Labor Surplus, Labor Shortage, and the Skills Gap Between


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There are two significant problems with the job market in the current recovery — labor surplus and labor shortage. High unemployment and short of job opportunity for teenagers – the surplus; employers who can’t find the highly skilled workforce needed – the shortage.

Both labor statistics indicate that an economic recovery is under way, but job recovery has been slower than market recovery. In May 2013, the unemployment rate was 7.6 percent – 11.8 million people. Of this almost 12 million, 4.4 million were long-term unemployed (27 weeks or more). In manufacturing (durable and non-durable), one of the sectors experiencing the most pronounced shortages, employment was only slightly better than the economy as a whole with 6.8 percent unemployed – 1.1 million people. The states showing the greatest improvement in employment were those with significant energy sectors (North Dakota and Texas, in particular). In other words, there is larger and constant amount of unemployed adults who were previously working who are looking for opportunity in this economy – the labor surplus.

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Perhaps the best assessment of labor shortage is the 2011 Manufacturing Institute and Deloitte study, Boiling Point: The Skills Gap in U.S. Manufacturing. The study points to a deficit of 600,000 skilled workers, primarily highly skilled production workers – “machinists, operators, craft workers, distributors, and technicians” .These highly skilled technicians are the new knowledge workers who requiring applied math and science, critical thinking skills, and an understanding of lean manufacturing and supply chain. Some have questioned whether the skills gap is as serious as the Manufacturing Institute report portends, but analyses by McKinsey and Company and others, as well as anecdotal reports from employers on the ground in places like North Carolina, attest to the reality of the gap. The only question is how big is it?

Let’s look at one example. In Winston-Salem, N.C., a metropolitan area of more than 250,000 people, Caterpillar is looking for CNC-prepared machinists with an associate degree; Deere-Hitachi is adding jobs that will require an associate degree in welding, including robotics. In the energy sector, Siemens is growing a workforce that has certified skills in welding, machining, and robotics coatings. In aviation, TIMCO Aviation requires FAA-certified technicians. And there are new jobs coming in bioprocessing with Herbalife. In this one community, hundreds jobs are in the balance, dependent on the pipeline of advanced manufacturing technicians.

A generation ago, only high school graduates who might have had high school shop classes or grown up tinkering at home or on the farm have the entry level for jobs like Winston-Salem, N.C. Today, the pipeline of skilled workers created by the partnership between the community college and employer who with advanced manufacturing grounded in science, math, and technology.

The pipeline may start with certificates that are stackable into related degrees. These certificates and degrees will recognize students’ experiential learning – previous job training, military training, badges, or open online learning. They will have third-party certified credentials, like the NAM-endorsed skill certifications, imbedded in the curriculum. While the degree programs may be industrial design technologies, production and engineering technologies, or logistics, they will include core competencies in sustainability, regulatory issues, globalization, lean processes, and project management.

Matching the need for a skilled workforce lies in one of the findings from the Deloitte-Manufacturing Institute study will be the challenge to community colleges. When manufacturers were asked how they search for or trick new production technicians, the most common response was “word of mouth.” Community colleges were down the list with less than 10 percent citing colleges as their source of new workers. A more systematic, defined process, and partnership, for placement/recruitment is needed to serve students and employers to fill the skills gap.

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