The 'Skills Gap' Myth
Corporate America has come up with a clever rationale for the plague of high unemployment. The problem is the “skills gap” between the requirements of modern technology and under-educated workers, they claim.
Our still-deplorable unemployment rate of 7.7% has nothing to do with the defects of the economic system, but on the defects of under-skilled workers, corporate leaders tell us.
This flimsy explanation for persistent unemployment and falling wages is thoroughly dynamited by Prof. Marc Levine’s recent study of the so-called “skills gap.”
Levine, an urbanologist affiliated with the Center on Economic Development at the University of Wisconsin-Milwaukee, looks primarily at Wisconsin. But he explodes the myths being propagated nationwide.
Recently, the “skills gap” has become a favorite theme for executives like Caterpillar CEO Douglas Oberhelmer, politicians such as Wisconsin Gov. Scott Walker, and establishment-friendly pundits Thomas Friedman of The New York Times and Fareed Zakaria of CNN. They use this “gap” to explain away persistent high unemployment. President Obama, during the fall campaign, also uncritically echoed the complaints of executives about under-skilled workers.
The “ skills-gap” salesmen tell us that we are faced with “structural unemployment” caused by the “mismatch” between the demands of modern technology and the inadequate skills of today’s workforce. Former Bucyrus International CEO Tim Sullivan issued the kind of explanation that we now hear across the nation: “We don’t have a jobs crisis in Milwaukee, we have an education crisis.”
The blame-the-worker mentality lurking behind the “ skills gap” thesis was more explicitly laid out by PIMCO hedge fund owner Bill Gross, who declared, “Our labor force is too expensive and poorly educated for today’s marketplace.”
When we talk about the “skills gap,” we can forget about inequality between the top 1% and working Americans. No wonder it’s such a popular theme for the heads of corporations who enjoyed a record $1.876 trillion in profits in 2012. They also managed to accumulate a record $4.75 trillion in savings, up from t $1.2 trillion in 1995. And, recently, the stock market hit an all-time high.
Meanwhile, working Americans face declining wages and plummeting median household income, which dropped from $54,000 in 2008 to $51,558 in January, 2013. Fully 58% of all new jobs created since 2010 pay between $7.69 and $13.83 an hour. Wages have hit a record low as a percentage of the US GDP, at 43.5%. Yet such trend-setting corporations as General Electric and Caterpillar have been aggressively fighting to ratchet down wages and benefits even further.
Conveniently, the “skills gap” narrative has come rushing to the ideological rescue of those who prefer to blame workers for our economic problems. The “skills gap” story has gained new value for its utility in claiming that under-skilled Americans still want too much in wages, leaving employers with far too few qualified workers to hire. It’s a great storyline for political figures like Gov. Walker, who promised to create 250,000 jobs during his term, but now faces a jobs deficit of 243,000 according to the Center on Wisconsin Strategies.
Levine’s study demonstrates that every key component of the “skills gap” meme propping up Walker and others is demonstrably false:
SUDDEN AMNESIA FOR SKILLED WORKERS? : Levine cites top economists who target the absurd premise that the skills of the workforce somehow dropped precipitously between 2007 (before the recession) and 2009 (when unemployment soared).
JOBS IN SKILLED SECTORS? More than three years after the official end of the Great Recession, unemployment remains at distressingly high levels for every sector of the economy, including those requiring advanced education. As Levine commented in the report, “In every sector of the economy, the number of unemployed through the end of 2012 exceeded the number of job openings.”
Further, “Even if every unemployed person were perfectly matched to existing jobs, over 2/3 of all jobless workers would still be out of work.”
WAGES RISING TO ATTRACT SKILLED WORKERS? Employers would be raising wages to attract workers with the special skills they supposedly seek if a genuine “skills shortage” actually existed. Yet workers’ wages have been falling in Wisconsin since 2000, including pay for welders where a dire shortage supposedly exists, according to the complaints of some business leaders.
MORE OVERTIME TO FILL THE GAP?: A real “skills gap” would drive employers to increase the hours of skilled workers they claim to so desperately need. In reality, average weekly hours worked in manufacturing have remained unchanged since 2000, while the average weekly overtime hours have actually dropped by 12.8% since 2000.
UNDER-SKILLED OR OVER-QUALIFIED?: A pervasive skills gap would raise the demand for workers with higher skills, as measured in indicators like college degrees. Instead, the percentage of college-degreed workers working in jobs where they are obviously over-qualified—as bartenders and retail clerks—has climbed notably. A full quarter of retail salespersons in the Milwaukee area have four-year college degrees, as do 21.6% of bartenders—both jobs classified as requiring less than a high school diploma. The wealthy can rest assured that over 60% of parking-lot attendants parking their Lexus or BMW have had some post-secondary education.
FUTURE NEEDS: HIGHEST IN LOW-SKILL AREAS: In stunning contrast to the calls of corporate, political and media elites for a better-educated workforce, forecasts of future needs show an increased demand in occupations that require a high school degree or less. No less than 22 of the 25 jobs projected by the Wisconsin Dept. of Workforce Development as providing the largest number of job openings between 2010-2020 require only a high school degree or less.
This grim picture suggests that we will continue to see mostly low-pay, low-benefit jobs being created, like the majority of those we have witnessed since 2010.
In this context, the “skills gap” myth plays a vital role in taking the spotlight off corporate decisions and pro-corporate government policies, Levine writes: “There’s a strong ideological component behind the skills gap trope: it diverts attention (and policies) from the deep inequalities and market fundamentalism that created the unemployment crisis, and focuses on a fake skills gap that had nothing to do with the surge in unemployment since 2007.
The “skills gap” narrative, says Levine, diverts public discourse away from “such inconvenient questions as 1) why corporate profits are at record levels while unemployment remains high and wages stagnant; 2) Why U.S. manufacturers invested in less domestic capacity than competitors over the last decade, and 3) How offshoring and other management strategies have devastated the employment base of cities like Milwaukee, and how Wisconsin employment is especially at risk from trade with China and Mexico.”
Levine’s report directly states the inescapable truth which the elites’ mythical “skills gap” seeks to obscure: “The problem isn’t a malfunctioning ‘talent pipeline;’ the problem is a sputtering job-creation machine, in both the quantity and quality of jobs created.”
Roger Bybee is a labor reporter and frequent contributor to the Progressive based in Milwaukee.
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