The Zombie Skills Gap Argument Again?!

17th March 201510:52 am

I was saddened to see President Obama and Secretary of Education Arne Duncan try to raise the Zombie Skills Gap argument from the grave again last week. I won’t mince words. The claim that there are millions of open jobs that no Americans are qualified to fill is complete hogwash. Unfortunately, that has never stopped advocates of the skills gap myth, which is a particularly durable corporate con job, from trotting it out whenever working people are on the ropes. In fact, virtually identical claims made by others, who now seem mind-numbingly clueless in retrospect, were also heard during both the Great Depression and the savage recession that unfolded during the late 1970’s/early 1980’s. The reason so many people did not have jobs back then was they were just not qualified. Really. That is what they said. Here, for example, is what Ewan Clague, who went on to become head of the U.S. Bureau of Labor Statistics, famously observed in a 1935 paper written at the height of the Great Depression. The paper was entitled “The Problem of Unemployment and the Changing Structure of Industry:”

“I believe this present labor supply of ours is peculiarly unadaptable and untrained. It cannot respond to the opportunities which industry may offer.”  (cited from the Journal of the American Statistical Association, Ewan Clague, 1935).

President Ronald Reagan made similar claims early in his presidency during what was at that time the biggest recession to hit since the Great Depression (funny how that keeps happening, no?). Reagan famously shared his jaundiced view of the qualifications of the beleaguered American workforce after he scanned the help wanted ads (many of which turned out to be completely phony) in a Chicago newspaper one Sunday morning:

“These newspaper ads convinced us,” Reagan said “that there are jobs waiting and people not trained for those jobs.”

Those holding this view typically contend that there is (and always was) basically no underlying problem in the U.S. economy. So, instead of fixing the economy (like maybe starting with the banks this time) they contend that it is the workers who need fixing. The solution: improving the links between employers, schools and job training providers. That way, businesses who have all those open positions will finally be able to hire all the workers they need. Problem solved.

Gee, I wonder why no one ever thought of that before?  Well, actually, they have.

As a former federal official who helped design the Obama administration’s signature job training program, it pains me greatly to note the obvious: linking job training programs to specific employer needs has been a central part of federal job training efforts since at least the 1930’s. I benefited from one such program, the federally-funded Comprehensive Employment and Training Act (CETA) during the downturn of the late 1970’s when I was in my twenties. There have been many, many others. The idea of linking training with a workplace is, by itself, as old as Social Security and can hardly be called fresh or exciting. It’s embarrassing to see President Obama caught flat-footed on this again, steered into an oval office session where he publicly proclaims something innovative and effective when in fact it is both old hat and an old saw.  And that is truly a shame, because when it comes to current federal job training efforts there really is something new and exciting going on.  Unfortunately, it’s something President Obama never talks about.

Here is what needs to be said (and what I saw as a young federal job training program graduate): In the real world the impact of enhanced employer/job trainer linkages depends almost entirely on the ability and willingness of participating employers to hire program graduates. And that “willingness to hire” depends primarily on overall economic conditions since no matter what they say, in a free market economy employers mostly hire more workers only when they have more customers, demand, and business. I never had a chance to talk with the President or Vice President about any of this (and believe me, I tried). I can only surmise that no one close to them ever explained why they should be skeptical when employers cite the poor qualifications of job applicants and the so-called skills gap as obstacles to job growth in the United States (interestingly, these skills gap arguments never arise in places such as Vietnam and Malaysia, perhaps because workers in those countries have what has become the world’s most important job skill, which is a willingness to work for peanuts).

Leaders of major firms in the U.S. routinely mislead policymakers about who they hire, when, and why. On this, I almost feel sorry for the CEO’s because when it comes to talking about hiring plans dishonesty is part of their job. In reality, CEO’s, and in particular those who lead big public companies today, have no choice but to say they have open positions even when they are busy firing workers left and right. The bosses must tell those fibs because if they don’t, Wall Street stock analysts (reminder: I worked for CNBC) will downgrade their stocks. (If a CEO says her firm has no hiring plans, financial analysts conclude she does not expect much growth and will then lower the firm’s stock rating, which depresses the price of the stock. When a firm’s stock price goes down, the firm has a harder time hiring anyone even when they really want to). So virtually all major U.S. employers routinely lie about their hiring plans, especially the employers rich and powerful enough to meet regularly with the President and his senior business liaisons. The CEOs must tell those lies to survive, which is why they all talk about the supposedly huge number of job vacancies they would fill if only they could find qualified applicants. The President and the Vice President hear that from virtually every CEO they meet, that they can’t find enough qualified workers. But that’s because that is what every CEO they meet must say. CEO’s, who must paint a rosy scenario for their firms, simply have no choice but to tell such fibs. Public officials, however, are under no obligation to repeat them.

It’s also important to remember that even the supposedly more reliable measures of the skills gap are based almost entirely on some type of self report by employers and data from similar sources, for example, calculations of the number of help wanted ads. But many credible investigations, including my own reporting on the same issue during the Reagan administration, which led to a Congressional investigation, have shown that employers routinely mislead others about their hiring needs and plans. In many other cases, employers simply have no idea how many workers they will need next year or the following year. The training offered today may not match up with what the company needs a year or two later.

Now, one might ask: overall, isn’t it a good thing to emphasize the importance of skills attainment in tech fields even if it is correct that the number of open, good paying jobs may be exaggerated? What is the problem here? Answer: It makes perfect sense to emphasize the importance of skills attainment. We should do more of that — and I personally do all I can. But I don’t think it makes sense to give aid and comfort to those who have a vested interest in pretending that economic conditions are better than they are. What’s more, it’s bad form. It’s like telling someone it’s fine outside when you know it’s raining. The only thing that accomplishes is to destroy confidence in the person who passed along the bad information. When President Obama make those claims, he appears out of touch.

Unfortunately, the Obama administration’s well-meaning but misguided language about the so-called “skills gap” also damages the President’s own agenda. It alienates qualified but unemployed Americans by denying their reality. To be sure, a limited number of employers in some places have faced limited shortages of qualified workers. That was true, for example, last year for oil workers in North Dakota, where higher wages quickly attracted more workers. But episodes like that are rare. Instead, for most Americans today the overwhelming reality is that skills that would have easily landed them a job in a healthier, more normal economy don’t generate any callbacks today. There is nothing wrong with all or at least most of those unemployed workers. There is, however, something deeply wrong with the economy.

As I write this, we still have huge numbers of highly qualified engineers and programmers in this country, many of them a little older, many of them right here in Silicon Valley, who can’t buy a decent job. Telling these highly qualified but unemployed engineers and others like them that they don’t have sufficient skills to land a job above minimum wage drives many of them right into the hands of President’s Obama’s political opponents. President Obama’s opponents say: “The economy is not working and that is why you don’t have a job, elect us instead and we will fix it!” And President Obama’s team responds: “You don’t have a job because you don’t have the right skills! It’s your fault! Vote for our team!” Now you tell me, who wins that argument? The answer: just look at the demographic groups where President Obama and the Democrats have lost so much support: the Democratic Party’s victory coalition of 2008 has evaporated. We couldn’t even get half of those voters to the polls in the last election.

The corporatist framing of the “skills gap” issue is even more problematic on a policy as opposed to political level. It undermines the sense of urgency the Obama administration could otherwise hope to marshall for critically important administration proposals calling for necessary investments in infrastructure, education, and sensible corporate tax reform. Each of those concerns becomes far less urgent once one accepts the Chamber of Commerce’s contention that, apart from too much regulation, the real problem facing the American economy today are all those unqualified American workers. By embracing Chamber of Commerce talking points on the skills gap the Obama administration undermines its own own far more significant domestic policy proposals as well as those of its Democratic Party allies in Congress. The administration is essentially taking wind out of its own sails. If the skills gap is really the big problem, why focus much attention on all those other pesky issues like making sure incredibly successful corporations pay their fair share in taxes? It is little wonder the corporate sector loves all this jibber jabber about how unqualified American workers are.

The main problem in our economy right now is the same as it has been since 2008: there is not enough economic demand. Period. If we had more economic demand (people able to buy stuff) employers would stop talking about all the supposedly open jobs they have and actually start hiring folks. They’d train new workers, as many businesses routinely do when customers are at the door. They’d even be passing out raises to keep workers from accepting a better offer across the street. Seen much of that lately? Neither have I.

I must confess an even deeper fear. I don’t have enough data yet to make a case I could publish in a peer-reviewed journal, and I am not even sure what research methodology would be appropriate, but I am worried that there may be a relationship between all this “skills gap” language and similar social tropes and now alarmingly high suicide rates of older American workers, particularly males over age 50.

In the Great Depression, it was the bankers and stock brokers who were throwing themselves out of open windows. In the quieter, longer lasting Great Recession the bankers did just fine but middle age and older, unemployed workers have been dropping like flies, killing themselves in record numbers across the country. Those in leadership positions have a special obligation to use language carefully, in ways that pull desperate, unemployed U.S. workers back from the brink of despair. Feeding the fears of older, unemployed workers that they, rather than our long-sputtering economy, are solely to blame for their plight can’t possibly be the best way to engage and lead the country.

What’s more, when it comes to federal job training efforts the Obama administration has a much more compelling success story it can share about a program called TAACCCT, a story that is more deeply rooted in reality, a reality more Americans might recognize. The one where families and unemployed workers across the country struggle each and every day to afford the books and supplies they need to obtain a high-quality education. Now, that would be something worth talking about.

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