Opinion: Fact and fiction on skills gap

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There was a thing called the “skills gap.”

Maybe you heard about it.

Most American economists and major companies throughout the country believed that the “skills gap” caused high unemployment in 2011 and 2012, as we emerged from that terrible recession.

Essentially, the theory was that there were jobs available, but the U.S. workforce wasn’t educated or trained to a level that those positions could be filled.

So national unemployment numbers jumped up near 10 percent, and everyone was wringing their hands because we didn’t have skilled workers to match the rest of the world.

You with me so far?

Good, because two things are coming …

First, it turns out that entire “skills gap” thing was nonsense, and matters were exactly the opposite of what they seemed.

Second, Kootenai County and North Idaho do have a “skills gap” problem, but it’s not the same one that appeared to cripple the nation a few years ago.

Still with me?

IF SO, you’re either fudging or you’re a trained economic analyst, because …

The average person was stumped by the whole issue.

Make that issues, plural.

Let’s hit the national news first: It came as a bombshell after some terrific reporting by a team at the Vox web site.

Here are the critical pieces …

“Five or six years ago, everyone from the U.S. Chamber of Commerce to the Obama White House was talking about a ‘skills gap,’” said the story in Vox.

“The theory was that high unemployment reflected a structural shift in the labor market — such that jobs were available, but workers simply didn’t have the right education or training for them.

“But nothing was really done to transform the American education system, and no enormous investment was made in retraining unemployed workers. And yet the unemployment rate kept steadily falling in 2013, 2014, 2015, and 2016 as continued low interest rates from the Federal Reserve let a demand-side recovery continue.

“Then a bunch of new fiscal stimulus items, on both the spending and tax sides, were enacted in 2017 and 2018.

“The unemployment rate kept falling and the labor force participation rate kept rising.

“Now along comes a new paper from Alicia Sasser Modestino, Daniel Shoag, and Joshua Ballance presented this week at the American Economics Association’s annual conference, and it shows the skeptics were right all along — employers responded to high unemployment by making their job descriptions more stringent.

“When unemployment went down thanks to the demand-side recovery, suddenly employers got more relaxed again.”

This research was based on a set of 36.2 million online job postings, a huge study model.

Bottom line: Lack of skills to handle jobs didn’t cause high unemployment, it was exactly the other way around.

Employers had tremendous leverage, and by using it they caused the high unemployment.

SO WHAT about us in Kootenai County?

“In the discussion of that particular national ‘skills gap,’ we were just moving along with the rest of the country,” said Sam Wolkenhauer, regional analyst for the Idaho Department of Labor. “The story in Vox got our attention just like everyone else.”

But …

“There is different type of ‘skills gap’ that really does affect us,” Wolkenhauer said. “It hurt us coming out of the recession and it’s still a problem.

“This is where you’re talking about a specific skills area, not 36 million job postings but the 70,000 or so jobs in this county.

“We have a lack of skills in some really important areas for a growing area, like construction and the medical care industry.”

Between those two important sectors, we’re talking about roughly 14,000 positions that employers are struggling to fill.

Wolkenhauer said it appeared that Idaho’s educational institutions have moved in directions to help where training is needed.

“But let me put it this way,” he said. “There is a significant wage difference in those jobs between Idaho and our neighboring states.”

It turns out that we don’t really have a skills gap in filling those important jobs.

No, it’s more like a money gap.


Steve Cameron is a columnist for The Press. Email Steve: scameron@cdapress.com

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