It’s counterproductive to discuss whether we have a talent shortage or high unemployment. We have both. Even as the economy recovers, the Obama administration’s Council of Economic Advisors earlier this year projected that the unemployment rate would stay well above 6% until 2015.
At the same time, the argument that my coauthors and I put forth in 2006 in our book Workforce Crisis remains true: There are significant, growing shortages of skills in critical job categories. The recession may have obscured this trend for a couple years, but it marches steadily onward. Even at the height of the recession in 2009, U.S. companies were struggling to fill certain kinds of positions.
These two seemingly paradoxical conditions exist because many of the jobs now being created require skills that the workforce doesn’t possess in sufficient quantity. This structural mismatch will be difficult to overcome, even in a climate of growth. The “workforce crisis” is a painful reality in both directions — for companies looking for the talent required to grow and, of course, for the individuals struggling to find jobs in a shrinking pool.
Which is why I find politicians’ promises to “restore jobs” a bit puzzling. I sincerely wonder: What are they thinking?! While government policy can support job creation broadly, most of the pain in the system today is not in the loss of jobs but the mismatch between the skills needed for available jobs and the skills workers possess. We need to address both sides of the equation.
In the middle of the last century, the United States had one of the closest matches between jobs and skills of any country in the world. At a time when most European countries limited advanced education to the economic elite, the U.S. made it broadly available and, as a result, created a workforce that had the right skills, at the right time, for our rapidly expanding industrial economy. U.S secondary schools have been free and generally accessible since early in the 20th century. By the 1950s, nearly 80% of older teens (aged 15 to 19) in the United States were enrolled in high school, compared with fewer than 40%in Western Europe. The widespread expansion of state colleges and universities, begun under the Morrill Land Grant Act of 1862, led to even further advances in American education. For decades, the number of educated American workers grew faster than did the demand for them.
But beginning with the cohort that completed its schooling in the early 1970s, the supply of highly educated Americans slowed significantly, while the demand continued to increase. At one point in our history, most American workers were engaged in producing food and manufactured goods, often through physical labor that did not require a great deal of training. The U.S. is now shifting to a knowledge-based society where workers produce services using knowledge, expertise, and analytical skills.Traditional manufacturing has been shrinking as a share of the economy for decades.
The impact of the decline in manufacturing jobs hits men in the workforce particularly hard. As Lawrence H. Summers, director of the White House’s National Economic Council, said at Davos in January, “Just to put it in a way it’s not usually put, one in five men in the United States between the ages of 25 and 54 is not working right now. A reasonable extrapolation would be that following a reasonable recovery, it will still be one in seven, or one in eight, who are not working. That is in contrast to the mid-1960s, when 95% of men between 25 and 54 were working. That suggests quite profound issues.”
As this year’s Economic Report of the President on Strengthening the Workforce concluded, the best way to prepare our workforce for the challenges and opportunities that lie ahead is by strengthening our education system — creating a seamless, efficient path for every American, from childhood, to acquire the skills need to fill the gaps.