U.S. Job Shortage or Skill Shortage?

Curious headlines have recently appeared in the Financial Times: “Aging Workforce Creates Skills Shortage for U.S. Manufacturers” (3/1/10), and “China’s ‘Workshop of the World’ Suffers Acute Labor Shortages” (2/26/10). How can this be true with the United States experiencing an unemployment rate of around 10 percent and 15 million people unemployed?  China has billions of people. It graduates 500,000 engineers a year. What is going on?

A recent report coauthored by Deloitte, Oracle, and the Manufacturing Institute reinforces the evidence this researcher has been writing about for the past decade: High-tech U.S. companies are suffering from a shortage of qualified skilled technical workers.

The baby-boomers have delayed their retirement because of the current financial crisis. As the economy improves, large numbers of what Peter Drucker termed “knowledge technologists” will leave the workforce.

Forty percent of Boeing workers will be eligible for retirement within five years. “That’s some 60,000 employees eligible to retire. . . . We just don’t see the [recruitment] pipeline meeting our needs,” says Rick Stephens, Senior Vice President for Human Resources at Boeing.

In China McKinsey reported that approximately 400,000 engineers graduate each year, but found that only about  40,000 are suitable for employment at companies with global standards because of their low-quality education. China’s export economy is moving up the value chain as it makes more sophisticated products. Wage inflation has increased. Skilled technicians are now in short supply. In Guangdong, China’s manufacturing heartland, skilled technicians now command a 65 percent wage bonus. Chinese engineers and technicians are returning home from around the world for these higher wages or to start their own companies.

India’s IT industries face a similar acute labor shortage. U.S. businesses can no longer use these countries as talent safety valves to fill their future unmet skill needs.

Thirty-two percent of U.S. manufacturers report a skill shortage in the midst of this great recession. How will our high-tech economy cope once expansion begins again? The talent pipelines are broken. Younger people have long spurned science, technology, engineering and math-related (STEM) jobs. America’s businesses have chronically underinvested in training their own workers, or helping support higher quality science/math education programs in their communities to better prepare youth for careers in a high-tech world economy.

Waiting for someone else to take the initiative is not going to solve our jobs and skills crisis. The good news is that public-private partnerships in many communities across America are now rebuilding local education-to-employment systems to restore the jobs pipeline in a 21st-century economy that will be more technology-based with each passing year.  Rather than finger-pointing and placing the blame on others, community-based organizations need your strong support as a parent, educator, or business person to rebuild America’s economy from the ground up.

Edward Gordon*          *          *

Edward Gordon is the author, among other works, of Winning the Global Talent Showdown: How Businesses & Communities Can Partner to Rebuild the Jobs Pipeline.

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