Report: Leaders Need to Help Bridge Middle-Skills Jobs Gap

By Dinah Wisenberg Brin Dec 1, 2014
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U.S. employers should take the lead in defining their labor needs and nurturing talent to fill key jobs, bridging the gap between millions of jobless Americans and industries that are suffering a chronic shortage of skilled workers, a new report recommends.

While business leaders, educators and policymakers lament the erosion of America’s middle class, “employers across industries and regions find it hard to fill open positions” for jobs that require more education and training than a high school diploma but less than a four-year college degree, states Bridge the Gap: Rebuilding America’s Middle Skills.

“That failure is inflicting a grievous cost on the competitiveness of American firms and on the standard of living of American workers,” according to the report from Accenture, Burning Glass Technologies and Harvard Business School. “It is time we stopped accepting the cliché that America’s job engine is stalled.”

The report calls on employers to work with various parties to “spark a revival of middle-skills jobs” by accepting leadership over the system, taking responsibility for educating aspiring workers and reintroducing the unemployed into the workforce.

Leaders in business, academia and politics should work together to restore the middle-skills ranks, concentrating on those middle-skills jobs that create high value for U.S. businesses, provide decent wages and a pathway to increasing lifetime career value for many workers, and are persistently hard to fill, the report states.

Fewer Skilled for Most Jobs

Recent labor market figures demonstrate the paradox. In August, the government reported that 9.6 million Americans were unemployed, while employers posted 4.8 million jobs, the report noted.

“The supply of skilled workers and the demand are pretty consistently mismatched,” said Joseph Fuller, Harvard senior lecturer of business administration and one of the report’s primary authors, in an interview with SHRM Online. Various industries, including metalworking and electric utilities, “consistently report difficulty in getting qualified applicants.” Meanwhile, he said, the traditional American middle class is “under siege.”

Fuller shared an anecdote about a Louisiana community college that held a welding course for 11 students. The students showed up for class on a Wednesday but weren’t there on Friday because an employer had hired all of them and their instructor—offering to train the new employees using the same teacher.

As SHRM Online reported in June, a Mercer LLC survey found that 74 percent of oil and gas companies see a critical technical skills gap, and that two-thirds of organizations planned to hire talent away from competitors. That survey, however, found that poaching employees won’t help industry overcome a talent shortage that’s also being driven by retirements, turnover and rising labor demand.

The problem isn’t limited to the oil and gas industry. The Bridge the Gap report cites various studies indicating that many executives find it difficult to fill positions because of job candidates’ lack of technical and “soft” workplace skills.

More than half of 800 human resources executives surveyed by Accenture in early 2014 found middle-skills jobs hard to fill, with finance and insurance companies and health care businesses reporting the most difficulty. More than a third of respondents, led by manufacturing and health care executives, reported inadequate availability of middle-skilled workers had undermined their productivity.

“The data suggest that aspiring workers cannot prudently assume that academic degrees or certifications related to some desired career will necessarily lead to employment,” the report states.

While middle-skills jobs historically served as a springboard to the U.S. middle class, real hourly wages for these workers stagnated from 1979 to 2000 and have fallen since then, according to the report, which cites various trends as contributing to today’s job market mismatch. These include globalization, technological innovation, employer use of a “spot market” for talent, weakening relationships between companies and community colleges, and students’ lack of information about the most marketable skills to develop.

Meanwhile, since 2000, highly skilled, highly educated workers “moved down the occupation ladder and took jobs historically held by lower-skilled workers,” increasing labor market pressure, the report states. “In recent years, ‘malemployment,’ in which workers are overeducated for their job, has been on the rise.”

Realigning the labor market may take more planning than simply opening new factories and hiring long-term unemployed workers.

Why ‘Reshoring’ Doesn’t Work

An MIT Sloan Management Review article in August noted the difficulty with “reshoring” manufacturing to the United States, in spite of good macroeconomic arguments for doing so. One problem is that worker perceptions of manufacturing jobs haven’t kept pace with advances in manufacturing processes at modern plants over the past two decades, wrote a colleague of Fuller’s, Willy C. Shih, Harvard Business School management practice professor and a director of Flextronics International Ltd.

This isn’t surprising, he wrote, given that many American manufacturers moved work to low-cost countries in the late 1990s and early 2000s, largely ignoring the negative effects on the U.S. “industrial commons”—the shared resource base on which manufacturers draw.

Shih cited the case of a Google-Flextronics effort to assemble smartphones in Fort Worth, Texas; the project aimed to hire 2,500 workers and used six employment agencies for recruitment, “but the percentage of workers who first made it through the screening process and then continued past the first few days or weeks on the job to become a part of the regular workforce was depressingly low.” The company had to hire 6,500 workers over 10 weeks to acquire the 2,500 employees needed to start volume production, Shih wrote.

(In May, less than a year after opening the facility, Google’s Motorola Mobility said the plant would close by the end of 2014, with production moving to China and Brazil, the Fort Worth Star-Telegram reported.)

More broadly, the Bridge the Gap report suggests that business leaders bring the same vigor to sourcing talent that they do to their materials supply chains by leading a skills-development system. Meanwhile, educators should pay attention to developments in the job market and employers’ changing needs.

“Most companies are very effective at ways they manage their supply chains for stuff—ball bearings, rubber belts,” Harvard’s Fuller said. “We don’t do that, though, for talent.”

The aerospace and electric utility industries have made headway in addressing the problem, but there are too few examples of that, Fuller said. He’d like to see companies work at the industry level to define the skills they need.

“The employers have got to take leadership of the system,” he said. “They control the most valuable currency in the system, which is jobs.” They know the mix of skills and competencies that make someone an attractive and plausible employee, he said, and are the best ones to anticipate the types of skills needed for the future.

Dinah Wisenberg Brin, a former reporter for the Associated Press and Dow Jones newswires, is a freelance writer based in Philadelphia.
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