The recent release of the March employment data reflecting the pitiful growth in net new jobs for the month of 88,000, while almost half a million more Americans left the labor force during the month, sent the experts scurrying once again to explain why, four years after the technical end of the so-called great recession, we have such dismal growth in the economy and jobs along with the lowest workforce participation rate since 1979. The reasons that I have seen and heard offered range from the federal budget sequestration to the restoration of the 2% payroll tax cut to the overburden of federal regulation to the lack of bank financing to slack consumer demand to the failure of Federal Reserve policy to the dysfunction of Congress to the implementation of Obamacare and to the fear and anticipation of more of all of these. Certainly, all of these factors are playing some part in the failure of recovery.
There is also another factor that is discussed and debated, primarily in the business trade media–the “skills gap”, the notion that there are large numbers of jobs available for which there are no candidates who have the necessary skills required. Unlike the other factors, with the exception of our flawed fiscal policy, an issue for another day, the skills gap problem is largely structural. Basically, we haven’t yet resolved the issue of adapting our deeply flawed public education system into one that can cope with the intense dynamics of economic globalization.
Chief Executive magazine Editor J. P. Donlon writes that the most prevalent answer he gets when asking CEOs what single thing, apart from the general economy, is holding them back from growing their businesses is the inability to find people with the right skills. In the current issue of the magazine, it is reported that a study by the American Enterprise Institute reflected that the shortage of skilled workers is a “serious challenge that needs to be addressed”. In September 2011, Deloitte and the Manufacturing Institute surveyed 1,123 U. S. companies and found a “moderate to severe” shortage of skilled workers that translates into approximately 600,000 skilled positions then unfilled. And the article further notes that, due to the aging of the current employment base, this gap is likely to widen.
Recent data from the Bureau of Labor Statistics reflecting the education levels needed for workplace entry, as analyzed by the Economic Policy Institute, shows that approximately 43% of available jobs projected in 2020 will require a high school diploma or equivalent, roughly the same percentage as in 2010. This is a lower percentage than other analyses I have seen, but will suffice to make my point, which is that the issue in question here, when we consider the skills gap problem, is the quality of the high school diploma in terms of the rigor of the curriculum and the skill sets it represents. For example, if we use community college readiness without the need for remediation as a proxy for postsecondary readiness, including a meaningful 21st century job, we know that less than 25% of Texas high school graduates taking the ACT exam score at this readiness level. Further, based on a study by Houston Endowment, only 22% of Texas students in the eighth grade cohorts of 1996-1998 have secured any type of credential, college degree or industry certification, within six years after their expected high school graduation. And we know that 51% of Texas high school graduates entering community colleges require remedial courses. These results are not appreciably different in other parts of the country, better in some areas, worse in others. At a minimum, this should give us cause to look more closely at the entry level skills and true competencies delivered by our education system and represented by the high school diploma.
My take on this is that the current and growing skills gap is a very real structural impediment to job creation and economic growth, with enormous consequences for the prosperity of generations to come and the security of our country, and that we (and here I refer primarily to business leadership) need to get much more serious and urgent about the structural changes in our education delivery system that are necessary to attack the problem.