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US / Labor Surplus, Labor Shortage, and the Skills Gap

We have two significant problems with the job market in the current recovery — a labor surplus and a labor shortage. High unemployment and a lack of job opportunity for young people – the surplus; employers who can’t find the highly skilled workforce needed – the shortage. The situation resembles an hourglass. On one end are those people needing jobs, but lacking skills, trying to fill the need of employers for highly skilled workers – the other end of the glass. At the neck of the hourglass is the community college, providing the skills needed for business competitiveness.

Both labor statistics and anecdotal information from the field indicate that an economic recovery is under way, but job recovery has been slower than market recovery. In May 2013, the unemployment rate was 7.6 percent — 11.8 million people (Bureau of Labor Statistics). Of this almost 12 million, 4.4 million were long-term unemployed (27 weeks or more). In manufacturing (durable and non-durable), one of the sectors experiencing the most pronounced shortages, employment was only slightly better than the economy as a whole with 6.8 percent unemployed — 1.1 million people. The states showing the greatest improvement in employment were those with significant energy sectors (North Dakota and Texas, in particular). In other words, there is substantial and persistent pool of unemployed adults who were previously working who are looking for opportunity in this economy – the labor surplus.

Then, there is the shortage. Perhaps the best assessment of this phenomenon is the 2011 Manufacturing Institute and Deloitte study, Boiling Point: The Skills Gap in U.S. Manufacturing. The study points to a deficit of 600,000 skilled workers, primarily highly skilled production workers – “machinists, operators, craft workers, distributors, and technicians” These highly skilled technicians are the new knowledge workers, requiring applied math and science, critical thinking skills, and an understanding of lean manufacturing and supply chain. To paraphrase the old car ad, these are not our grandfathers’ plant workers. Some have questioned whether the skills gap is as serious as the Manufacturing Institute report portends, but analyses by McKinsey and Company and others, as well as anecdotal reports from employers on the ground in places like North Carolina, attest to the reality of the gap. The only question is how big is it?

Chosen excerpts by Job Market Monitor

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via Dr. Gary M. Green: Labor Surplus, Labor Shortage, and the Skills Gap Between.



  1. Pingback: US / Why Jobs Go Unfilled In Spite of High Unemployment | Job Market Monitor - August 18, 2013

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