Unemployment in America has dipped below 4% for the first time in almost 20 years through a combination of modest, but consistent job growth and a declining yet recently stabilized labor force participation rate. For employers, this means your pool of potential applicants is being squeezed at both ends, making it that much harder to find the talent you need.
To explain the challenges faced by employers, some have pointed to the existence of a “Skills Gap,” a mismatch between the skills employers need and the actual skills in workers’ possession. But is any of it right?
The short is: No. The long answer is: It’s complicated.
A recent survey of employers in high-demand industries such as technical manufacturing, IT and healthcare (places where the demand for specialized technical skills would, in theory, be the highest) we see that most employers can fill positions within three months of their opening. Additionally, many of the more long-term openings reported to the study were during overnight shifts or reflected other more demanding working conditions, indicating that compensation or work-life balance was more at issue than skills.
Besides, it is tough to argue the existence of a persistent skills gap in an economy at or close to full employment with little to no real wage growth. If highly skilled or specialized talent were in such high demand, then one could expect to see companies willing to pay more to attract that talent, and at the moment only professions within the healthcare industry show any meaningful wage growth.
Simply put, the idea that positions are persistently being left open due to “mismatched” candidates is more complicated than many industry groups or employers would have you believe. Despite their protestations, companies need to rethink how they compensate and incentivize new hires while at the same time ensuring that their current staffs not only obtain new skills but the right skills.