There’s Not Really a Skill Shortage

Part of the reason politicians and pundits offer for increasing the college graduation rate is that the country needs more skilled employees. This might be an exaggeration.

Saying America has a skills shortage isn’t exactly a controversial opinion. Everyone “knows” this now. As Motoko Rich wrote in the New York Times in 2010, “The problem, the companies say, is a mismatch between the kind of skilled workers needed and the ranks of the unemployed.” And according to a piece in The Economist earlier this year, “America’s problem with training was laid bare in a report published last year by Deloitte, a consultancy firm, and the Manufacturing Institute. It identified 600,000 positions that were going unfilled because there were too few qualified skilled workers.”

But, according to an article by Matthew O’Brien at The Atlantic:

We would expect wages to be rising much faster in sectors where employers can’t find enough qualified workers if a skills mismatch really was holding the economy back. But that hasn’t really been the case. The chart below from the Chicago Fed tries to quantify how big an impact there’s been from a skills shortage. The answer: not much.

O’Brien provides a chart of demand for jobs, based on online help-wanted ads for various positions. This is what job demand looks like:


If companies really couldn’t find enough high-skill workers, the gray line above would look different from the blue and black lines, which represent demand for low and medium skill jobs, respectively. Instead, all the lines look the same. As O’Brien explains, “this is what a general shortfall of demand looks like.”

But this skills shortage myth is likely to persist, largely because skill shortage reports always seem to come from employer surveys.

Employers might think they want more skilled workers. They might even believe such workers are hard to find, but it looks they’re not actually trying to hire such people. [Image (originally) via]

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Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer