The Skills Gap at the Macro Level
The current labor market “skills gap” translates into more than 4 million jobs annually going unfilled, and stems from an imperfect match of supply and demand for critical talent in growing sectors of the economy.
Skills shortages are common to most periods of economic transition and resurgence over the past 100 years; it’s a deceptively complex problem that does not lend itself to simple solutions. The root cause of a skills gap is demand brought on by ever-evolving new technologies and accelerating pace of change without sufficient on-and-off ramps for skills training and actions by policy-makers. This was as true during the industrial revolution as it is today in the mobile commerce era. However, the current skills gap challenges have important differences and, without action, very worrisome implications for the current generation of young adults.
Middle-skilled workers significantly contribute to America’s global competitiveness. Unfortunately, 45 percent of U.S. employers reported that a lack of skills exhibited by entry-level employees caused “significant problems in terms of cost, quality, and time” or worse. A recent Manufacturing Institute study describes a growing skills gap in the industry as “storm clouds on the horizon that could dampen growth.” More than 75 percent of manufacturers reported a moderate to severe shortage of skilled workers, and the U.S. manufacturers may lose up to 11 percent of earnings annually as a result of increased production costs driven by a shortage of skilled workers. While the risk to sustainable profit grows, this forceful dynamic has also begun to systematically limit opportunities for a large part of the latest generation of young Americans as the job market demands a wider array of skills from workers.