The Skills Gap Fallacy – Part 1

How the Skills Gap Grows

     Several months ago, when I first considered writing about this topic, mainstream media, trade press, and social media were all bursting with articles and anecdotes about the impending collapse of our economy caused by a widening “skills gap” in our workforce.  Reports have since begun to trickle out that foster a modicum of restrained optimism; however, the public discourse on the topic continues to, largely, fail to present (or actively avoid – you decide) the big picture.
     Discussions of the “skills gap” tend to focus on manufacturing industries; in the interest of continuity, I will follow that trend.  It should be noted, however, that many of the issues raised are equally relevant to service industries.

     Participants in this “discussion” often cite the need for better communication of the nature of modern manufacturing, contrasting it with obsolete stereotypes.  Manufacturers can benefit from the application of marketing techniques to recruitment efforts.  However, this requires much more than pumping out glossy photographs of a clean factory full of high-tech tools to accompany declarations that we have entered “A New Era of Manufacturing.”  This is a snake oil tactic – effective for few, unconvincing, even suspicious, to many.
     To overcome the PR push failure, we are told that we must “get ‘em young,” presumably before their snake oil detectors are fully developed.  We do this by supporting STEM programs at all levels of the primary education system.  Participation in these programs fosters inquisitiveness and helps develop collaboration and problem-solving skills.  These are key ingredients of students’ future success.  What it does not do, however, is create a strong link in students’ minds to manufacturing.
     STEM initiatives – core education or extracurricular – can instill fundamental skills and should be valued for that contribution to student development.  They cannot, however, produce the hyper-skilled “super-techs” that seem to be, for many, the expected outcome.  A great deal of building on this foundation is still required.

     The next step in this progression, for a number of industrious business leaders, is to partner with community colleges and vocational schools.  Partnership allows businesses to influence curricula to support their training needs, creating a pipeline of skilled applicants for future job openings.  To the uninitiated, this may appear to be the solution everyone has been looking for, but the pig picture realities of these partnerships have, again, been deleted from the narrative.
     The most egregious characteristic of these partnerships is their potential for corruption and exploitation for anticompetitive purposes.  The essence of such a partnership is the ability of a private enterprise (a business) to directly influence the operation of a public institution (the education system).  This is akin to lobbying legislators, albeit with fewer intermediaries and less oversight.
     If we assume that these partnerships are executed with the highest level of integrity, as I sincerely hope they are, the system remains imperfect.  If a corporation with multiple sites would like to create a local talent pipeline for each, it must repeat the process in every jurisdiction in which it operates a facility.  Meeting each jurisdiction’s requirements while maintaining consistent training throughout the organization is unlikely to be an efficient process, if it is even possible.
     Companies that are not in a position to exert significant influence over school curricula or other training programs receive no benefit from policies that allow or encourage “public-private partnerships.”  It is more likely that these partnerships will be to their detriment.
     University partnerships are usually focused on professional career tracks (e.g. engineering disciplines), but they share many of the same issues as those with vocational schools.  One university official asserts that “More US funds [are] needed to address workforce skills gap.”  The funds he seeks would allow institutions of higher education to “focus on a specific technology sector and create curriculum [sic] and workforce development programs tied to that sector.”  If your business isn’t “tied to that sector,” where will you recruit the talent you need?

     The affinity for government intervention also seems to be reflected in the Public Perception Index that “measures public opinion on a range of issues affecting manufacturing.”  One finding of the Index is that parents “believe the government has not enacted policies supportive of the manufacturing sector.”  While it is unclear what policy enactments respondents would support, the evidence seems to contradict this perception.  In fact, the very existence of the educational partnerships discussed is a strong signal to the contrary.  Also, “almost half of US states have passed laws promoting [career and technical education]” in support of manufacturing industries.  Specific examples reported include Kansas schools being paid “up to $1000 for each student who graduates from high school with an industry recognized credential.”  Several other states have adopted similar practices.  Also, “Colorado has started paid apprenticeships for high school students to gain real-world experience in growing sectors such as advanced manufacturing and technology.”
     Policies enacted, and proposed, certainly appear to have the goal of closing the “skills gap.”  The incentives for educational institutions have become clear.  Employers’ motivations are also quite clear.  Yet, despite an abundance of media attention, little, if any, evidence is offered of the effectiveness of these programs or the impact on participants’ long-term employment prospects.

     Reluctance to share evidence of the achievement of desired outcomes may stem from a scarcity of supporting data.  It may also stem from a realization that public policy is often misguided and subject to fads.  The desire is to strike while the iron is hot – even if there is no coal in the furnace.
     Though not definitive, a look at recent history may support the latter conclusion.  According to a McKinsey Global Institute Study, “After a surge of growth in the late 1990s, the US manufacturing sector has experienced two decades of erosion…”  The onset of manufacturing sector erosion coincided with the proclamation, by so-called “leaders,” that the industrial economy, just as the agrarian economy before it, was a thing of the past.  The US had transformed into a knowledge economy!  The media were duty-bound to share this wisdom ad nauseam (see a pattern?).  Unfortunately, this vision of the US economy lacked knowledge of the manufacturing sector’s role in sustaining it.
     During the two “lost decades” from which we now attempt to recover, policy decisions discouraged investment in manufacturing education and “[a]pprenticeship programs in the US ceased to exist to a large extent.”  This “lost generation” of students – and their parents – were force-fed the notion that skilled trades were dead-ends, that obtaining a university degree provided the only hope for a substantive existence in the new economy.  This was clearly a false narrative, launched and fueled by policymakers’ lack of critical insight.

     Ostensibly to correct some of the errors of the past, US Secretary of Labor Alexander Acosta charged his department’s apprenticeship task force with “com[ing] up with something better” than the failing registered apprenticeship model.  He also stated that “the administration will simultaneously develop its own ‘parallel’ apprenticeship program that will be ‘industry-recognized.’”  Secretary Acosta also supports a plan “to allow businesses, unions, and other groups to develop and monitor apprenticeships themselves.”
     Acosta’s statements demonstrate that we have made little progress on the “policymakers’ lack of insight” front.  First, “industry-recognized” training programs already exist; the government need not be involved in their development.  Second, businesses and other groups already develop and monitor apprenticeship programs; the Secretary’s permission is not required.  Third, the first two points may explain why only “0.3% of the workforce use the registered apprentice program.”  Perhaps the federal program doesn’t add sufficient value to encourage greater participation.  Finally, continuing a failed program while developing a “parallel” program – neither of which is necessary or beneficial – is quintessential bureaucratic waste.

     From the “We Have to Solve the Problem We Created by Solving a Problem We Didn’t Have” file comes the latest Congressional effort to further complicate the situation.  I like to call this story “Senator Hatch’s New Clothes.”*
     Senator Orrin Hatch of Utah has proposed more than doubling the number of temporary visas available to high-skilled workers.  Doing so would contribute to a cycle of “lost generations” and other, presumably, unintended consequences.  As more visas are issued for foreign workers, the demand for American workers with similar skills declines.  The funding for – and subsequent availability of – training programs required to acquire these skills disappear accordingly.  When the temporary program expires, Sen. Hatch and his ilk will scan the American landscape in despair:  “There are not enough skilled workers to blah, blah, blah.”  The obvious necessity will be to renew – no, expand! – the temporary visa program.  Again, a lack of insight or analysis by policymakers serves to perpetuate a problem they purport to solve.**

     Reliance on public policy and other external factors to resolve the “skills gap,” or almost any issue your business faces, is a high-risk proposition, as the discussion above aimed to make clear.  The growth of the skills gap can be explained, in large part, by one consultant’s summary of the management strategy deployed by many during the “lost decades.”  “They naively thought that complaining about the problem to the government, local government officials, educational institutions or others would address their shortfall.” (emphasis added)  The conclusion to which this observation led:  “No wonder we have a crisis.”  That is, naiveté fosters fallacy.


     Part 2 will discuss programs that allow companies to eschew reliance on public policy, circumvent much of the uncertainty and volatility created by it, and maintain the skilled workforce needed to prosper.
 
*  Adapted from the fable “The Emperor’s New Clothes” by Hans Christian Andersen.  If you don’t know this story, I highly recommend you read it; it is timeless.
** Conflating this issue with the larger, highly volatile, immigration debate, as Sen. Hatch’s proposal does, is a complicating factor, the enormity of which far exceeds the scope of this post.  This is not anti-immigrant sentiment; it is anti-unnecessary-interference-that-doesn’t-address-the-root-of-the-problem sentiment.

References
[Link] “Acosta: Apprenticeship program 'does not work.'”  Politico, November 14, 2017
[Link] “Challenges and Opportunities for the Automotive Manufacturing Workforce.”  Manufacturing Engineering, January, 2018
[Link] “Creating the 21st Century Manufacturing Workforce.”  Manufacturing Engineering, January, 2018
[Link] “GOP Lawmaker Wants to More Than Double High-Skilled Worker Visas.”  Bloomberg Politics, January 25, 2018
[Link] “Hail the Community College.”  Aerospace & Defense Manufacturing 2017
[Link] “Julian Cornwall, 17, has options. Twelve job offers, for starters.”  Cincinatti.com, January 25, 2018
[Link] “Key to Closing Manufacturing Skills Gap? Optimistic Millennials.”  Aerospace & Defense Manufacturing 2017
[Link] “Look to Technology Natives.”  Energy Manufacturing 2017
[Link] “More US funds needed to address workforce skills gap.”  Smart Manufacturing, November 2017
[Link] “Push for Technical Education Gains Momentum.”  Manufacturing Engineering, January, 2018
[Link] “US Manufacturing Has Opportunity to Make Up for Lost Time, McKinsey Says.”  Advanced Manufacturing, November 14, 2017
[Link] “You Can Get a Good Job Without a Bachelor's Degree.”  Bloomberg View, November 14, 2017

Jody W. Phelps, MSc, PMP®, MBA
Principal Consultant
JayWink Solutions, LLC
jody@jaywink.com