Don't blame the unemployed for the jobs crisis

  • Article by: ERIC WIEFFERING , Star Tribune
  • Updated: November 5, 2011 - 10:18 PM
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Job seekers attend the Minneapolis Career Fair held Wednesday, Nov. 2, 2011, in Bloomington, Minn. Fewer people applied for unemployment benefits last week, a positive sign that the job market is picking up a bit.

Photo: Jim Mone, Associated Press - Ap

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A new culprit has emerged as a major source of the nation's long-term unemployment crisis: the jobless themselves.

If they had the right skills, the thinking goes, they would be able to claim millions of jobs that are otherwise going unfilled.

Intuitively, the existence of a "skills gap" seems plausible and perhaps even obvious. Who doesn't know a carpenter or laborer who lost his job when the housing market collapsed? And we have read the stories about assembly lines now manned by robots instead of men or women.

But in this case, the numbers don't back up the anecdotes. America's economy isn't suffering from the creation of too many high-skilled jobs. It's creating too few jobs, period.

This notion of a mismatch between the skills employers need and the ones workers have comes up during most periods of growing unemployment. It was prevalent in the 1980s, when carmakers, steel mills and other traditional manufacturers shed thousands of jobs. It was championed by President Bill Clinton during the recession of the early 1990s, not long before the U.S. economy raced off to full employment.

So it was hardly surprising that the skills gap emerged as the overriding theme at Gov. Mark Dayton's jobs summit last month. A survey of more than 400 manufacturers, released the day before the conference, helped set the table, with more than 40 percent claiming they had jobs that were going unfilled because of a lack of qualified workers. Some of the most dire shortages were claimed by manufacturers in southwestern Minnesota.

I was puzzled because job seekers tend to be highly rational. They will move to North Dakota and endure separation from their family for the opportunity to earn a good wage. So why not move to Pipestone instead?

The answer to that question appeared deeper in the survey: Southwestern Minnesota has the lowest average manufacturing pay in the state: $781 a week. That's 39 percent below the state average, and not even two-thirds the average wage paid in the Twin Cities area.

Still, the complaint about manufacturing worker shortcomings was so persistent during the conference that it prompted State Education Commissioner Brenda Cassellius to observe that parents and educators should think about steering young people into careers in welding, machining and other vocations instead of college.

"We need to start talking to our kids about these other jobs," Cassellius told the Star Tribune.

Hold on there, madam secretary. Minnesota has lost about 100,000 manufacturing jobs in the past decade. Nationally, the manufacturing sector has the second-highest number of workers who have been jobless for a year or more. That doesn't sound like a promising career track.

John Clay, a labor analyst with the Jobs Now Coalition in St. Paul, offers an even deeper reality check. In the second quarter of 2011, there were only 3,474 openings in all production occupations in Minnesota, at a median wage of $11.50 an hour. The highest-paying jobs offered a median wage of $20 an hour. There were 27 of them. The highest number of openings, 767, were for metal and plastic workers at a median wage of $15 an hour.

Minnesota had 210,000 job seekers statewide during that same period. It's hard to imagine that none of them was qualified for those 3,474 jobs. It's far more likely that companies were unwilling or unable to pay enough to fill those jobs, or unwilling to invest in training their current workers to fill those jobs. Indeed, according to the state survey, manufacturers in Minnesota are spending less than the recommended benchmark, 3 percent of total payroll, on training.

Economics 101 also tells us that wages should be rising if demand for particular skills exceeds supply. In Minnesota, just the opposite has occurred. The median wage for all job openings dropped from $10.80 an hour in the fourth quarter of 2010 to $10 an hour in the second quarter of 2011.

The belief in a skills gap is not peculiar to Americans. In 2000, the Canadian province of British Columbia hired a team of U.S. researchers to explore the widespread assumption that there was a growing gap between academic abilities of students leaving high school and skills that employers needed.

They concluded that the problem was that Canada was not creating enough jobs that took advantage of the skills graduates possessed.

"The major job growth in areas in Canada and other industrialized countries appeared to be in low-salaried, low-skill service occupations in the hospitality, food service and retail sectors," said the study's authors, Emery Hyslop-Margison and Benjamin Welsh.

I don't want to entirely dismiss the threat that a skills gap can pose to a regional economy. Low high school graduation rates and a worsening achievement gap between students of color and white students are alarming trends that threaten the long-term vitality of any region.

But that's not the chief issue in our economy today. Minnesota has 108,000 fewer people working than it did three years ago. There are job openings, but here's what they look like through the first six months of 2011, according to Clay's analysis of state and federal labor data:

•49,000 Minnesotans with a high school diploma were out of work, but there were only 16,708 job openings statewide that required a high school diploma or GED.

•91,000 Minnesotans with postsecondary education were looking for work, but there were only 23,000 job openings requiring some level of postsecondary education.

Minnesota's problem is not a skills gap. It's a jobs gap.

ericw@startribune.com • 612-673-1736

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