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Is There a Manufacturing Skills Gap, a Wages Gap or an Education Gap?

Dear Commons Community,

Adam Davidson, founder of NPR’s Planet Money, had an essay in yesterday’s New York Times Magazine, examining the issues related to job skills and manufacturing.  He introduced the topic by referring to his observation of a class in the engineering technology program at Queensborough Community College taught by Professor Joseph Goldenrod.

“As the instructor Joseph Goldenberg explained, today’s skilled factory worker is really a hybrid of an old-school machinist and a computer programmer. Goldenberg’s intro class starts with the basics of how to use cutting tools to shape a raw piece of metal. Then the real work begins: students learn to write the computer code that tells a machine how to do it much faster. “

Mr. Davidson goes on to explain:

“Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000. And while many of these jobs were lost to competition with low-wage countries, even more vanished because of computer-driven machinery that can do the work of 10, or in some cases, 100 workers. Those jobs are not coming back, but many believe that the industry’s future (and, to some extent, the future of the American economy) lies in training a new generation for highly skilled manufacturing jobs — the ones that require people who know how to run the computer that runs the machine. “

However, the situation is complicated by the fact that many skilled manufacturing jobs are not competitive when it comes to wages:

“The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several  factory managers who  confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages. In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren’t many places where manufacturing wages were going up and employers still couldn’t find enough workers. “Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.” The study’s conclusion, however, was scarier. Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages…

It’s easy to understand every perspective in this drama. Manufacturers, who face increasing competition from low-wage countries, feel they can’t afford to pay higher wages. Potential workers choose more promising career paths. “It’s individually rational,” says Howard Wial, an economist at the Brookings Institution who specializes in manufacturing employment. “But it’s not socially optimal.” In earlier decades, Wial says, manufacturing workers could expect decent-paying jobs that would last a long time, and it was easy to match worker supply and demand. Since then, with the confluence of computers, increased trade and weakened unions, the social contract has collapsed, and worker-employer matches have become harder to make. Now workers and manufacturers “need to recreate a system” — a new social contract — in which their incentives are aligned. “

In his conclusion, Davidson refers to an interview with the owner of a metal fabricating factory in Wisconsin:

“The problem, [the owner]  finds, is that far too few graduate high school with the basic math and science skills that his company needs to compete. As he spoke, I realized that this isn’t a narrow problem facing the manufacturing industry. The so-called skills gap is really a gap in education, and that it affects all of us.”

Much for all of us but especially young people to think about.

Tony

 

 

 

 

2 comments

  1. There’s plenty of evidence to support that skills gaps are emerging in the economy today, and one major way to curb them is to invest in career and technical education (CTE). CTE has proven to deliver many benefits, including improved student achievement and career/earning prospects, more community vitality and more qualified workers for the jobs of today. When businesses work with educators, CTE programs are especially effective.

    The Industry Workforce Needs Council is a new group of businesses working together to spotlight skills gaps and advocate for CTE as a means of bridging them. For more information on the IWNC, or to join the effort, visit http://www.iwnc.org.

    Jason Sprenger, for the IWNC