Does a ‘skills gap’ threaten the economy?

What’s the biggest threat to Michigan businesses today? Weak national demand? Excessive regulation? The Affordable Care Act? In his visit to Holland last week, Gov. Rick Snyder had a different answer – a shortage of workers with the talent needed for jobs in the modern economy, a gap that creates the paradox of many positions going unfilled at a time when unemployment remains high and wages stagnant.

“No. 1 on my list is talent,” Snyder said at Wednesday’s Tulip Time Festival Luncheon. “We’re going to have a serious skills gap.”

In raising the topic, Snyder waded into an intense national debate over how to close the skills gap – and whether it exists at all. Business surveys and anecdotal evidence suggest employers are leaving jobs unfilled, even if it means forgoing sales growth and expansion, because they can’t find the right people, especially in skilled trades and advanced manufacturing.

Economists are divided, with some, such as Nobel laureate Paul Krugman, arguing the skills gap is a myth disguising an unwillingness to raise wages. But Valorie Putnam, director of Thompson M-TEC, an adult job-training center run by the Ottawa Area Intermediate School District, believes the skills gap is very real locally, exacerbated by this area’s falling jobless rate: “It’s steady and it’s increasing.” The shortage, says Doug Bagley, M-TEC’s business development coordinator, is most acute locally for machining, tool making, welding and maintenance technician jobs. “A lot of people just didn’t get that training,” he says. Local employers unable to fill jobs, Bagley says, often turn to automation, which in turn demands even more advanced skills for the workers who run the systems.

What’s undeniable is that too many young people are graduating from high school and college and finding themselves unprepared for the available jobs. One potential solution touted by Snyder is a German model dating back to medieval times – the apprenticeship. The Michigan Economic Development Corp. recently launched the Michigan Advanced Technician Training program at four community colleges on the east side of the state, which allows students to earn an associate’s degree while working at companies that pay their tuition. Students earn an hourly wage and weekly stipend, and in return commit to working for the supporting employer for at least two years after graduation. As Michigan started its program, the Obama administration committed $100 million to expand apprenticeship programs nationwide.

The apprenticeship model has provided German manufacturers a steady stream of skilled workers and helped keep them internationally competitive despite the country’s high cost structure. Putnam and Bagley see value and promise in apprenticeships, but say they’re not sure how many American companies would be willing to fully embrace the German model, given the investment in time and money in apprentices who can easily take their training to another workplace.

America also needs a cultural shift to re-instill interest and respect for skilled trades and manufacturing jobs. As Snyder noted to The Sentinel, the drive to increase the number of young people going to college – a worthy goal we shouldn’t shrink from – has undervalued what we used to call vocational education. Skilled trades and advanced manufacturing, despite their very good pay, lost respect as everyone concentrated on four-year degrees. “Parents and kids are not looking at these options,” Snyder said.

Contrary to popular belief, manufacturing is not dead in America, especially not in Holland. Many experts predict the U.S. is the next global manufacturing powerhouse’ that won’t require more workers, but it will demand more highly trained ones.

Our economy needs more college graduates, especially in engineering and the sciences, but it’s a mistake to say everyone needs a four-year degree. What’s more accurate is to say all young people should get advanced training after high school.

It’s clear to us the skills gap is real, and correcting the mismatch will take an investment of time and money by employers, economic development agencies, schools and job candidates, but just as importantly a change in mindset to help better prepare future workers.

– The Holland Sentinel