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Is the worker skills gap an 'urban myth'?
YES
Michael J. Handel
It’s easy to exaggerate
These days, the popular refrain from employers is that young people coming out of public schools don’t have the skills to cut it in today’s workplace. Some believe that the spread of computer technology keeps raising the bar and fewer young workers are able to jump over it. The gap between education levels and job requirements is indeed a popular notion—but it’s based on misconceptions.
While there are real problems, it’s important to keep things in perspective. Skill and education levels have not declined among either employed adults or high school students in recent decades. In the early 1960s, nearly half of all Americans dropped out of high school, including nearly one-third of young adults. Today, both figures are under 15 percent. Four-year college completion rates for young workers doubled, from 15 percent to 30 percent, over the same period. Americans are more educated now than ever before.
For all 17-year-olds, the National Assessment of Educational Progress (NAEP) long-term reading and math trends tell a similar story. Average test scores have fluctuated in a relatively narrow band and trended a bit upward since the early 1980s. Racial gaps narrowed in the 1980s, though some of the gains were lost in the 1990s. From the late 1960s to the mid-1980s, SAT and ACT scores did decline and later recovered. To the extent there was a real decline in reading and math scores, most of it is history.
While employers do complain that workers under 25 have problems fitting into today’s workplace, focus groups and surveys show many really are frustrated with poor work attitudes and lack of effort, which improve with age. As for technological competencies, young people tend to be more current and flexible than older workers. Additionally, the broader workforce uses computers in ways that are relatively easily learned and do not require expert knowledge.
To be sure, inequality grew and the wages of most Americans stagnated in the last 25 years. The reason is not skills or education. Rather, the economic crises of the 1970s and early 1980s resulted in a drive to lower labor costs, contributing to a lack of well-paying jobs.
Yes, it’s always a good idea to improve education and training, but let’s not overlook the facts. The education system and the labor force have absorbed changes in a reasonable, albeit imperfect, fashion. Skill requirements have risen and will continue to do so, but probably at the same steady pace as in the last four decades—not at the breakneck speed of popular imagination.
Michael J. Handel, a sociologist at Northeastern University, is author of the 2005 Economic Policy Institute report “Worker Skills and Job Requirements.”
NO
More skills equal higher wages
When policymakers argue that the skills gap in the United States is an urban myth, they tend to be justifying the large cuts in federal education and training budgets over the last decade. In essence, they say, why should the United States subsidize a student to go to school to be an engineer, chemist or doctor if these skills are not needed? Wouldn’t it be better to train technicians using on-the-job training instead of formal education?
These arguments fly in the face of both economic theory and the data. First, with increased competition from highly skilled foreign labor, more education is the only way to keep wages high. Capital markets are fluid in the new global economy, and capital will move between countries to find the highest return; this leaves human capital as the only investment that can raise the standard of living for the citizens of the United States.
Why, then, argue against increased public spending and access to education? Simply put, it can make sense from the business perspective. Those with skills that can be transferred from job to job, such as engineers and chemists, tend to have more power in determining their working conditions and can demand higher wages. When a company can substitute lower-skilled, company-specific workers, it can extract lower wages, break unions and increase profits. In its most basic form, the better argument is this: An individual should continue his or her education until the benefits in higher lifetime earnings are outweighed by the additional costs. This level will differ for each individual, depending on their natural skills and opportunities. Subsidizing education will lower the costs of education and increase the skills that a society can draw upon in the future. Society should continue these subsidies until the benefits in higher standards of living are matched by the costs to society from raising taxes to pay for this education. In other words, we should continue to fund skills education until the costs outweigh the benefits for society as a whole.
The question, then, is how we will know if the subsidies are too high.
It is not by looking at international test results or SAT scores. Instead, we must ask whether high-wage industries are entering or leaving the country. The Work Place Development Task Force, chaired by the late Sandra Feldman and sponsored by the Shanker Institute, framed the issue correctly: “The lack of basic skills throughout much of the workforce, and the growing shortages of workers with specific skills that are increasingly needed, create a danger that the American economy will drift into what economists call low-skills equilibrium.” This is a place we don’t want to go.
Fred Floss, vice president for academics at the United University Professions/AFT, is a professor of economics and finance at the State University of New York College at Buffalo.
