybe not.

This week there are two separate reports, one from the Federal Reserve Bank in Chicago, and the other from a professor at the Wharton School of Business, that raise some big questions about the idea that we have a shortage of skilled workers.


Matthew O'Brien at The Atlantic reviewed a study by the Fed in Chicago, and notes that data tracking labor demand shows that since the end of the housing bubble, demand for workers at ALL skill levels has fallen significantly. He points out that if there were a real shortage there, we should expect some rise in wages in areas where demand exceeds supply. But none has occurred.

Professor Cappelli of the Wharton School of Business provides some substance to this story, by taking us into the workings of the labor market. In this column at Time magazine, he points out several problems. First, "roughly 10% of employers admit that the problem is really that the candidates they want won't accept the positions at the wage level being offered. That's not a skill shortage, it's simply being unwilling to pay the going price."

But the real problem is something else.

Professor Cappelli writes,


...the heart of the real story about employer difficulties in hiring can be seen in the Manpower data showing that only 15% of employers who say they see a skill shortage say that the issue is a lack of candidate knowledge, which is what we'd normally think of as skill. Instead, by far the most important shortfall they see in candidates is a lack of experience doing similar jobs. Employers are not looking to hire entry-level applicants right out of school. They want experienced candidates who can contribute immediately with no training or start-up time. That's certainly understandable, but the only people who can do that are those who have done virtually the same job before, and that often requires a skill set that, in a rapidly changing world, may die out soon after it is perfected.

One of my favorite examples of the absurdity of this requirement was a job advertisement for a cotton candy machine operator - not a high-skill job - which required that applicants "demonstrate prior success in operating cotton candy machines." The most perverse manifestation of this approach is the many employers who now refuse to take applicants from unemployed candidates, the rationale being that their skills must be getting rusty.
Cappelli also suggests that employers are less willing to invest in training for their employees. They want "plug and play" workers, and therefore seek those already working, rejecting applicants who are currently unemployed, on the basis that they may not have current skills.

Sometimes no humans even look at the thousands of job applications pouring into these employers - they are fed into a computer system, which checks the ever finer specifications, and looks to see if applicants are willing to work for the low pay the employer has in mind. If there is no match, the employer decides the workers aren't here - and then puts in a call for an overseas worker to come over with a H1 visa, to do the job for which we supposedly have no "qualified" applicants.

In this interview with the Wall Street Journal, Professor Cappelli explains more.

Maybe the reason we have structural unemployment has less to do with the skill of our workforce, and more to do with the pressure on employers to save every possible dime so as to maximize profits. This seems to be leading them to look for the perfect off-the-shelf employee, already 100% trained for the position, and willing to work cheap, rather than investing in building the skill level within their companies from within.

What do you think? What does this suggest about the complaints we hear about the students graduating from our schools?

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