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Practical Economics

Why Do Jobs Go Begging?

A grievous mismatch of workers’ skills and job openings means millions go without paychecks while employers lack the help they need.

Despite 11.3 million unemployed Americans, there are 3.9 million job openings in the U.S. right now, and 39% of businesses report having difficulty filling jobs, according to a 2013 Manpower survey. Wouldn’t it be nice if job hunters could be matched up with the available jobs? Of course, the 37% of the unemployed who have been out of work for six months or longer will always be harder to place, but there are other reasons it is proving difficult to make these matches.

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Jobs with poor wages or working conditions are hard to fill -- no surprise there. Long-haul truck drivers, for example, are in short supply. Competitive pressures prevent wages from rising enough to eliminate the shortages. Agriculture, with its need for a highly mobile seasonal workforce -- a role usually filled by immigrants -- is particularly vulnerable. The H-2A visa program for such seasonal migrant labor is inadequate, according to the American Farm Bureau. And sometimes an employer simply misreads labor market conditions: One manufacturer lamented that he could find only 25 people qualified for skilled machinist positions out of 1,051 who applied, but he didn’t think the $10- to $15-an-hour starting wage rate he was offering had anything to do with that.

Sometimes, however, there are real shortages. An analysis by Economic Modeling Specialists International that compared, by occupation, the number of job openings to the number of unemployed plus new graduates, found that persistent shortages exist for engineers, highly skilled health workers, computer-related occupations, certain manufacturing skilled-trades workers and financial specialists such as accountants and financial analysts.

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In fact, they’re not just in certain industries. There are shortages in skill levels across a broad range of industries. Rapid technology advances mean that many more jobs demand increased skills, leaving a greater share of the workforce behind. Metal-cutting machines, for example, are now computer controlled to produce the same cut with the exact specifications over and over again, which no human could do. So both programmers and machinists who can work with them are needed. Similarly, not all health care workers are in high demand. It’s those in occupations that require years of college training -- physicians, nurses, therapists and other specialists, for example. There is actually an oversupply of medical and dental assistants.

By 2020, 75%, or 123 million, of the projected 164 million U.S. jobs, will require higher skill levels. Ed Gordon, whose book Future Jobs explores the issue, estimates that only 98 million workers will have the training to do those jobs, while 64 million unskilled will compete for the remaining 41 million jobs.

For many skilled professions, years of advanced training are required. Students often must go into debt to complete programs of study, constraining their numbers. Odds are the number of skilled foreign workers allowed into the U.S. each year under the H-1B visa program will be increased from its current low level of 65,000, but political objections mean that’s not a slam dunk, either. And it certainly won’t solve the problem by itself.

Businesses are going to have to step up to help solve the problem. Overall business spending on in-house training has been flat since 2001, according to Training magazine. Smaller businesses, especially, have been reluctant to put money into training. They may feel they cannot make a dent in the problem themselves, and if they try, someone else will simply hire their people away.

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But there is some progress on that score. Some companies are banding with others in regional networks to address the problem. The Northeastern Wisconsin Manufacturing Alliance, for example, has over 100 corporate members that fund scholarships, promote employment opportunities and provide plant tours, career speakers, job shadowing and outreach to middle and high school students.

Community colleges are finding that they are uniquely suited to fill the liaison role between business and workforce training. Some, such as Monroe Community College in Rochester, N.Y., are taking the initiative to identify training needs in their community and set up programs to address them. Monroe’s survey found that local manufacturers needed to hire 100 high-skill machinists each year, so it developed an accelerated program of study that is currently meeting half the need.

Eventually, the invisible hand of supply and demand will do its work in the labor market, coaxing more people to get the skills needed by paying them more. But it will take time and money to make that come about.