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What Do 3 Million Job Openings Tell Us About the Skills Gap?


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#1 concert andy

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Posted 06 December 2012 - 02:20 PM

http://finance.yahoo...Y3Rpb25z;_ylv=3

By Maureen Conway

This post is part of an Aspen Institute Business & Society Program conversation series exploring ways to align the incentives of business and the capital markets with the long-term health of society. To learn more, visit www.aspenbsp.org.

At last report, there were approximately 3.6 million jobs open in the U.S., and the Bureau of Labor Statistics has reported more than three million openings at the end of each month for over a year now. In a context of high unemployment, many conclude that this figure must mean that employers cannot find workers with the appropriate skills for the jobs that are open—that is, that there is a "skills gap".[1] In looking more carefully at the job openings numbers, however, this conclusion seems unfounded.

What Do We Know About the Available Jobs?

The reported number of job openings comes from the Bureau of Labor Statistics, courtesy of a monthly establishment survey called the Job Openings and Labor Turnover Survey or JOLTS. And, since the recovery started, JOLTS has found a growing number of job openings at the end of every month—most recently reported at 3.6 million.

Employers can have jobs open for many reasons—for example, they may need to replace workers that have retired or moved to different jobs, or their business is growing and they are adding jobs, or they have been unable to find workers with the skills they need. Since JOLTS does not ask questions about how long jobs have been open, how much they pay, or what skills are required, it is hard to draw firm conclusions about which of these reasons explains current job openings.

In the most recent report, the survey found 4.2 million hires during the month and about 4 million job separations (layoffs, retirements, quits, etc.), similar to the results of the preceding few months. When the number of openings is viewed in this broader context of continued economic recovery and an economy that employs 143 million people, some of whom are bound to change jobs at times, then 3 million openings at a single point in time does not seem unusually large. In addition, there is no evidence that openings are concentrated among high skill jobs. For example, in the last two months, retail trade & accommodation and food service, sectors known for having large numbers of low-wage jobs, account for 30 percent of openings, while manufacturing, the sector most frequently cited as struggling due to an inadequate supply of skilled workers, has accounted for only six percent of job openings. On the basis of these commonly cited data, it is hard to draw the conclusion that a "skills gap" is a major contribut
or to our current unemployment problem.

So, Is There a Skills Gap?

The short answer seems to be "no," or at least not yet.

Most labor economists will point out that we have not seen any increase in wages in skilled-trades occupations in manufacturing, or other kinds of occupations that are frequently cited as experiencing a skills gap. Taking a close look at wage data in manufacturing, the Boston Consulting Group recently found that less than one percent of the manufacturing workforce, in a handful of labor market areas, is affected by a skills gap. In its survey of employers, Manpower finds that, among U.S. employers having difficulty filling jobs, 54% report that the reason positions are difficult to fill is that workers are looking for more pay than is offered and 44% report that applicants lack experience.

But such reasons cast doubt on the idea of a skills mismatch, as it is not unreasonable to expect employers to pay the going rate for the skills they need, or to provide opportunities for workers to gain experience doing the jobs they need done. So the driver of current high rates of unemployment certainly does not seem to be the inadequate skills of the American workforce.

Still, There Is a Problem

All this is not to suggest, however, that skills issues are not worth some serious attention. Certainly a well-educated and skilled workforce is important to the country's economic strength. And some industries, such as utilities and construction, are facing the retirement of skilled trades people without an obvious pipeline to replace these workers.

A puzzle, however, is why businesses that are concerned about the skills gap don't seem to see themselves as part of the solution. It would seem logical for businesses, which have an obvious interest in building a skilled workforce, to play a leading role. Indeed, at one time, it was not unusual for businesses to invest resources and effort into training their workers, through apprenticeship systems and other forms of on-the-job training. We need models in which both private industry and the public sector play a strong role in building the skills of the American workforce. And we need companies in which workers can benefit from improving their skills and acquiring experience.

Business and the general public have a shared interest in a strong workforce, and should have a shared vision--and shared investment strategy--to develop the next generation of skilled workers.

#2 hoagie

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Posted 06 December 2012 - 02:31 PM

In the immediate job market where i am (monmouth/middlesex/ocean counties nj) the same thing seems to be happening; employers want to hire skilled workers who will be of the highest quality, yet offer lowball wages, and wont hire someone green that might take the low pay rate to learn on-the-job. Thus, the same job offers fooat around month in, month out.

If you look at it right, it seems these employers are trying to take advantage of the times and get the most for the least, at the risk of not hiring anyone (and saving on labor). Really makes finding a quality job doing anything tough when the game is fixed

#3 TakeAStepBack

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Posted 06 December 2012 - 02:40 PM

The market is saturated with those looking to acquire jobs. You have a massive pool of potential hires. When you're a business, just hiring someone, costs money. Hiring taxes, etc..

So, they look for the best possible fit, and have the upper hand when UE is high. Because demand for labor positions is high. The opposite is true in times of low UE. The demand is much lower, so employers will higher to fill voidds even for more pay and less skill.

Right now, a lot of jobs are "open", but the employers aren't actually hiring. I know this through first hand experience. They post a job,, get a tax deduction from federal incentives to hire, and just sit on the position. Post it up, take it down, post it up, repeat.

This also lowers the negotiation ability on pay. In my field and demographic, a position would easily go for 80 - 100K a year. Now, after four years of heavy downturn adn a saturated market, you'll be lucky to get 50 or 60K. Lucky.

Labor is a commodity (no, not the people, the labor itself).

#4 Feck

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Posted 06 December 2012 - 03:13 PM

we're probbaly going to have a big shake up in 2013 or 2014.
in the good old days they use to offer a rention package so people would not leave before they needed to cut you loose.
Since none of us ( ok 1 person so far) has left or been able to find anything close to what we have now, we have no real option than to wait it out. I am looking, but not finding anything worth while - withut a major relocation.
Hopefully by the end of 2014 things start to pickup.

#5 TakeAStepBack

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Posted 06 December 2012 - 03:19 PM

I'm thinking it wont ever pick back up. I was looking for a new job for the the last 3 years up until recently. After several hundred applications/resumes sent out, I got a grand total of 5 rejection letters and 2 interviews. I just said fuck it. As far as I'm concerned, I'm just part of the "lost generation" that is the reality of this last downturn. The hopes of home ownership, better pay and moving up the ladder in my field seems completely lost to me.

Hopefully feck is right though.

#6 hoagie

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Posted 06 December 2012 - 03:22 PM

Right now, a lot of jobs are "open", but the employers aren't actually hiring. I know this through first hand experience. They post a job,, get a tax deduction from federal incentives to hire, and just sit on the position. Post it up, take it down, post it up, repeat.


Thanks, this just confirms my suspicions...shady

#7 Feck

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Posted 06 December 2012 - 03:43 PM

After 5 years of not seeing any movement, one of our trade news letters has been posting new hires and promotion information again , on a monthly basis. They only show the exec and upper management positions, but with movement comes opportunity.

At my level there are still a lot of people that have been out for a while, hopefully there is enough headspace to pick most of them up and then some.

#8 TEO

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Posted 06 December 2012 - 03:43 PM

Geographical location also plays a role.

#9 concert andy

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Posted 06 December 2012 - 03:53 PM

Geographical location also plays a role.


You can say that again. When I moved to Scranton, I couldn't find anything good. Took a year to finally accept a $10 an hour job. Interim I worked as a fancy cab driver for people to go to their lawyer appointed doctor appointments all over PA. From Williamsport to Philly on the regular, and one trip to Pittsburgh. But I did get to go to a Pirates game at PNC park.

After 6 months of working there I was very unhappy.

Then I found a 'job' for decent money 10 months later.

When we decided to move to Philly, I had 4 interviews, 2 offers, and 1 job in a 3 month job search.

#10 TakeAStepBack

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Posted 06 December 2012 - 03:54 PM

Absolutely. Business is booming in Texas. Lots of companies are relocating to places like Texas.

#11 PeaceFrog

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Posted 07 December 2012 - 08:12 PM

I think it means that education has become too expensive