The overarching economic narrative of the past five years has been jobs. The story began during the financial crisis, when we lost 8.8 million of them, the heaviest loss of employment since the Great Depression. The U.S. economy shed more than 700,000 jobs per month during the height of the crisis, and in October 2010, headline unemployment peaked at 10%. The middle of the story, the recovery period from then up through the present day, has been characterized by meandering, uninspired growth — but growth nonetheless. Employment is up 58 months and counting.
Come October 2014, and this job-centric arc looks like it could be coming to an underwhelming but agreeable end. According to the Bureau of Labor Statistics, headline unemployment is down to 5.8% and the total number of unemployed is approaching pre-crisis levels. The overall employment level of 147 million is the highest on record. But the end of the arc doesn’t necessarily mean a happy conclusion. Long-term unemployment is still an outsized issue, post-crisis wage growth has been flat to negative, and many of the new jobs being added are part-time. The economy is still not truly healthy, and the job market is still tough.
One of the biggest issues at play is the so-called “skills gap”, which refers to the idea that companies can’t find employees with the skills they really need. Key positions are often left unfilled or, worse, they are filled with unqualified people, and the potential for further, more robust job growth is limited. At a time of economic melancholy this friction is incredibly costly. So what we need, what the economy needs, are skilled workers to fill the gap.
Why we need military veterans
Veterans have skills — lots and lots of skills — many of them unique to military service and most of which can be valuable in the private sector. But unfortunately (outrageously), the unemployment rate among veterans of the second Gulf War-era is 7.2%, representing 188,000 veteran job seekers without work.
Writing on Quora, Jon Davis, a sergeant in the United States Marine Corps and a former hiring manager, unpacked some compelling reasons for why a business would want to hire a veteran. “I’ve hired more than enough people to know that it’s one of the hardest decisions you have to regularly make,” he wrote. Later, he summed up: “They have all the mentalities that good companies want. Tenacity, intuition, reliability, capability, responsibility, leadership and are part of a culture built on getting the job done. They are smart and they are serious.”
Speaking to Monster, Toni McDaniel, a Prudential financial director of diversity recruiting, said: “We’ve hired veterans from entry-level to management. They are great at project management, at working processes from end to end.”
Mike Panigel, senior vice president of human resources at Siemens, told Monster: “Technicians coming out of the military have worked on complex, expensive, large equipment. They know how to accomplish a mission and they’re diverse. Altogether they are a great source to recruit.”
What’s happening with the skills gap
The skills gap is the difference between what an organization can do and what it wants to do. According to the American Society for Training & Development (ASTD), “It is the point at which an organization can no longer grow or remain competitive because it cannot fill critical jobs with employees who have the right knowledge, skills, and abilities.” The skills gap emphasizes the difference between “high-skill” and “low-skill” jobs and workers, with “middle-skill” wedged somewhere in between. Operating a cash register is low skill, while designing a jet engine would be high skill; many construction jobs fall somewhere in between.
“Middle skills describe highly specialized mechanical, technical, and production careers that may require industry or government certification but not necessarily a bachelor’s degree,” says the ASTD.
At first glance, the skills gap may seem like one of those conceptual fads that wash through the economic news from time to time — and much of the issue has been blown out of proportion — but too many businesses have been talking about the issue for too long for it to be a fiction. James Bessen, an economist at the Boston University School of Law, contextualized and defended the idea in the Harvard Business Review. “The issue is confusing because the skills required to work with new technologies are hard to measure,” he writes, later adding, “What is hard to measure is often hard to manage.”
To be clear, we are not attributing any particular or general economic woe to the skills gap, but simply arguing that there is an issue with the supply of and demand for many types of specific skilled labor. The exact severity of the problem or the degree to which the issue is exaggerated is an important though more pedantic conversation, because we know well enough by now that what businesses perceive as a problem is likely to manifest as a problem. Either the skills gap is real or business leaders in every industry around the world have been consumed by some kind of economic hysteria.
A survey of ASTD members found that 84% of organizations believed they were experiencing a skills gap at the time, although a separate survey by the Manpower Group puts the share at about 39% in the United States. Moreover, given the nature of labor supply (low-skill labor is more abundant, high-skill less so), the largest gaps were in middle- and high-skill positions. This means that the largest skills gaps are often in executive, leadership, and management positions. Here are the the responses from the ASTD survey for which skills are most absent.
Why skill gaps happen
Skills gaps emerge as an organization expands and increases in complexity, as new technology is developed and adopted, and as experienced workers retire — in a word, they are almost inevitable. Bessen uses the dramatic shift in media from print to digital as an example of this change, and similar examples are abundant. The world is and has been changing rapidly. It takes time for people to learn new skills and sometimes even longer to figure out how to properly manage people, teams, and divisions of people with those skills.
A survey conducted by Adecco, a staffing company (read: a company with skin in the game), found that 59% of senior executives think the education system is to blame for the skills gap in the U.S. workforce. This is one of the first conclusions people reach on the “why” vector, but it can be hard to defend because of the complexities and vagaries of the education system. It’s easy to identify friction but it’s hard to identify specific failures, successes, or untapped opportunities.
Aside from education, 23% of senior executives believe that a general disinterest in the job sector is to blame, while 22% cite an absence of appropriate training opportunities, arguably a subset of the education concern. If you’re wondering why businesses themselves don’t just invest in training, the survey is way ahead of you: 42% of senior executives report that the cost of training programs is simply too high.
Here are the results from the ASTD survey for the same question.
Why the skills gap matters
The negative impacts of the skills gap are generally intuitive. If workers or managers lack the appropriate knowledge or abilities, then they will simply not be as effective as they should be — or, at least, not as effective as executives or excitable economists believe they should be. In the Adecco survey, 45% of senior executives report that a lack of skills results in missed opportunities for growth, 34% report that product development has suffered, and 30% report a blow to the bottom line. Moreover, 64% believe the skills gap in the U.S. will result in less investment in American companies.
Here’s what the ASTD survey respondents had to say about the impact of the skills gap.