19 May 2011

College Grads Can't Find Work, Employers Can't Find Skills

Here is a remarkable juxtaposition: Today, ManpowerGroup issued its sixth annual survey of global "Talent Shortage" finding a pronounced shortage of skilled workers around the world (PDF).  Also today, the New York Times has a front page story about the difficulties that college graduates have in the United States finding jobs.

There is obviously a policy problem here, and some of it has to do with what universities are (or are not) doing.

Here is an excerpt from the Manpower report:
As we enter the Human Age, when human spirit and potential will become the driving force behind enterprise and innovation, having the right people in the right place at the right time becomes more critical than ever. Yet, as the global economic recovery continues, employers report increased difficulty filling open positions, despite an apparent surplus of talent amid high unemployment.

This year, Manpower expanded its sixth annual Talent Shortage Survey not only to gauge where employers are having difficulty filling available positions, but also examine why organizations are facing a lack of talent and what they are doing to mitigate these challenges. The results reveal increased difficulty finding the right talent in the wake of global economic recovery with limited effort to systematically fill the gaps—and notable regional variances.

• ManpowerGroup research reveals employers in India, the United States, China and Germany report the most dramatic talent shortage surges compared to last year. In India, the percentage of employers indicating difficulty filling positions jumped 51 percentage points.

• Nearly one in four employers say environmental/market factors play a major role in the talent shortage—employers simply aren’t finding anyone available in their markets. Another 22% of employers say their applicants lack the technical competencies or “hard” skills needed for the job, while candidates’ lack of business knowledge or formal qualifications is the main reason identified by 15% of employers.

• Approximately three-quarters of employers globally cite a lack of experience, skills or knowledge as the primary reason for the difficulty filling positions. However, only one in five employers is concentrating on training and development to fill the gap. A mere 6% of employers are working more closely with educational institutions to create curriculums that close knowledge gaps.
Here is a figure from the NYT article showing employment success rates of recent college graduates:

The Manpower report lists the top 10 job areas for which shortages have been reported in the US (it also has similar lists for countries around the world):
1 Skilled Trades Workers
2 Sales Representatives
3 Engineers
4 Drivers
5 Accounting & Finance Staff
6 IT Staff
7 Managers/Executives (Management/Corporate)
8 Teachers
9 Secretaries, PAs, Administrative Assistants & Office Support Staff
10 Machinists/Machine Operators
Interesting but not surprising to me (as a professor in an environmental studies program) is that such "area studies" graduates do the worst.  According to the NYT:
Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.
The issues cannot be boiled down to a simplistic and misleading distinction between so-called "hard" disciplines versus "soft" disciplines (in my courses I distinguish between "hard" disciplines and "difficult" disciplines, with my courses falling into the latter;-). Manpower makes clear that even in non-technical fields, such as sales, there is greater demand for skills such as, "Excellent oral presentation and communication skills, consultative approach: ability to read people, diagnose problems, critical thinking / problem-solving, first-rate organizational skills" just to name a few (PDF).  And in technical fields such as engineering and skilled trades such skills are also increasingly needed.

The consequences of the skills shortage ripple through the labor market:
An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.

This may be a waste of a college degree, but it also displaces the less-educated workers who would normally take these jobs.

“The less schooling you had, the more likely you were to get thrown out of the labor market altogether,” said Mr. Sum, noting that unemployment rates for high school graduates and dropouts are always much higher than those for college graduates. “There is complete displacement all the way down.”
This is not an easy problem to address, but I am convinced that universities must be part of the solution. Expect more on this topic from this blog in the future.

11 comments:

  1. Businesses need to look in the mirror on this one. Everyone demands experience to get the job, but no one wants to be the one to give employees on-the-job experience. The hope is to let the other sucker train their workers, and then poach them. Classic tragedy of the commons problem.

    I worked as a machinist, but I didn't operate CNC (computer controlled) machines. Most of the few remaining help wanted ads for machinists now demand CNC programming experience. How many of those companies running the ads do you think train their own people in house? That was a rhetorical question.

    Of course, the liberal arts fantasy is another issue. The idea that you can piss away four of your earning years reading Moby Dick and Marx assumes that when the time comes, Daddy will have a job lined up for you at the company. All liberal arts bloat has done is to inflate expectations by companies. Where they could fill their positions perfectly well with an intelligent high school graduate, they demand a college degree. Why? Why not? In other words, no good reason.

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  2. A major reason behind this is the high unemployment rate leads companies to look for an extremely narrow range of qualifications.

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  3. Roger - My son recently completed an internship in the health sciences (hard sciences - math, physics, biology, chemistry, etc.)at his university. As part of his internship he was charged with first identifying if the university's current curriculum met the needs of community based health employers in both public and private sectors within a given geography of the university. This was accomplished via numerous meetings and surveys. He then met with the university department heads to review needed changes and then had to rewrite the curriculum in response to the needs of the community.

    I thought this particular university internship program was a great way for the university to stay in touch with the needs of the community and to make sure that their curriculum would prepare the students to be a valuable and immediate resource for the community.

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  4. The first commenter has identified a symptom, but not the cause, I believe. Companies aren't training folks because they can't afford the risk and the cost. Training someone not only saddles you with someone who will necessarily be less productive, but will cost you productivity from at least one of your more productive employees, all for someone who's probably going to leave for a higher paying job just as soon as the training is done if he's decent, or stick you with someone who will be very hard to fire if he's not.

    Get the economy back rolling again and this problem goes away. Companies will then be able to afford the risk of training people.

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  5. If you're short-handed, you have to hire someone, and take the "risk" of training them as needed. Employers need to let go of the notion of plug-and-play employees.

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  6. "Nearly one in four employers say environmental/market factors play a major role in the talent shortage—employers simply aren’t finding anyone available in their markets."

    This wouldn't apply to recent grads so much, but how much of this is due (at least in part) to people being underwater on home mortgages and unable to move?

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  7. Considering that American school curriculum K through PHD is about 100 years old its not surprising. Nobody is asking "what is the mission of our schools?" It should be employment as the top priority.

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  8. Mike McHenry

    “Nobody is asking ‘what is the mission of our schools?’”.

    See Pew survey of general public and college presidents at:

    http://pewsocialtrends.org/2011/05/15/is-college-worth-it/

    “Split Views of College Mission. Presidents are evenly divided about the main role colleges play in students’ lives: Half say it is to help them mature and grow intellectually, while 48% say it is to provide skills, knowledge and training to help them succeed in the working world. Most heads of four-year colleges and universities emphasize the former; most heads of two-year and for-profit schools emphasize the latter.”

    The survey appears to answer a few more questions. Have a read.

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  9. As someone who has had to hire people in 'technical work' hiring is a huge risk.

    Someone with a masters degree in 'computer science' may believe they know everything about computers.

    In the world of 'applied sciences' one not only needs to know about computers,one also has to understand the specific industry one is working in. I.E. Medical Imaging is enormously different then Financial Services.

    So even if one is hiring someone with a masters degree in computer science, one is still tossing away six months to a year in salary for the new employee to 'learn the ropes' of the specific client industry.

    The masters degree is merely an indication of whether or not the new employee is capable of 'minimally supervised learning'.

    The last thing I want is an employee that needs to be told everything in excruciating detail...not only was I spending on the employees salary during the learning period my time is being expended as well.

    We live in an age of specialization that is only becoming more specialized with time.

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  10. Nobody is asking "what is the mission of our schools?" It should be employment as the top priority.

    Low class size (the maximum number of dues paying union members for a given number of students) is the employment priority. The teacher's check-off funds many politicians.

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  11. In some states the technical colleges provide the instruction for hard skills like CNC programming, Minnesota and South Carolina are two I personally know of. In fact, South Carolina lured BMW to the state by guarantee to take care of all of BMW’s training; company execs said that was a big inducement to locate there and has proved valuable since.

    The technical colleges rely on both staff and contract teachers to perform even highly specialized training for BMW and the suppliers that have sprung up around it. The same thing is being done for the Boeing plant on the coast. The hiring companies get a trained, certified employee with little risk, the technical colleges do the winnowing, build their competencies, and reinforce their value to the communities.

    In Minnesota I got to know the owners of two specialty machine tool companies (one did defense work, the other medical) and both took similar tacks. They could not afford to hire and train because they had nothing for the trainee to do until s/he mastered the trade, but did monthly give talks, roundtables, etc. at the tech schools, emphasizing the excellent pay and benefits they would start graduates at. Last I saw they were still struggling because not enough kids had enough math and attitude to make it through the courses.

    Regarding the preceding post, The Politics of Fungibility, why don’t the environmentalist obstructionists simply return to school and study engineering so that they can provide answers instead of complaints and roadblocks.

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