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Employers are having trouble finding workers with the right skills

Caleigh Wells Jan 16, 2025
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Businesses told the Federal Reserve that finding workers with AI expertise has been difficult. miniseries/Getty Images

Employers are having trouble finding workers with the right skills

Caleigh Wells Jan 16, 2025
Heard on:
Businesses told the Federal Reserve that finding workers with AI expertise has been difficult. miniseries/Getty Images
HTML EMBED:
COPY

It’s one of my favorite times of the economic year: The Federal Reserve’s Beige Book just came out. It’s a big report, published eight times a year, that compiles anecdotal information from business leaders and economists, providing a qualitative snapshot from the Fed’s 12 regional districts. Several of those districts, including San Francisco, Dallas and Richmond, Virginia, said employers are having a tough time finding skilled workers or worry about filling skilled jobs in the future.

Yet we’ve been hearing for months about workers feeling stuck in their jobs, unable to find open positions. So that’s confusing.

It is possible to have both of those problems at once. Josh Hirt, senior U.S. economist at Vanguard, said that’s what happens when skills are mismatched. And one new development is making the problem worse.

“AI would rise to us as a pretty leading cause where you’re getting some pretty rapid change,” he said.

Meaning the skills workers have aren’t necessarily the skills employers are looking for. Babson College professor Tom Davenport, who focuses on artificial intelligence, said that’s true — especially in the tech sector.

“Employers need to get much more serious about training people to use AI effectively and to build AI,” he said.

Solving that mismatch will take time. The labor market is strong right now in many sectors, but it has shown signs of softening.

Although employers are concerned about finding the right kind of skilled workers, said George Washington University economics professor Tara Sinclair, low-wage laborers are actually more vulnerable.

“As the economy cools, people in the higher education brackets tend to see their unemployment rate changed less than people at the lower end of the wage and education distributions,” she said.

Sinclair doesn’t see employers’ complaints resolving any time soon.

“We have long faced challenges in terms of the types of jobs that people want and that people are trained to do are quite different from the jobs that employers are wanting to hire for,” she said.

So the tech industry and AI are getting the attention this time around, but Guy Berger said it’s bigger than that. “Employers like to complain about the difficulty of finding skilled workers. Like all the time,” he said.

Berger, who directs economic research at the Burning Glass Institute, said Beige Books a decade old would reveal the same problem.

“Employers always love to have the unicorn of, you know, paying less for a highly skilled worker, and so it’s just a part of griping,” he said.

Some of the griping isn’t even a bad thing, he said. Sometimes, it’s just a sign of a healthy labor market.

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