New Law Addresses Widening Skills Gap

Lawmakers act to invest in skills and training as employers take a step back.

By Jennifer Schramm Aug 22, 2014

0914cover.jpgIn a rare act of bipartisanship, Congress this summer passed the Workforce Innovation and Opportunity Act (WIOA) with nearly unanimous support in the Senate and the House of Representatives. The legislation, which reauthorizes federal job-training programs, also aims to streamline the workforce development system and strengthen local training services to meet employers’ needs.

It remains to be seen if these program changes will have the far-reaching effect on skills development that legislators, employers and other advocates hope. But the widespread support for the bill across the political aisle indicates there is a consensus that skills development for employees and job seekers is an important national priority.

For years, HR professionals have been reporting that the open jobs in their organizations require increasingly higher skill levels. At the same time, many have expressed concern that job seekers’ skills are not meeting these needs.

Yet the 2014 Employee Benefits research report from the Society for Human Resource Management (SHRM) finds that organizations have not significantly increased their spending on employee training and education in the past five years, and in many cases spending has decreased. This may imply that organizations and job seekers will be increasingly looking to local, state and federal government programs for training and skills development.

The latest in an ongoing series of SHRM surveys underscores this assertion. The Jobs and Skills in the Economic Recovery survey report found that 96 percent of organizations had hired full-time regular staff in the last 12 months. While many of those individuals were replacement hires, a majority of HR professionals reported that there has been an increase in the number of completely new positions that require new skills. In fact, 66 percent said these types of open positions have increased. That compares with 45 percent who said there has been an increase in replacement jobs that include added duties and 25 percent who reported a rise in replacement hires.

For HR professionals, the main implication of tighter training budgets coupled with higher skills requirements may be a greater need for collaboration with local, state and federal training programs. These programs could address the training needs of multiple employers and reduce their training development costs, while building a stronger local training system that benefits both job seekers and employers.

Employers Decrease Commitment to Training …

Percentage of employers providing the following benefits:
2010 2014
Professional development opportunities90%82%
Cross-training to develop skills not directly related to current job49%39%
Undergraduate educational assistance62%54%
Graduate educational assitance56%50%
Source: 2014 Employee Benefits research report, SHRM.

… While Demand for Skills Grows

Percentage of employers that say their regular full-time positions open in the last 12 months require new skills:
Finance, Insurance and real estate53%
Educational services49%
Professional, scientific, and technical48%
Health care and social assistance45%
Construction, mining, quarrying42%
Accommodation and food services42%
Government agencies41%
Source: 2014 Jobs and Skills in the Economic Recovery survey report, SHRM.

Many local HR groups, including SHRM chapters as well as individual HR practitioners, are growing savvy about working with the training, education and skills development resources they can access locally. They often are leaders in the skills discussions in their communities.

The success of the WIOA will rest largely on the shoulders of such local leaders. Their work will continue over the next decade as the need for skilled employees grows even more urgent. But no matter how knowledgeable they become about local training resources, the biggest challenge for many HR practitioners may be convincing their organizations’ leaders to reverse the trend in declining employer investments in employee training and education benefits.

Jennifer Schramm is manager of the Workforce Trends program at SHRM.

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