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Unemployment and the Skills Gap Myth

published 5 February 2013 updated 5 February 2013
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The American social reformer and women’s suffragist Jane Addams noted in 1910 that of all the aspects of social misery nothing is as heartbreaking as unemployment. To be without meaningful work is not only financially devastating, but also mentally and physically damaging. Unemployed workers and their families are twice as likely as those with jobs to experience poor self-esteem, depression, and anxiety – conditions that routinely led to serious physical health problems. Added to this is the destabilizing impact of high levels of unemployment on our communities and social well-being.

Few would dispute the view that unemployment is a tragedy, but a century later the scourge of joblessness remains with us.  To make matters worse, most governments today seem more focused on fiscal austerity than on dealing with the human catastrophe that is unemployment.

It should come as no surprise then to learn that unemployment continues to rise. According to the latest global employment trends report from the ILO [link to: http://www.ilo.org/global/research/global-reports/global-employment-trends/2013/lang--en/index.htm], after two years of modest declines the number of jobless people around the world rose last year to and is expected to increase again in 2013.  And the labour market situation remains particularly bleak for young people. A stunning 12.6 per cent or nearly 74 million people between the ages of 15 to 24 are unemployed with more and more experiencing long-term unemployment.

The ILO report suggests that a significant share of unemployment can be explained by a so-called skills gap or shortage. This echoes the well-rehearsed argument that more and more job-seekers can’t find work because they don’t have the skills employers need. Talk about blaming the victim. But it doesn’t end there. The finger pointing extends to schools, colleges and universities who are supposedly failing to equip students with the skills demanded by today’s labour market.

There’s just one problem with the skills gap argument. There is no solid evidence to support it. Yes, there are plenty of anecdotes here and there of employers complaining that even as the ranks of job seekers swell they can’t find any qualified candidates. And there are some emerging specialized occupations where there may in fact be shortages of skilled applicants at the moment. But this alone doesn’t confirm that the education system is failing us or that there’s a general skills deficit.

Digging into this question a bit deeper, Wharton University’s Peter Cappelli concludes that the skills gap is a myth. In Why Good People Can’t Get Jobs[link to: http://wdp.wharton.upenn.edu/books/why-good-people-cant-get-jobs/] Cappelli wanted to find out why many jobs in the United States are going unfilled even as unemployment remains high.

He concluded that employers must bear much of the responsibility. Companies are investing less in on-the-job training and becoming pickier about who they hire. In effect, employers are increasingly demanding significant prior work experience for even unskilled jobs. The problem is this creates a vicious circle – job seekers who could do the job with a small bit of hands-on training are immediately disqualified because they don’t have experience, but they can’t get experience until they get a job.

Cappelli also suggests that some jobs go unfilled not because of a skills gap, but a wage gap. In many cases, employers are simply not offering attractive salaries. Calling this a skills shortage is absurd. As Cappelli illustrates, you may not be able to find the exact car that you want at the price you’re willing to pay, but that doesn’t mean there is a shortage of cars.

What about the claims that public education is failing? Again, there’s absolutely no good evidence to support this. When employers are asked in surveys about what skill deficiencies they see in graduates, the list isn’t topped by poor academic abilities. The most common weaknesses identified are attitudinal or what we used to call character traits -- things like motivation, punctuality, work ethic and time management. A lot of these criticisms have been consistent for decades and might reflect generational biases. Older employers, perhaps nostalgic for the “good old days”, may be a bit too quick to judge younger applicants. In any case, you have to go far down the list before you encounter the first skills weakness that is taught almost exclusively in schools – reading. And this is ranked as only a small deficit.

The point is teacher unions have to be very careful about the skills shortage argument. On the surface, it might look like a good way to argue for more money for education and training. But it’s not only an argument without evidence; it can also quickly lead to the conclusion that public schools are failing us and to justify a host of regressive “reforms”.

The truth is quality public schools have been and are doing a remarkable job in preparing students for work and life. The failure is with employers and governments. Until we recognize that and take the steps needed to help people find work, the social misery that is unemployment will remain.

The opinions expressed in this blog are those of the author and do not necessarily reflect any official policies or positions of Education International.