As posted on FosterEDU blog
The current labor market “skills gap” translates into more than 4 million jobs annually going unfilled, and stems from an imperfect match of supply and demand for critical talent in growing sectors of the economy.
Skills shortages are common to most periods of economic transition and resurgence over the past 100 years;it’s a deceptively complex problem that does not lend itself to simple solutions. The root cause of a skills gap is demand brought on by ever-evolving new technologies and accelerating pace of change without sufficient on-and-off ramps for skills training and actions by policy-makers. This was as true during the industrial revolution as it is today in the mobile commerce era. However, the current skills gap challenges have important differences and, without action, very worrisome implications for the current generation of young adults.
Middle-skilled workers significantly contribute to America’s global competitiveness.Unfortunately, 45 percent of U.S. employers reported that a lack of skills exhibited by entry-level employees caused “significant problems in terms of cost, quality, and time”or worse. A recent Manufacturing Institute study describes a growing skills gap in the industry as “storm clouds on the horizon that could dampen growth.” More than 75 percent of manufacturers reported a moderate to severe shortage of skilled workers, and the U.S. manufacturers may lose up to 11 percent of earnings annually as a result of increased production costs driven by a shortage of skilled workers. While the risk to sustainable profit grows, this forceful dynamic has also begun to systematically limit opportunities for a large part of the latest generation of young Americans as the job market demands a wider array of skills from workers.
The Tale of Two Labor Markets: The Millennial Generation
The “skills marketplace” is complex and rapidly changing; this contributes to an imbalance of supply and demand of labor and has different implications across various segments of the workforce. Arguably, the group most impacted by changes is the adult-youth workforce—as of June 2013, only 43.6 percent of those 18 to 29 years old were employed full-time, even as overall unemployment has improved to 6.1 percent. This performance is a significant milestone because six-and-a-half years after the Great Recession began the U.S. economy has finally surpassed its pre-crisis employment peak, and yet millions of young adults are struggling. Most worrisome, an unbundling of the youth-adult job market highlights this is not a single cohort, but instead among the most extreme example of “Haves” and “Have-Nots” among workforce peer groups.
Consider that at the high end of the young-adult employment market, there is a relentless need for advanced skills, such as engineering, to support “new economy” jobs. This shortage is now primarily a function of insufficient supply of talent. For example, studies have shown that the number of jobs available in the U.S. is directly related to advances made in science and engineering, yet, only about 4 percent of college graduates receive degrees in engineering or science. Moreover, according to Jeff Lawson, of Twilio, software-minded people who can master both the advanced technology and abstract thinking needed to innovate will be in constant demand. This reality is increasingly recognized, and the surge in interest among students and investors in tech boot camps reflects this persistent struggle among employers to hire qualified people for high-tech positions, and students eager for credentials who don’t come along with the extraordinary opportunity costs of college.
The Other Young Adult Employment Market: The Opportunity Youth Segment
Unfortunately, in a far larger part of the young-adult marketplace are the millions of young people between ages of 16 and 24 who are out of school and out of work, and they are most often the forgotten people in the employment marketplace. This is a pandemic that sits near the epicenter of the middle-skills crisis, as most have left high school without a diploma and suffer from acute achievement and skills gaps. While education remains the single most important factor that drives employment and life-time income, this cohort is most often disconnected and lacks even basic credentials, skills and direction.
This reality helps explain the significant part of the talent crisis at the middle-skills level of the economy as more than 1.5 million students annually drop out of high school and nearly 7 million of the 39 million people in the 16-to-24 age group struggle for connection to a growing economy.
Longer-Term Implication of Today’s At-Risk Adult Challenges
Regrettably, a generation of young people are not getting the relevant work experience needed to grow their skills, yet a survey by America’s Promise indicates almost 50 percent are seeking full-time employment. While they are optimistic that opportunity awaits, the factual reality is that the barriers are significant. For example, 31 percent of high school graduates indicate they did not continue their education because it was too expensive. This group of young adults are stuck trying to stay above the minimum living standards while navigating a training and education ecosystem not designed for their needs.
The Tale of Two Labor Markets: The Millennial Generation
The “skills marketplace” is complex and rapidly changing; this contributes to an imbalance of supply and demand of labor and has different implications across various segments of the workforce. Arguably, the group most impacted by changes is the adult-youth workforce—as of June 2013, only 43.6 percent of those 18 to 29 years old were employed full-time, even as overall unemployment has improved to 6.1 percent. This performance is a significant milestone because six-and-a-half years after the Great Recession began the U.S. economy has finally surpassed its pre-crisis employment peak, and yet millions of young adults are struggling. Most worrisome, an unbundling of the youth-adult job market highlights this is not a single cohort, but instead among the most extreme example of “Haves” and “Have-Nots” among workforce peer groups.
Consider that at the high end of the young-adult employment market, there is a relentless need for advanced skills, such as engineering, to support “new economy” jobs. This shortage is now primarily a function of insufficient supply of talent. For example, studies have shown that the number of jobs available in the U.S. is directly related to advances made in science and engineering, yet, only about 4 percent of college graduates receive degrees in engineering or science. Moreover, according to Jeff Lawson, of Twilio, software-minded people who can master both the advanced technology and abstract thinking needed to innovate will be in constant demand. This reality is increasingly recognized, and the surge in interest among students and investors in tech boot camps reflects this persistent struggle among employers to hire qualified people for high-tech positions, and students eager for credentials who don’t come along with the extraordinary opportunity costs of college.
The Other Young Adult Employment Market: The Opportunity Youth Segment
Unfortunately, in a far larger part of the young-adult marketplace are the millions of young people between ages of 16 and 24 who are out of school and out of work, and they are most often the forgotten people in the employment marketplace. This is a pandemic that sits near the epicenter of the middle-skills crisis, as most have left high school without a diploma and suffer from acute achievement and skills gaps. While education remains the single most important factor that drives employment and life-time income, this cohort is most often disconnected and lacks even basic credentials, skills and direction.
This reality helps explain the significant part of the talent crisis at the middle-skills level of the economy as more than 1.5 million students annually drop out of high school and nearly 7 million of the 39 million people in the 16-to-24 age group struggle for connection to a growing economy.
Longer-Term Implication of Today’s At-Risk Adult Challenges
Regrettably, a generation of young people are not getting the relevant work experience needed to grow their skills, yet a survey by America’s Promise indicates almost 50 percent are seeking full-time employment. While they are optimistic that opportunity awaits, the factual reality is that the barriers are significant. For example, 31 percent of high school graduates indicate they did not continue their education because it was too expensive. This group of young adults are stuck trying to stay above the minimum living standards while navigating a training and education ecosystem not designed for their needs.
