Does anyone else see an irony in some of the news stories these days? High unemployment, escalating student loan debt and talent shortages. How can this be?
To use terms from my days in manufacturing and distribution, the product mix is out of balance.
Yes, we have very high unemployment and even higher unemployment if you count discouraged workers. The skills and experience those unemployed and under-employed persons possess is not a perfect fit for the needs of employers. I have spoken with manufacturers who are concerned about the aging population of workers who understand complicated machining skills. I have read plenty of articles about technical companies not being able to find workers with the programming and technical skills they would prefer.
The number of schools that have popped up and are focused on retraining the work force is surprising. Those schools are often funded by students using federal student loans. The students are a combination of recent high school graduates, recent college graduates who have not been able to find work and older workers seeking new skills. This has resulted in a large increase in the federally guaranteed student loan debt. Just a few weeks ago the Consumer Financial Protection Bureau unveiled a new initiative to assist the 37 million former college students who are struggling to pay off a combined $1 trillion in student loans. And that number only focuses on those who have left the classroom.
Grant Thornton International recently released a study showing that 39% of businesses are having difficulty recruiting the right people. Their research shows that 28% of businesses expect their 2013 expansion plans to suffer because of skills shortages. How can this reconcile with high unemployment and thousands of students racking up millions in student loan debt getting retrained?
I believe there are three problems. The students who are obtaining the skills needed by employers have not yet completed their studies or don’t have the desired work experience. Secondly, there is a miss-match between the skills employers’ desire and what the students are obtaining. This is particularly true in trade skills that will be needed to replace retiring workers. In other words, not everyone needs a college degree but they do need training. Finally, employers have gotten accustomed to finding great, often over-qualified, workers who were ready to drop into positions with minimal training.
The first part of the solution will work itself out, just not as quickly as employees and employers would like. Workers have always gravitated to the skills which are in demand. Typically there has been a lag in the recognition of the skills needed and beginning of training so we suffer through a skills shortfall.
The solution for employers is to recognize and act on the training shortfall. Employers must communicate their needs to colleges and high schools and assist in the training process. The trade skills shortfall is being addressed through apprentice programs but it will take time to train the new workforce. Fortunately for employers, the poor economy has prompted many experienced workers to remain in the work force to earn more money and build up higher reserves prior to retirement. This delay in retirement will provide some time for younger workers to get up to speed.