LACK OF SKILLED WORKERS — NATIONAL CRISIS THREATENING OUR ECONOMIC FUTURE
America’s CEOs, Academia, Government Partner To Close the Skills Gap
The United States is experiencing a workforce skills gap that is holding our economy back and threatening our economic future. In particular, there are three types of skills gaps in today’s workforce, often acting in combination:
As America continues to recover from the worst recession since the 1930s, our economic growth is hindered because the skills of today’s workers have not kept up with the requirements of current and future jobs.
A lack of individuals with fundamental employability skills, such as the ability to use basic math, communicate effectively, read technical manuals, work successfully in teams and participate in complex problem-solving;
- A lack of workers who have the specialized skills needed to fill many trade positions; and
- A lack of applicants with the science, technology, engineering and math (STEM) skills needed for many of today’s jobs.
As America continues to recover from the worst recession since the 1930s, our economic growth is hindered because the skills of today’s workers have not kept up with the requirements of current and future jobs. The situation is dire and worsening due a combination of challenges:
- The working-age population is growing at half the rate of the last century;
- Labor force participation is holding steadily below that of the past three decades; and
- Baby boomers are retiring in record numbers.
No amount of automation or technological innovation can overcome these headwinds if our nation does not take action to ensure that our labor force holds the skills needed for today’s jobs and for the future.
In 2016, Business Roundtable, an association of chief executive officers of America’s leading companies working to promote a thriving U.S. economy and expanded opportunity for all Americans, surveyed its members and found that more than half of responding CEO members report that talent gaps are already problematic or very problematic for their companies and industries.
Likewise, a report by the Manufacturing Institute found that nearly 3.5 million U.S. manufacturing jobs will open over the next decade, but the skills gap will leave 2 million of those jobs vacant, absent concerted action.
Even as unemployment continues to decline, millions of jobs remain stubbornly unfilled because not enough applicants possess the requisite skills. Although some areas of the country face greater problems than others, this issue is not simply regional — it is a national crisis threatening our overall economic future.
AMERICA’S BUSINESS LEADERS ARE CONCERNED
The private sector already spends more than $164 billion each year on education and training, but we are still falling behind in generating enough skilled labor to meet our nation’s needs. To address this problem, we need to work directly with our nation’s academic and government leaders to rebuild the pipeline that generates top talent — from the earliest grades through college, career training and beyond. This rebuilding will require nothing less than a national effort involving all levels of government, the private sector, educational institutions and training providers.
As this report makes clear, the corporate sector is moving forward on several fronts to tackle the skills gap challenge by:
- Collaborating with education providers to sponsor large-scale training programs;
- Providing apprenticeship opportunities;
- Offering tuition assistance; and
- Providing education and learning opportunities for current employees to acquire new skills.
Business leaders are committed to raising the skills of the American workforce. But more will be needed to close the gap and prepare our nation for tomorrow’s economic challenges and opportunities.
CLOSING THE SKILLS GAP IS A WORK IN PROGRESS
Labor Department data show that in May 2017, the United States had 5.7 million job openings, which is close to the record number of job openings reported since the Department started tracking them in 2000.
There are three types of skills gaps in today’s workforce, often acting in combination.
First, many individuals lack fundamental employability skills, such as the ability to use basic math, communicate effectively, read technical manuals, work successfully in teams and participate in complex problem-solving. Many see the nation’s K–12 education system as the root cause of this problem, as low-performing schools and low academic standards in many places have allowed students to graduate from high school without mastering core competencies. These individuals are unprepared to succeed in either the workplace or college. These problems can continue beyond high school, however, as many employers find college graduates and certificate holders also deficient in these core skills (Business Roundtable Talent Survey, 2016).
Second, many trade positions remain unfilled because workers lack the specialized skills needed to fill these occupations, which often do not require a traditional two- or four-year college degree. A sampling of these jobs includes:
- Advanced welders;
- Energy services technicians;
- Computer technicians; and
These jobs require specialized training that typically results in a certification or license but not necessarily a traditional college credential (although the training may count toward a degree).
Reasons for this gap include:
- Poor labor market information on the job needs of a region;
- The training required to fill those jobs;
- The difficulty of finding the right kind of training needed for specific occupations; and
- The cost of learning a specialized skill without a clear path to post-training employment.
Forty-four percent of responding CEOs whose companies employ skilled trade workers expressed difficulty finding qualified candidates for at least one skilled trade occupation.
— 2016 Business Roundtable Talent Survey
In the 2016 Business Roundtable Talent Survey, CEOs confirmed that their companies struggle to fill many skilled trade positions. Among the most difficult to fill were:
- Qualified tool and die makers;
- Solderers; and
With the working-age population growing at half the rate of previous decades, it is imperative that all demographic sectors obtain the education and training needed to secure high-quality jobs.
Third, many occupations go unfilled because applicants lack the science, technology, engineering and math (STEM) skills needed for those jobs. While this shortage exists for some traditional STEM fields, it is more acutely found in newer occupations that integrate STEM knowledge with other disciplines. These emerging job areas include:
- Data analytics; and
- Financial services.
A key problem is that many colleges and universities do not offer programs that integrate STEM skills with other disciplines that are needed in emerging occupations. Most postsecondary institutions teach traditional STEM courses like chemistry, engineering and math but are slow to recognize that STEM knowledge is needed for many new job categories outside of the traditional STEM fields.
BUILDING A DIVERSE WORKFORCE
A complicating issue affecting today’s labor market is closing the skills gap for women and minorities. With the working-age population growing at half the rate of previous decades, it is imperative that all demographic sectors obtain the education and skills training needed to fill today’s jobs. The labor market continues to underrepresent women, African-Americans and Hispanics in many occupations, particularly those involving STEM.
Over the past two decades, the U.S. workforce in science and engineering (S&E) occupations has become more diverse, with increasing proportions of Asians, African-Americans and Hispanics and a decreasing proportion of whites. However, while Asian participation in S&E jobs has grown substantially, Hispanics account for just 6 percent of employment in S&E occupations — which is lower than their representation within the U.S. population ages 21 and older (15 percent) — and African Americans account for only 5 percent of S&E employment, which also is lower than their representation within the U.S. population ages 21 and older (12 percent).
The number of women in S&E occupations or with S&E degrees has doubled over the past two decades, while the disparity between women and men has narrowed only modestly. In 2013, women constituted 29 percent of S&E workers, only slightly better than the 23 percent recorded in 1993.
Companies also had difficulty hiring women to fill most skilled trade occupations, such as electricians; tool and die makers; welders, cutters and solderers; mechanics; machinists; commercial pilots; plumbers, pipefitters and steamfitters; and sheet metal workers.
— 2016 Business Roundtable Talent Survey
Not surprisingly, the Business Roundtable Talent Survey found that most companies struggle to identify qualified candidates with diverse racial, gender and ethnic backgrounds. For example, at least 70 percent of respondents reported problems hiring a diverse workforce for the following occupations: computer and mathematical, architecture, sales, business and finance, life and physical sciences, and social sciences. Moreover, nearly nine in 10 respondents indicated that ensuring gender diversity in data science and computer/mathematical occupations is at least somewhat problematic.
HOW BUSINESS LEADERS ARE ADDRESSING THE CHALLENGE
To better understand what companies are doing to address the skills gap challenge, Business Roundtable invited its members to submit information on the training efforts they sponsor.
The following section presents brief profiles of some of the ways that America’s largest employers are working with academia to increase the pipeline of skilled and diverse workers to join their companies and to upgrade and transform the skills of their current employees. The efforts of these member companies are broad and robust and exemplify the goal of providing lifelong learning from the earliest grades through the span of an individual’s career.
The types of programs described tend to fall into the four general categories described below, and many companies support activities in more than one area.
Skill Building in Grades K–12
While the various K–12 programs introduce students to a range of specific career paths, they also emphasize basic workplace skills like problem-solving, teamwork and resourcefulness.
- Many companies work directly with local schools or through other organizations to prepare elementary, middle and high school students to enter and succeed in the workforce and/or college.
- Some programs allow students to earn college credits or gain an industry certification while still in high school.
- Some connect students to apprenticeships, mentoring and other work-and-learn activities provided by local companies.
- Many are focused on preparing students for STEM-related careers and postsecondary study.
Postsecondary Credentials and Certifications
A large number of companies sponsor programs at community colleges, colleges, universities and private training providers to increase the number of people entering the workforce with in-demand college credentials and/or industry certifications.
- Some companies collaborate directly with universities or community colleges to create programs in STEM or industry certifications related to high-demand occupations.
- Other companies sponsor apprenticeships that combine on-the-job training with local classroom instruction to produce a credential and a certification.
- Many companies provide mentoring and other student support to individuals pursuing specific career paths.
Incumbent Worker Training
Most companies in this report place a high priority on upgrading the skills of their current employees and giving them opportunities to advance and take on new jobs. While many programs focus on specific technical skills, they routinely incorporate workplace skills such as leadership, decisionmaking and customer engagement. These efforts include:
- Apprenticeship programs;
- In-house seminars and instruction;
- Tuition reimbursement programs for employees attending school to attain an additional credential; and
- Special programs that send employees to local colleges to learn new skills in courses designed by the company.
Diverse, Skilled Workforce Initiatives
This category reflects an emphasis many companies are making to prepare, recruit and retain a more diverse workforce. Many companies accomplish this by:
- Sponsoring K–12 initiatives in underserved communities;
- Working directly with colleges with a commitment to minority populations; and
- Promoting programs that encourage girls and women to study science and engineering. Notably, several companies have established relationships with local colleges and other training providers to support the recruitment of women and minorities who graduate in high-demand fields.
AMERICA’S CEOS ARE TAKING NOTE AND TAKING ACTION
America’s CEOs, through their own efforts and through Business Roundtable and other national organizations, are partnering with academia and government at all levels to close the skills gap and meet our nation’s workforce needs. We are collaborating with our nation’s academic and government leaders to recast our educational programs according to today’s and tomorrow’s needs — from the earliest grades through college, career training and beyond. This effort must be nationwide and involve all levels of government, the private sector, educational institutions and training providers. This report provides some data to direct these most important efforts.