Can American workers handle a manufacturing renaissance?

Saturday December 29, 2012

The rate of unemployment and the lack of jobs have bedeviled Americans for over four years now. Although under 8 percent, the jobless rate remains stubbornly high and yet, there appears to be plenty of work -- if you have the skills to qualify.

"There is a mismatch between the jobs that are available and the people that we are interviewing" explained the chief executive of a huge German engineering firm, looking to hire skilled manufacturing workers.

It is the same story wherever you go. If you can believe the Bureau of Labor Statistics, there was a shortage of 7 million skilled workers in America as of two years ago and that number is increasing. They are forecasting that shortage will balloon to 21 million skilled workers by 2020.

Most scholars will tell you that the lack of education within the American work force is behind these depressing numbers. To make matters worse, the average education of U.S. workers is expected to decline over the next ten years, which will further widen the gap between supply and demand for skilled help.

Readers who have been reading my columns understand that the rising cost of higher education is now beyond the means of more and more Americans. At the same time, the vast majority of the work force is making less in 2012 dollars than their fathers did. One major reason for this trend is that low-wage work constitutes a growing share of the jobs produced by the U.S. economy.

The Labor Department forecasts that among the top 30 occupations that will add the greatest number of jobs between 2010 and 2020, 24 typically require only a high school degree or less. Only six occupations, among them registered nurses, elementary teachers and accountants, require more.

Yet scholars, politicians and pundits alike keep pointing to increased education as the answer to reducing unemployment. Many workers have dutifully followed that advice only to discover that many would-be employers now consider them over-qualified. The jobs available for the most part are in openings for cashiers, home health aides, retail sales persons and the like.

Other jobs, such as long-haul truck drivers or manufacturing jobs demand a certain combination of skills that blend both technical as well as academic training. I believe as more and more college educated workers realize that they must also incorporate some technical training in their resumes, those jobs will be filled. Many corporations are also realizing that fact and are providing training in those technical skills to new workers.

Most recent estimates indicate that the U.S. manufacturing sector is short roughly 80,000 to 100,000 highly skilled workers. That sounds like a lot but it is actually only one percent of the manufacturing sector’s workforce, according to the Boston Consulting Group. But it does represent almost 8 percent of the skilled workers in that sector.

When you delve into the figures behind the shortages, one realizes that only seven states show a real gap in skilled manufacturing labor know-how. Therefore, the skills gap is largely a local and not a national shortage. Much of the so-called shortage is of some corporation’s own making. It is natural when planning a factory or plant in a new location to seek an area with the lowest cost wages and tax structure prevail. It was one of the reasons that foreign auto manufacturers selected the Deep South to establish their U.S. operations.

What companies fail to recognize is that a major reason for a region or state’s low labor costs are the lack of skills and education provided by that workforce. You can’t deliberately locate your plant in an area that abounds with unskilled labor and then bemoan that same lack of skills.

Don’t get me wrong, there is a gap in skilled labor in this country but it is not as large as some would have you believe. Hopefully, as time goes by, more and more manufacturing jobs will return to this country and as they do, those jobs will be filled by Americans. There may be a time lag, such as the one we are experiencing today, but the gaps will be filled and quickly.




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