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Study reveals skills gap between education and jobs

A 'help wanted' sign is posted in the window of a cafe on September 27, 2012 in San Francisco, Calif.

A new report out this morning from McKinsey & Company on the much-debated ‘skills gap’ finds a profound disconnect between educators, employers, and would-be employees.

The study of nine countries (the U.S., U.K., Brazil, Germany, India, Mexico, Morocco, Saudi Arabia, and Turkey) finds that nearly three quarters (72 percent) of educators believe their graduates are ready for the job market. Only 42 percent of employers and only 45 percent of young people think so. Meanwhile, fewer than half of employers say they can find the skilled employees they need, and 75 percent report this is a drag on their business.

In the U.S., a report from the Manufacturing Institute recently found that more than 600,000 skilled manufacturing jobs were going vacant because employers could not find workers to fill them.

At Benchmade Knives in Oregon City, Oregon, this dynamic plays out on the factory floor. The company has 190 employees and works closely with local community colleges and other worker training programs to find skilled employees.

Still, it’s hard to fill certain positions. Mark McCallum was recently hired to maintain the precision cutting tools. Pay for these positions ranges from $35,000 to $60,000, he says, depending on experience. “I kind of was one of those kids that decided to tear the TV apart, the toaster apart, dad’s motorcycle apart,” says McCallum. “I like to get dirty, take things apart, figure out why they fail.”

McCallum's father and grandfather were all machinists. Now 30, McCallum got machinist training right out of high school, then a bachelor’s degree in mechanical engineering. “In my opinion, to do the job I do, you also have to educate yourself,” he says.

The problem, according to today’s McKinsey report, is that too few young people know how to get the right education to land a decent job, or launch themselves on a viable career path. Mona Mourshed heads McKinsey’s education practice and is a lead author of the report. She says more than half of U.S. employers can’t find enough skilled workers like McCallum. And yet, “in the U.S. we find that only 45 percent of youth believe that post-secondary education actually improved their chances of employment.”

Yet numerous studies find that post-secondary education -- from an associate’s degree on up -- is likely to boost a worker’s lifetime earnings, job tenure, and career advancement.

Bonnie Spayd directs business and industry training programs at Reading Area Community College in eastern Pennsylvania. She says she observes this disconnect every day -- between the educational choices that young people think will get them ahead, and actual conditions in the labor market.

“I don’t think we’ve done a great job with our kids to really help them to understand that you can be anything you want,” she says, “that you can go to school and get any degree you want, but which one of those is going to get you that job?”

Spayd’s highly-regarded community college programs are tailored to fill local employers’ needs in industries like manufacturing and pharmaceuticals.

That’s largely on the public’s dime—funded by federal, state and local government, as well as student tuition.

But academic critics like Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, insist employers themselves should be funding more on-the-job training. Then, says Cappelli, U.S. companies might not report such a big and problematic ‘skills gap’ in the first place. Cappelli recently published a book on the topic: “Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It.” 

“It’s been difficult to get employers to engage in these programs, and more difficult over time,” says Cappelli. Ever since the 1990s, he’s documented a decline in employer commitment to training, workforce development, and apprenticeship programs. He says employers want to hire people who are ready to hit the ground running, delivering productivity and profit right away. And government-funded programs have not jumped in to fill the gap.

Cappelli says that in other developed economies -- especially in Western Europe and the industrialized economies of Asia, such as Korea and Singapore -- public and private investments in worker training have been much more robust, and better-coordinated.

“The move in the U.S. toward more of a plug-and-play labor market, where you just hire what you need, when you need it, makes it much more difficult to make investments in these areas,” says Cappelli. “And in particular, when the economy is soft, as it is now, nobody much has interest in dealing with high-school students when you can get a college graduate to do the same job.”

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.
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