College Grads Can't Find Work, Employers Can't Find Skills

Here is a remarkable juxtaposition: Today, ManpowerGroup issued its sixth annual survey of global "Talent Shortage" finding a pronounced shortage of skilled workers around the world (PDF).  Also today, the New York Times has a front page story about the difficulties that college graduates have in the United States finding jobs.

There is obviously a policy problem here, and some of it has to do with what universities are (or are not) doing.

Here is an excerpt from the Manpower report:

As we enter the Human Age, when human spirit and potential will become the driving force behind enterprise and innovation, having the right people in the right place at the right time becomes more critical than ever. Yet, as the global economic recovery continues, employers report increased difficulty filling open positions, despite an apparent surplus of talent amid high unemployment.

This year, Manpower expanded its sixth annual Talent Shortage Survey not only to gauge where employers are having difficulty filling available positions, but also examine why organizations are facing a lack of talent and what they are doing to mitigate these challenges. The results reveal increased difficulty finding the right talent in the wake of global economic recovery with limited effort to systematically fill the gaps—and notable regional variances.

• ManpowerGroup research reveals employers in India, the United States, China and Germany report the most dramatic talent shortage surges compared to last year. In India, the percentage of employers indicating difficulty filling positions jumped 51 percentage points.

• Nearly one in four employers say environmental/market factors play a major role in the talent shortage—employers simply aren’t finding anyone available in their markets. Another 22% of employers say their applicants lack the technical competencies or “hard” skills needed for the job, while candidates’ lack of business knowledge or formal qualifications is the main reason identified by 15% of employers.

• Approximately three-quarters of employers globally cite a lack of experience, skills or knowledge as the primary reason for the difficulty filling positions. However, only one in five employers is concentrating on training and development to fill the gap. A mere 6% of employers are working more closely with educational institutions to create curriculums that close knowledge gaps.

Here is a figure from the NYT article showing employment success rates of recent college graduates:

The Manpower report lists the top 10 job areas for which shortages have been reported in the US (it also has similar lists for countries around the world):

1 Skilled Trades Workers
2 Sales Representatives
3 Engineers
4 Drivers
5 Accounting & Finance Staff
6 IT Staff
7 Managers/Executives (Management/Corporate)
8 Teachers
9 Secretaries, PAs, Administrative Assistants & Office Support Staff
10 Machinists/Machine Operators

Interesting but not surprising to me (as a professor in an environmental studies program) is that such "area studies" graduates do the worst.  According to the NYT:

Young graduates who majored in education and teaching or engineering were most likely to find a job requiring a college degree, while area studies majors — those who majored in Latin American studies, for example — and humanities majors were least likely to do so. Among all recent education graduates, 71.1 percent were in jobs that required a college degree; of all area studies majors, the share was 44.7 percent.

The issues cannot be boiled down to a simplistic and misleading distinction between so-called "hard" disciplines versus "soft" disciplines (in my courses I distinguish between "hard" disciplines and "difficult" disciplines, with my courses falling into the latter;-). Manpower makes clear that even in non-technical fields, such as sales, there is greater demand for skills such as, "Excellent oral presentation and communication skills, consultative approach: ability to read people, diagnose problems, critical thinking / problem-solving, first-rate organizational skills" just to name a few (PDF).  And in technical fields such as engineering and skilled trades such skills are also increasingly needed.

The consequences of the skills shortage ripple through the labor market:

An analysis by The New York Times of Labor Department data about college graduates aged 25 to 34 found that the number of these workers employed in food service, restaurants and bars had risen 17 percent in 2009 from 2008, though the sample size was small. There were similar or bigger employment increases at gas stations and fuel dealers, food and alcohol stores, and taxi and limousine services.

This may be a waste of a college degree, but it also displaces the less-educated workers who would normally take these jobs.

“The less schooling you had, the more likely you were to get thrown out of the labor market altogether,” said Mr. Sum, noting that unemployment rates for high school graduates and dropouts are always much higher than those for college graduates. “There is complete displacement all the way down.”

This is not an easy problem to address, but I am convinced that universities must be part of the solution. Expect more on this topic from this blog in the future.