Employers Aren’t Just Whining – the “Skills Gap” Is Real

[rousseau]

Can we at least agree that there is *a lot* of grey issue in this topic, and it's not as simple as employers should always train employees all the time or employers should never train employees.

- Sometimes employers don't train employees when they should
- Sometimes employers train employees when they should
- Sometimes employers want to train employees but can't
etc.

We're not going to come to any kind of resolution in this thread besides saying: some employers should do a better job sometimes, and some employers are doing a good job already.

I tend to think that if employers are in a position where they need skilled workers but can't find them and aren't training, the reality is actually that they want not need high skilled employees. If they really needed an employee desperately but couldn't find one, they'd train. This naturally puts the onus on job seekers to do things like go to school and seek out internships to get the skills.

 

[rousseau]

As another note, there are going to be a lot of cases where there is literally no one available to train someone for the position, which is why they need the position filled.

 

[hurtinbuckaroo]

I've seen job ads that require X years with a particular development/database package, when that package didn't exist X years ago.

You should expect to pay a premium for people who can create their own time warp.

 

[laughing dog]

That is fine, but then they have no reason to whine when the labor market does not deliver their expected worker at their offered compensation.

Or perhaps the people without the skill shouldn't expect to receive the compensation of someone who does have the skill.

If you had read the OP, you'd notice that it is not the unhired people whining they cannot get a well-paying job. It is the employer who is whining. If employers cannot find the right people at the offered compensation, then they are not offering a high enough compensation. That is how markets - labor or product - operate. Employers whining about no qualified employees at the offered compensation is equivalent to a banana consumer blaming farmers for not offering bananas for sale at 1 cent per pound.

If you had read the OP, you would have seen that the compensation isn't the problem being identified here - it's specific types of advanced skills. And employers are willing to pay for those specific skills - when they can find them. But they're not willing to pay top dollar to someone who does not have the needed skills.

I think you need to understand how markets work. If employers cannot find "qualified" people to work for their offered compensation, then the employers are not offering enough to induce those qualified people to work for them. It really is that simple.

 

[rousseau]

Or perhaps the people without the skill shouldn't expect to receive the compensation of someone who does have the skill.

If you had read the OP, you'd notice that it is not the unhired people whining they cannot get a well-paying job. It is the employer who is whining. If employers cannot find the right people at the offered compensation, then they are not offering a high enough compensation. That is how markets - labor or product - operate. Employers whining about no qualified employees at the offered compensation is equivalent to a banana consumer blaming farmers for not offering bananas for sale at 1 cent per pound.

If you had read the OP, you would have seen that the compensation isn't the problem being identified here - it's specific types of advanced skills. And employers are willing to pay for those specific skills - when they can find them. But they're not willing to pay top dollar to someone who does not have the needed skills.

I think you need to understand how markets work. If employers cannot find "qualified" people to work for their offered compensation, then the employers are not offering enough to induce those qualified people to work for them. It really is that simple.

Then it comes back to a math problem: employers can't afford to lure existing skilled employees because their demand is too high and supply is too low. Either they can afford skilled workers but don't really need them, in which case their isn't a real demand for skilled workers, or they need skilled workers but can't afford them, meaning the supply of skilled workers is too low, and the problem is real.

I think we really need to re-define what we mean by a 'skill shortage': there isn't a need for skilled workers, there is a desire for skilled workers.

 

[ksen]

Then it comes back to a math problem: employers can't afford to lure existing skilled employees because their demand is too high and supply is too low.

No, there is no math problem. It's simply that companies have grown used to having historically high profits and anything that might cut into that a little bit, say . . . paying people what they're worth, is a non-starter for them right now.

 

[rousseau]

Then it comes back to a math problem: employers can't afford to lure existing skilled employees because their demand is too high and supply is too low.

No, there is no math problem. It's simply that companies have grown used to having historically high profits and anything that might cut into that a little bit, say . . . paying people what they're worth, is a non-starter for them right now.

So it comes down to ethics and the role of corporations in society. Look to government. Wait.. government doesn't work, damn.

 

[ksen]

So it comes down to ethics and the role of corporations in society.

Pretty much.

Personally, if the socialist reloveution doesn't start soon, I'd like to see the Benefit Corporation mode of incorporation take off.

Look to government. Wait.. government doesn't work, damn.

Despite what the looney right says, government works just fine and could reverse this trend since they are the ones that put policies in place to start it.

 

[rousseau]

Pretty much.

Personally, if the socialist reloveution doesn't start soon, I'd like to see the Benefit Corporation mode of incorporation take off.

Look to government. Wait.. government doesn't work, damn.

Despite what the looney right says, government works just fine and could reverse this trend since they are the ones that put policies in place to start it.

The only issue is with the ethical side of corporations is that you can't expect them to be ethical on their own. They can only be as ethical as government forces them to be, caused by the social dynamics inside of them.

 

[Emily Lake]

The flip side to that argument is equally valid though. Why should employers be the ones to bear the risk of paying to teach someone a valuable and competitive skill set, in addition to a comfortable salary, when all they have to go on is their best guess and just pray that they guessed right and that by the time they're done investing in that training the employee will still stick around and not move to a competitor?

Why should employers bear the risk? Because they reap the profits. And no matter what they pay in compensation, they will get more in the value of the work provided.

In many cases that's certainly true, but I don't think it's universally so. In cases where there is a significant amount of training required on the job, before the employee can do the job unsupervised, then they may not get more value than the work provided - at least not early on.

In this context, we're talking about shifting the burden for specialized skills onto the employer, so that they would be providing the training instead of seeking already qualified employees. In that case, given the types of specialized skills under consideration, I don't believe it's reasonable to assume that employers always get more out of the deal.

- - - Updated - - -

Or perhaps the people without the skill shouldn't expect to receive the compensation of someone who does have the skill. If you had read the OP, you would have seen that the compensation isn't the problem being identified here - it's specific types of advanced skills. And employers are willing to pay for those specific skills - when they can find them. But they're not willing to pay top dollar to someone who does not have the needed skills.

That's what you got out of the OP?

Yes. It did indicate that the highly skilled positions that employers are complaining about not being able to fill are positions that have shown steady and significant wage increases over time.

 

[Emily Lake]

Employers whining about no qualified employees at the offered compensation is equivalent to a banana consumer blaming farmers for not offering bananas for sale at 1 cent per pound.
...

I think you need to understand how markets work. If employers cannot find "qualified" people to work for their offered compensation, then the employers are not offering enough to induce those qualified people to work for them. It really is that simple.

I think it might be more like employees complaining that they can't find clusters of exactly 11 bananas that are the exact shade of yellow with exactly 2% green at the top (but not the bottom!) end, and with exactly 4 inches of stem on each banana, and in which one single banana is hot pink when you peel it... even though they're offering a very competitive rate.

Because all the people who apply are clusters of 7 bananas that are 5% green with 2 inch stems and all white inside.

To translate a rather complicated continuation of your analogy: Employers are seeking very specific technical needs. Even if they're offering very competitive rates, the applicants don't meet those needs. The supply for those positions is so small that the price offered is almost irrelevant. There's a practical element at play, because even when you're talking pure economic theory of supply and demand, the budget line still exists.

 

[ksen]

Employers whining about no qualified employees at the offered compensation is equivalent to a banana consumer blaming farmers for not offering bananas for sale at 1 cent per pound.
...

I think you need to understand how markets work. If employers cannot find "qualified" people to work for their offered compensation, then the employers are not offering enough to induce those qualified people to work for them. It really is that simple.

I think it might be more like employees complaining that they can't find clusters of exactly 11 bananas that are the exact shade of yellow with exactly 2% green at the top (but not the bottom!) end, and with exactly 4 inches of stem on each banana, and in which one single banana is hot pink when you peel it... even though they're offering a very competitive rate. Because all the people who apply are clusters of 7 bananas that are 5% green with 2 inch stems and all white inside.

"very competitive"

lol

obviously they aren't

 

[Emily Lake]

I think it might be more like employees complaining that they can't find clusters of exactly 11 bananas that are the exact shade of yellow with exactly 2% green at the top (but not the bottom!) end, and with exactly 4 inches of stem on each banana, and in which one single banana is hot pink when you peel it... even though they're offering a very competitive rate. Because all the people who apply are clusters of 7 bananas that are 5% green with 2 inch stems and all white inside.

"very competitive"

lol

obviously they aren't

I suspect that you're conflating the wage paid for the average skill level with the highly skilled workers under consideration here. I think you should re-read the article that you posted in the OP. It makes a very compelling point about the difference between what is happening for average workers and their wages and what is happening for highly skilled workers and their wages - and where the skill gap exists.

 

[ksen]

Or perhaps the people without the skill shouldn't expect to receive the compensation of someone who does have the skill. If you had read the OP, you would have seen that the compensation isn't the problem being identified here - it's specific types of advanced skills. And employers are willing to pay for those specific skills - when they can find them. But they're not willing to pay top dollar to someone who does not have the needed skills.

That's what you got out of the OP?

Yes. It did indicate that the highly skilled positions that employers are complaining about not being able to fill are positions that have shown steady and significant wage increases over time.

Rather than looking at the ratio of pay at the 90th percentile to that at the median, you should look at the growth at the 90th percentile. If it's true that workers at this level are in short supply, we should see their wages rising much higher than inflation and close to inflation plus producitivty growth. You mentioned nursing. Here's the yoy % change in avg hourly pay at the 90th percentile in the nursing industry (data taken from the Occupational Employment Statistics):

2004 = 2.99
2005 = 3.18
2006 = 4.63
2007 = 3.64
2008 = 3.01
2009 = 2.35
2010 = 2.34
2011 = 2.64
2012 = 1.51
2013 = 1.38

Here's the same series for "computer and mathematical science occupations", which includes computer software engineers.

2004 = 2.47
2005 = 1.29
2006 = 2.95
2007 = 5.00
2008 = 3.60
2009 = 1.37
2010 = 1.25
2011 = 2.28
2012 = 3.12
2013 = 1.63

 

[ksen]

"very competitive"

lol

obviously they aren't

I suspect that you're conflating the wage paid for the average skill level with the highly skilled workers under consideration here. I think you should re-read the article that you posted in the OP. It makes a very compelling point about the difference between what is happening for average workers and their wages and what is happening for highly skilled workers and their wages - and where the skill gap exists.

The author of the OP overstated the gains highly skilled workers were making which a commenter illustrated and I posted his illustration above.

If companies need highly skilled workers and they are not able to get any at the prices they are willing to pay then, according to Econ 101, the companies need to beef up their offers more.

If they truly need a skill so specialized that next to no one has it then it's up to them to provide the training especially if it's a skill that wouldn't be easily transferable to another company.

Why should I, as a skilled worker, pay a lot of money and spend a lot of time learning your specialized system just for a chance to be considered for your underpaying job?

 

[coloradoatheist]

I suspect that you're conflating the wage paid for the average skill level with the highly skilled workers under consideration here. I think you should re-read the article that you posted in the OP. It makes a very compelling point about the difference between what is happening for average workers and their wages and what is happening for highly skilled workers and their wages - and where the skill gap exists.

The author of the OP overstated the gains highly skilled workers were making which a commenter illustrated and I posted his illustration above.

If companies need highly skilled workers and they are not able to get any at the prices they are willing to pay then, according to Econ 101, the companies need to beef up their offers more.

If they truly need a skill so specialized that next to no one has it then it's up to them to provide the training especially if it's a skill that wouldn't be easily transferable to another company.

Why should I, as a skilled worker, pay a lot of money and spend a lot of time learning your specialized system just for a chance to be considered for your underpaying job?

Wouldn't that be the argument that people shouldn't pay for college but companies should pay people to go to college? Why then do we say it's up to the individuals to go to college then?

As I said in the other threads about this, more research needs to be done into what the companies are looking for and what they are doing when they say this.

 

[AthenaAwakened]

If you are in a business that requires certain skilled workers, and you can't afford to pay the going rate and you can't afford to grow your own...

You are not in the right business for you.

 

[ksen]

The author of the OP overstated the gains highly skilled workers were making which a commenter illustrated and I posted his illustration above.

If companies need highly skilled workers and they are not able to get any at the prices they are willing to pay then, according to Econ 101, the companies need to beef up their offers more.

If they truly need a skill so specialized that next to no one has it then it's up to them to provide the training especially if it's a skill that wouldn't be easily transferable to another company.

Why should I, as a skilled worker, pay a lot of money and spend a lot of time learning your specialized system just for a chance to be considered for your underpaying job?

Wouldn't that be the argument that people shouldn't pay for college but companies should pay people to go to college? Why then do we say it's up to the individuals to go to college then?

No, that wouldn't be the argument about college . . . at all.

Although as an aside I do support government paid for college education like a lot of the rest of the civilized world has.

 

[laughing dog]

To translate a rather complicated continuation of your analogy: Employers are seeking very specific technical needs. Even if they're offering very competitive rates, the applicants don't meet those needs. The supply for those positions is so small that the price offered is almost irrelevant. There's a practical element at play, because even when you're talking pure economic theory of supply and demand, the budget line still exists.

When an employer cannot hire the employees with the needed skills at the offered compensation rates, those rates are not competitive enough to induce people with those skills to take the jobs. Either that is true, or there is literally no one who has those skills. In either case, it is up to the employer to either increase the compensation offers or revise his/her expectations if the work cannot get done with the current level of staffing. While anyone can whine about their insufficient budget line, that doesn't change the reality that it is the budget line that is insufficient.

 

[coloradoatheist]

Wouldn't that be the argument that people shouldn't pay for college but companies should pay people to go to college? Why then do we say it's up to the individuals to go to college then?

No, that wouldn't be the argument about college . . . at all.

Although as an aside I do support government paid for college education like a lot of the rest of the civilized world has.

Yes it does apply, because you as an individual growing up are expected to decide what you want to study and then decide if that applies to what you want to do later in life. An individual decides before knowing they have a job to become a nurse, lawyer, engineer, etc without being 100% that those are the skills that a company wants.