Report refutes notion that ‘skills gap’ exists on part of recent college grads

There is a common belief, and perhaps a misperception, that a significant gap in skills on the part of recent college grads is responsible for stunting the growth of American commerce. But on March 14, the National Association of Colleges and Employers (NACE) shared an article disputing that any significant gap in skills actually exists. While the prevalent national narrative is that there is a troubling skills gap among college-educated workers in the U.S. labor market that is impeding the growth of businesses, analysis conducted by NACE refutes that any skills gap is as pervasive as it is cast to be.

In his article titled “Is There Really a Skills Gap?” that appears in the February 2018 issue of the NACE Journal, Edwin Koc, NACE’s director of research, public policy, and legislative issues, writes that this perceived “skills gap” has become an issue for higher education for two reasons:

• While these “middle-class” jobs were filled in the past more frequently than not by those with a high school or some post-secondary education, they are now jobs for which employers are nearly universally demanding candidates with bachelor’s degrees.
• The “skills gap” is frequently attributed to a failure of the U.S. education system, and more and more the part of the education system that is increasingly being blamed for the skills shortage is our nation’s colleges and universities.

“Despite several employer-based assessments of the employment market, there is no credible supporting evidence of a national skills gap that would warrant a comprehensive national response in the way of radical reform of the American higher education system,” Koc explains.

In his analysis, Koc reviewed the data that serve as the foundation for the skills gap perception: data concerning job openings and employment wages. The problem, Koc shows, is in the approach to using those data.

For example, the commonly cited figure of 5.9 million job openings reported by the U.S. Bureau of Labor Statistics (BLS) from data provided in November 2017 is little changed over the previous 24 months. Koc notes that these job openings are not the result of new jobs coming online, and that the implication that these jobs go unfilled is highly misleading. In fact, 5.2 million of these reported openings stem from separations—workers quitting their jobs, being laid off or fired, retiring, going on disability, or transferring to a different location within the same firm. The fact that the vast majority of these separations are voluntary is actually a strong indication of a healthy economy.

Furthermore, the same BLS report indicates that, in November 2017, employers hired 5.5 million workers, leaving approximately 400,000 job openings—or just 0.2 percent of the U.S. labor market—that went unfilled during November.

Koc notes that the November 2017 figures are consistent with the monthly data since January 2016.

“In fact, hires have exceeded separations, and the openings they create, for every month since 2010,” Koc explains. “A mass of jobs in the United States are not going unfilled; a relatively small fraction of job openings are taking longer than the desired time to fill.”

He adds that the existence of a national skills shortage is also belied by national wage data.

“Under the rules of supply and demand,” Koc points out, “if demand is high and supply is low for a product, service, or a worker, then the price associated with that commodity/worker should significantly increase.”

Since the recession, however, wage increases have held steady in the 2.0 percent to 2.5 percent range.

“There has been no significant jump, nor has there been a noticeable blip, in the trend suggesting a tremendous increase in demand not capable of being met with the supply of available workers,” Koc observes.

“Is There Really a Skills Gap?,” which appears in the February 2018 issue of the NACE Journal, is available to the public on the NACE website.

~ Posted by: Richard Webster, Ace News Today   /   Connect with Richard on Facebook and Twitter