Labor paradox
We’re right in the middle of a labor market paradox. There are 3.7 million job openings in the U.S. (which is equal to the population of Los Angeles), while 12.5 million people are looking for work (equal to LA and New York City combined). At the same time, according to the latest ManpowerGroup talent shortage survey, 49% of the employers we surveyed report moderate to severe shortages of available, qualified workers. That’s a 3 to 1 ratio of the unemployed-to-available-jobs, yet nearly half of employers are struggling to fill key positions.
Why are we seeing this contradiction? There is no one reason and the answer to that question is complex. I suggest that the major causes of this mismatch include (but are not limited to):
- Demographics. As the population goes, so goes the labor force. We’re all getting older and so is the workforce. The big baby boomer bubble of folks is approaching retirement – in fact each and every day, 10,000 baby boomers reach age 65. Baby boomers are leaving the workforce in huge numbers.
- Education. High school drop-out rates are high and these kids are not getting the education they need to succeed in the workplace. We could also argue that many post-secondary institutions are not teaching the skills appropriate for 21st century jobs. And, not enough students are choosing to go to career or technical institutions to learn trades, get certified or start apprenticeships.
- Technology. Technology is changing how we work so rapidly that if we aren’t keeping up with these changes, our skills become obsolete very quickly. And add those who have been unemployed for any length of time you can see why the skills of applicants may not match current job requirements.
- Soft skills. Many employers feel there is a lack of soft-skill ability in applicants – critical thinking, problem solving, communications, work ethic, etc. While many of the technical, job-related skills can be taught on the job, the ability to master the soft skills takes a bit more time and patience.
- Location. People may not be where the jobs are and for many reasons don’t have the ability to relocate.
While I certainly wish we could solve all these problems easily, that’s not possible (unless someone has a magic wand). Rather we have to work on it one problem at a time, one person at time, one employer at a time.
Tell me what you think about the talent shortage.
Considering that the enrollment in engineering programs at four year schools peaked in the mid 1980′s, skilled trades become replaced with academic tracks in secondary schools in the 1970′s, and IT enrollments in all schools peaked in 2000, there should be no surprise that Skilled Trades, Engineers, and IT Staff lead the talent shortage in the US.
The causes are broad and cultural that will take major efforts to reverse. Major changes to education and business will have to transpire to address the root causes.
In the short run, local communities need to develop business consortiums surrounding different occupations, identify the skill sets, and create development programs for individuals within the community where individuals move from education to the workplace.
Totally agree, Larry. We need to make sure students know there are multiple pathways to explore after high school. And parents should continue to pressure their kids to get post-secondary education or training, but NOT make it not okay to go to a technical school or community college (sorry about the double negative in that sentence!).
This is a great post, and I agree with almost everything said here, as well as with Larry Domine’s observations. I think, however, that the caption “labor paradox” might be a bit off. Instead of “paradox,” I might reach for more explanatory, testable terms, such as “market failure” or “policy failure” or “disconnect/breakdown.” I like “market failure,” simply because it is the most provocative term in this context (especially if it put: “market failure” vs. “public policy failure”). All stakeholders (labor-using enterprises, policy makers, educational institutions, and the staffing industry — as well as entreprenuers) must start to work collaborative on solutions and not just state the problem and its causes. I suspect too that we have to work on it more than “one person at time, one employer at a time,” rather in each industry and in each occupational area, up and down every unique talent supply chain, every work-arrangement ecosystem. I would suggest that the staffing industry is in the best and most neutral position to take the lead on this, and seek out the rewards that come with correcting “market failure” and guiding “public policy.” This post is a good start and call to action.
Good points, Andrew and I agree with everything you say. But it’s not an “either/or.” We can still work one person, one employer at a time while we look at the bigger picture of policy, education and job creation.
Melanie, I agree that there are many approaches to address supply/demand gaps for certain skills, knowledge, and talent in different areas of the economy. My point is not about whether there can and should be multiple approaches (yes, of course), rather I am raising the question of which approaches will have the greatest impact (yes, an unknown). Having said that, I am interested to hear more details about your thinking about the the approach “one problem at a time, one person at time, one employer at a time,” and how those approaches will put a dent in the macroeconomic problem. It seems like Kristina and Vue have offered some helpful comments to take this discussion in that direction.
I would propose adding two more bullet points to this list as items that contribute to this paradox:
1) Lack of understanding about how to find a job and interview for one – As someone who has worked in a career center and recruiting for almost 10 years, I can tell you that there are many qualified people out there. However, many of them either spend their hours applying online for jobs using resumes and cover letters that do not represent them well (i.e. not tailored to the job, don’t highlight the most important information). Considering that a resume and cover letter provide such limited information (i.e. soft skills are very hard to show with these documents), employers have learned to rely on referrals for the best candidates (because they come with more information that often complete the story of why the person would be a good fit).
2) Employers’ obsession with experience versus ability – Look at any job description and you’ll see a requirement for a certain number of years of experience, usually in the field of the job. With an ever changing economy, people that have a lot of experience from a field that is declining or no longer exists are a very difficult spot. And then as new fields develop, employers still try to look for people who have already done the job. The one employer that is the exception from my experience is Google. They seem to be very good at looking at a person’s resume, determining skills that they have, and then suggesting jobs for candidates (whether or not they applied for them). Until more employers learn to do this, there will be a labor paradox.
Yep. You’re right, Kristina. Job seekers need to take personal responsibility to keep their skills up to date, do their best on interviews and network, network, network. And employers need to look more closely at their recruiting practices. They’re unlikely to find that perfect person, with all the skills and abilities and years of experience — who will be productive on day one. Rather they should seek candidates who have the basic technical and soft skills that are required for the job, then train them to do the rest. Both the demand and the supply sides have to make some changes to help alleviate.
Hi Melanie, this is an interesting topic. I would argue that there isn’t a lack of talent, but there is a lack of willingness to hire talent. What I mean by this is that there are candidates out there that have raw hidden talent. Companies who look for talent vs resumes have been very successful. i.e. FB, EPIC systems, google..These types of companies look for problems solvers, thinkers, soft skills vs experience. I have a friend who went through a Surgeon residency, only to find that he did not want to be a doctor, but wanted to be a SWE programmer. No company would look at him because he did not have ( Programming Experience). He was interviewed and hired by one of the top Healthcare Software developing companies. He is a genius so they are teaching him to code. FB and google recruits by having potential candidates solve problems. I could go on and on but this is the idea. Companies just have to be willing to talk to them. There is talent out there.
Employers and job seekers alike view filling the next job as a transaction or event. Most employers hire when needed and don’t engage the people who have applied in the past and stay connected with that group who probably have the talent for a job in the future. Applicant tracking systems are filled with “dead” data applications and recruiters never use their ATS after the last position was filled. Not having access to real time data forces them to run a new ad and spend more, valuable dollars.
Job seekers are content when they find a job and don’t keep up any level of job search because they “don’t have time”. Employees should always be looking for their next career move. Skills learned on their job often times are not certified so no level of proficiency can be determined.
This approach by both parties leads to a natural disconnect (market failure) between what employers are needing and what talent is available. Recruiters need to stay engaged with their talent community and employees need to keep their LinkedIn profile up to date and always be looking for the next job.
Great topic and remarks by everyone!