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Home Publications Blogs Beat the Press The Skills Shortage: It's on the Management Side

The Skills Shortage: It's on the Management Side

Wednesday, 23 January 2013 03:43

Yes, we have a mismatch of jobs and skills. The problem is that it seems to be on the side of the managers who can't seem to figure out how to get good help. An excellent review of Peter Cappelli's new book by Trey Popp.

Comments (9)Add Comment
written by Chris Engel, January 23, 2013 4:06
When you're a middle-manager responsible for hiring, you have a hard limit sometimes budget-wise. Can't always get flexibility to offer more competitive wages unfortunately.
written by David, January 23, 2013 4:46
The age of leisure management has arrived?
Perfect Matches Made in Heaven End Up in Economic Hell of Bottom Feeding
written by Last Mover, January 23, 2013 7:00
As explained in detail by Trey Popp, the 'perfect match' dilemma created by employers who claim lack of available skills as an excuse for not hiring - makes sense in the self interest of employers.

When the job market is flooded with qualified applicants combined with high churn for those who do find work due to low aggregate demand, it pays employers to be extremely picky and choosy for specific skills and experience while offering below par compensation.

This is bottom feeding. If a highly qualified underpaid candidate is stumbled across and hired under these conditions, the employer wins despite the lack of sales. If no candidate is hired the employer also wins, given free reign to bash the system with complaints for not providing qualified applicants.

If there was a tight labor market it would eliminate the 'perfect match' dilemma in short order. Yet know-nothing economists and pundits pounce on the current situation as proof of structural rather than cyclical and frictional high-churn unemployment brought on by the deep recession.
written by Kat, January 23, 2013 8:40
The book looks good and it offers many reasons for their inability to fill positions beyond simply not paying enough.
That his ideas are controversial is dismaying, however. The skills gap theory just does not pass the sniff test. It seems as ridiculous as the belief that a house can indefinitely increase in value ten percent a year. We know how that worked out.
But, like the idea that home values always go up it seems pretty pervasive to me. I talk with people that seem to believe the employment crisis is the result of people having "worthless" degrees. I had a conversation with one acquaintance-- a laid off public employee no less-- who spoke with alarm of the looming crisis of lack of skilled workers. (This was after the last SOTU address.)
That employers who profit form having labor on the ropes or the profit and nonprofit educational institutions who have services to sell promote this myth is to be expected.
It is unfortunate, however, when the myth is contained in the words of a presidential inauguration speech.
I checked to see if the book was out yet. It has been out a while and I guess the writer is not a big enough brand name to warrant much attention (or he doesn't have the right message.)
Here is what one reviewer wrote:
While i enjoyed his style of writing, I didn't get any more information than what I could have read in my local newspaper.
Really? Sign me up for a subscription to your local paper.
"pays less than an entry-level RN might make doing shift work"? Six-figure salary
written by Rachel, January 23, 2013 11:34

At least in the SF Bay Area, RNs make more than engineers (chemical, civil or electric). That's because of the market clout of the big hospital chains. The nurses get them to pass along some of the excess profits. Meanwhile the cities and countries are all in financial trouble. Thus the 3300 nurses of Vallejo and Fairfield, the highest paid in the nation, collectively make over 400 million a year. While Vallejo is just emerging from bankruptcy.

It's not that I blame the nurses especially. The problem is just easiest to see in their case. We have a big problem with hospital chains having too much market clout. This harms the community. But the media fears, perhaps, to notice the situation. Hospital chains, whether for-profit or non-profit, pay for a lot of advertising. Or the people in the media, like the unlovely people who design "progressive health care policy," are content with this sort of inequity.

But except for that one minor aspect, the Penn Gazette article seems very useful.
Retired Small Business Owner
written by Jim Forrester, January 23, 2013 11:56
Employers whining they can't find qualified employees simply do not want to pay wages that could pay someone's bills or induce them relocate. Take the example of the minimum wage: I've seen employers complain they offer several dollars above the minimum wage and can't find workers.

The minimum wage in 1970 was $1.60/hr. or $9.47 in 2012 dollars. To get workers of any ability in Southeast Michigan at that time, employers typically paid 25% more or close to $12/hr today. The $7.40 paid today simply will not keep anyone afloat.

And offering someone $12/hr. who has $50k in student loans to pay off forces the young to give up their youth to a 21st century form of indentured servitude.

I've also seen the complaints about not being able to find qualified applicants. Too often the people hiring have no knowledge of the job they are hiring for. Your H.R. professional may be able to use software to compose a document on their computer but that does not mean they have any idea of what it takes to write the software they just used. Or even know how to find out what it would take. Would you let someone with a B.A. in personnel management hire an M.D. at your hospital, or would you insist a panel of doctors conduct the interviews?

The complaint the middle manager, though, is a real one, especially if she has to manage the workers she hires. Sooner or later some or (or many depending on the situation) of the workers hired for too little will find their personal situations between a rock and a hard place. Productivity will suffer and some (or many) will have to be replaced.

Is this the world we want for our children?
They want an excuse to hire guest-workers
written by Avedon, January 23, 2013 10:28
They like hiring foreigners - they aren't allowed to strike, they don't have rights, they are afraid of being deported if they lose their jobs. But the only way to get them is to claim they can't find the workers in the US and have to bring import them from elsewhere. It's a convenient lie, in other words. I'm sure they know it's not true.
even across borders
written by David, January 24, 2013 5:19
My son (from Texas, works in Canada) was offered a job by a German firm, but they declined moving expenses as part of the package. Rather than go into revealing details, I'll just say that the managers shouldn't have offered the job. Unless they like taking suckers for a ride.
written by watermelonpunch, January 24, 2013 9:34
Yes, I realized this a few years ago... and found Capelli's other book as a result of trying to find out if anyone else noticed this.
(I've had Capelli's book on hold at the library for ages -and it never seems to get to me!!)

I think there's some perverse psychology at work with this.

Employers, noticing that unemployment is still high, believe they have "their pick" of prospective employees and therefore expect:

1) They can refuse to hire anyone out of work for a long time.

2) They can find the "ideal" candidate, completely familiar with their business, with completely identical work history to the position they have.

3) They can offer pitiful pay for the position.

What they don't seem to realize is that:

1) Lots of the same people have been unemployed for a long time. And those are the people who are looking for jobs.

2) Lots of the people who are currently unemployed may be completely qualified for the offered position, but it's unreasonable to think they worked in an identical position in an identical line of business - because well, unless their business had employed them in the past, what's the chances of someone having identical business experience in the area? I mean how many of the identical business can be located in one region - just as an example?
They should just start calling up people they laid off & fired in the past, with that sort of thinking.

3) Someone meeting the 1 & 2 standards, is not likely to be interested in their crap pay... because they're already employed OR they have more options because they haven't been unemployed for a long time. And someone from another area, isn't going to relocate for their crap pay position.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.