New UWM report says NO; ‘Skills Gap’ a Myth

Written by admin   // April 1, 2013   // 0 Comments

by Mitch Teich, Article courtesy of WUWM’s “Lake Effect”

Business leaders in Wisconsin often lament that not enough qualified workers are in the job pool for the jobs that they need to fill – that there is a so-called “skills gap.”

But a new study says that’s simply not the case.

UWM professor Marc Levine just completed his Skills Gap and Unemployment in Wisconsin: Separating Fact from Fiction study to quantify what the skills gap situation is in Wisconsin.

And it comes to a conclusion that flies in the face of the narrative that is often portrayed in the state. A few months ago, Milwaukee Public Radio produced a series of reports on the so-called “skills gap” in Wisconsin – the apparent mismatch between unemployed workers and the jobs that exist. In it, business leaders said there were too few skilled workers to hire, while skeptics argued that the real problem was an unwillingness to pay workers what they’re worth.

After reviewing studies from across the country, Levine says there is virtually no research supporting the existence of a skills gap in Milwaukee. If a skills shortage did exist here, he says we would see higher wages and longer hours – instead we have seen these decline since 2000.

“There’s almost a complete disconnect between the public discourse, the discourse certainly that we see in Wisconsin about the skills gap as if it’s a given from politicians, from media, from business leaders,” he says. “There’s a disconnect between that and the consensus on the other side among trained economists.”

Likewise, we often hear about how future jobs will require a high level of skills, but Levine says occupational projections suggest 70 percent of openings through 2020 will require a high school diploma or less.

Nor do national data on job requirements show that the Milwaukee and Wisconsin labor markets comparatively lack a certain set of skills.

Levine says that’s particularly true in the oft-cited case of the welding industry’s purported inability to find qualified welders here – or as he calls it, “the peculiar case of the missing welder.”

The study instead indicates, “there is no evidence that Wisconsin suffers from a ‘competitive disadvantage’ in the skills of its welding labor force.”

Moreover, Wisconsin welders actually have more educational attainment than the national average.

The study does suggest that there is indeed a high unemployment rate, the leftover of the Great Recession and stagnant job growth.

Data show there are three times as many unemployed workers in the U.S. as there are job openings.

There may be a real skills gap in Wisconsin, but it’s the opposite of what we commonly hear about, Levine says. Too few jobs that require a high level of skill are being created, while the labor market has too many educated workers.

“It is a mismatch of too many highly educated workers chasing too few ‘good jobs,'” the study reads.

What Levine calls “stunning” findings show that a quarter of Milwaukee’s retail salespeople have college degrees – a 14 percent increase since 2000. Sixty percent of the state’s parking lot attendants have some post-secondary education.

That’s the result of rising rates of educational attainment in Wisconsin in the last few decades.

About 90 percent of adult Milwaukeeans graduated from high school, and there are growing numbers of people from all racial and ethnic groups graduated from college.

This “rising human capital” is exacerbating the inverse skills gap in a stagnant job market, Levine says.

A false narrative?

Levine says there are three main reasons why this “false” narrative of the skills gap persists:

• It’s a “diversionary tactic.”

“This has been an argument that has been raised by corporate America by business leaders on a consistent basis for well over 30 years now,” Levine says.

“So no matter what the macroeconomic conditions are – high unemployment, low unemployment, stagnant wages, rising wages, education standards up…no matter what, we always have a skills shortage. That simply from an economics perspective cannot be.”

Levine says ideological partisans use the skills gap narrative to divert attention away from criticism of macroeconomic policy and how job creation is being managed in the country.

He says it distracts from tougher questions on issues like: off-shoring practices, corporate dis-investment, high unemployment in the face of record corporate profits, and whether the U.S. should be pursuing a bigger stimulus versus austerity policies.

“It diverts us from the real issues of what government can in fact do to deal with unemployment.”

• A “herd mentality” latches on.

Levine says the skills gap meme is an easy explanation for our persistent high unemployment, and it’s an easy line for politicians to use.

• The media repeats it.

Levine says the media, both locally and nationally, haven’t really investigated into the issue and instead simply report what politicians and business leaders are saying.

He says while there is a “vast consensus” of economists that the skills gap theory is false, none of that work has been cited in any of the highly touted reports on the skills gap used here in Wisconsin, such as the so-called “Sullivan report” or the “Be Bold 2.”

Then newspapers repeat what they’ve been told, accepting on “face value” a “default position” on the existence of the skills gap. Levine is a professor of history, and a senior fellow and the founding director of the Center for Economic Development at UWM-Milwaukee.

















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