Last month, my colleague Laurie Bassi posted about the “surprising” finding that manufacturing firms are having a hard time filling some of their available jobs. Laurie noted that one likely explanation is fairly simple and obvious: many of the jobs are paying below-market wages and aren’t attracting workers for that reason.
Last week, Slate writer Daniel Gross tackled the same issue – and came to a similar conclusion: “employers shouldn’t be surprised that Americans won’t take their crummy, low-wage jobs.” He notes that even in an era of high unemployment, “the laws of supply and demand apply” and employers may simply not be offering terms that are attractive enough to potential employees.
Today The New York Times ran a front page story on how the “skills shortage” is having a negative effect on manufacturing in the United States. The article reports that manufacturing firms are not able to find the highly skilled employees they are seeking for $15 to $20 an hour, and can’t find job applicants who come with the highly technical, specialized skills required for the work.
Although the Times is not typically known for its pro-business reporting, this article strikes me as frightfully one-sided. It fails to consider that employers’ complaints about skill shortages may simply result from below-market wages and/or miserable investments in training.
If U.S. manufacturing is to get the skilled workers it needs, then it will have to compete with the other sectors in which these workers are in demand and can find jobs (even in a labor market with dreadfully high unemployment). And if manufacturers want highly-trained workers, then they need to invest in training (which far too many do too little of).
The classic economic symptom of a declining firm is a failure to invest. When manufacturers complain about the shortage of skilled workers, they are confusing the symptom with the problem. If they would raise wages and/or invest in training people, they’d find that the apparent “shortage” would begin to disappear.
Last week I had the good fortune of speaking in London at the U.K. Skills Convention 2010 on Skills, Jobs, and Growth. The delegates were an extremely interesting group of hand-picked folks from around the globe, including Australia, Canada, China, New Zealand, and (of course) the United Kingdom. (You can find videos and blogs from the conference online.)
I’ll confess that I’m often not much of a fan of conferences, but I do attend my fair share, often out of professional necessity or courtesy (the latter, in this case). But to my great delight, this proved to be a conference I’m very glad I attended.
Here are four things that I observed and learned from the conference that will stick with me:
- Nations around the world are building infrastructures and devoting significant resources to improving the skill base among working-age adults.
- The United States is lagging behind in this regard.
- A very strong research base demonstrates that organizations that implement “high performance work practices” (what I would call “superior human capital management”) enjoy significant economic benefit from doing so.
- England is lagging behind many of its European counterparts in developing critical aspects of these high performance practices.