What’s Really Holding Back the US Jobs Market
By Jeff Cox, CNBC.com, 10 Oct 2012
Jim Murphy is like a lot of business executives these days—looking to hire but having a hard time finding the right people for the jobs he needs to fill.
In fact, the CEO at Almac Clinical Technologies in Souderton, Pa., has faced this unlikely problem for the past several years, a time during which his life-sciences business has expanded but the pool of workers fitting his needs has not.
“We’ve steadily been hiring for the last couple of years, but it’s always a lot of work,” Murphy said in a recent interview. “You end up having to develop ways to try and find these folks, whether it’s using recruiters, strengthening your own recruiting focus internally, even just old-school things, like bigger internal employee referral bonuses.”
At a time when policy-makers are groping for ways to reduce the nation’s persistently high unemployment rate, companies with specialized needs are struggling just as much to find the right employees for a challenging new wave of job needs.
What economists call the “skills gap” is one of the leading causes of unemployment today.
Quite simply, the demand for high-levels skills is outpacing the amount of people who have those skills, contributing mightily to structural unemployment, a term that refers to those out of work for reasons that exceed simple economic gyrations.
“Today, there is a significant and growing mismatch between the country’s demand for talent and its current supply,” research firm Deloitte said in a study released last week examining the skills gap issue. “The type of talent demanded today—and needed tomorrow—is increasingly either outdated or out of stock.”
Matching workers with specialized qualifications has turned into a lucrative business for Jason Hersh. Indeed, Murphy’s dilemma has been Hersh’s gain.
Hersh is managing partner and vice president of sales for Klein Hersh International, an affiliate of international recruiting firm MRINetwork, and works with Almac to attract qualified workers.
“There’s increasingly becoming a misalignment between supply and demand for talent,” Hersh said. “Demand is high and supply is becoming increasingly difficult to find.”
That may seem an unusual development in a country where the unemployment rate is 7.8 percent and 12.1 million people are out of jobs and looking for work, a tally that doubles when counting those working part-time for economic reasons or who have given up looking altogether.
But it’s the new reality for the American jobs market.
Among Deloitte’s findings:
Skills college students attain are out of date by five years after graduation.
About two-thirds of manufacturers say there is a shortage of available and qualified workers; 56 percent say the shortage is going to get worse in the next three to five years, and about 600,000, or 5 percent, of jobs remain unfilled “due to a lack of qualified candidates.”
Deloitte researchers William D. Eggers and John Hagel concluded that the U.S. is badly lagging behind other leading industrialized nations in developing workers with the skills necessary to fit the changing workplace.
“Traditional mainstay industries are contracting, while our competitive advantage erodes under pressures from new global markets,” Eggers and Hagel wrote. “Despite all of these warning signs, our country lacks the cross-cutting policies needed to develop the most valued American commodity of all: good jobs.”
Time and again in conversations with business executives the talk turns to education and the inability of the system to turn out prospective workers with the right technological know-how to adapt to new demands.
But blame also rests on workers who are not doing enough to keep themselves properly trained to face new challenges.
“Employees have to adapt,” said Geoff Hoffman, chief operating officer at Chicago-based DHR International, a firm that helps companies find executive-level talent. “The newspapers are going away, the video store went away. Individual businesses always have to make sure you’re in the best position to adapt and change. Otherwise, you risk becoming irrelevant.”
“We have truly reached an inflection point,” the Deloitte study said. “Individuals, firms and nations can no longer remain complacent about the talent required to succeed; they must constantly strive to refresh their workforce.