May 10, 2012 brian

Skills Shortage: Fact or Fiction?

Some of my favorite people in Washington last year were at the Manufacturing Extension Partnership (MEP), and my respect for the agency just went up tenfold. The manufacturing industry has been complaining about a shortage of skilled workers for years. Yet, very rarely do you see any meaningful discussion of wages in the context of this purported national crisis. A skilled worker shortage and a skilled worker shortage at the wage you are willing to pay are two different things. But you almost never see employers pressed on it. I guess that’s not too surprising. Think tanks don’t get their studies quoted in speeches by questioning the conventional wisdom, especially now that the Obama administration has hitched its wagon to manufacturing as a campaign strategy.

But, occasionally, there are wonderful moments that renew my faith in the possibility of Washington being a place where smart people can disagree about important policy issues in constructive ways. One such moment occurred when Stacey Wagner on the MEP blog a few weeks ago dared to question: Skills Gaps or Wage Gaps? It’s not an academic argument. If we are going to prioritize certain occupations and training programs in our “employer-driven” workforce development system based on input from employers, then stopping at “we can’t find workers” is woefully inadequate. We need much better information on why that’s happening, including how the labor market responds to different wage levels.

Thanks to my friends at EMSI, I was able to have this conversation with about 1,000 experts at the National Association of Workforce Development Professionals annual conference on Monday, where I did the opening keynote. We looked at job postings for skilled trades as a way to measure the shortage, compared wages for production work to wages in other types of occupations that could be competing for the same employees, and learned that workers in the skilled trades are generally older than the workforce as a whole. If the skills shortage is debatable today, it likely won’t be at some point in the future.

There was healthy disagreement about what the data could say, reliably, about the skills shortage, but I think everybody agreed in the value of continuing the conversation.

Maybe Ms. Wagner could lead it, if she’s still working at MEP.

(HT to ICIC for the pointer)