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Skills and Tomorrow's Jobs Report: The Usual Suspects

Updated: Jul 4, 2020

Originally published on Opportunity @ Work by Byron Auguste on July 12, 2018

All ready for “Jobs Day” tomorrow? During my two years in the White House advising President Obama on jobs and economic policy, the first Friday of each month’s Bureau of Labor Statistics (BLS) release of its Employment Situation report felt like an 8:30 a.m. rock concert — for people who follow ‘U5’ the time series more closely than ‘U2’ the band. So, if you happen to be a labor economist (sorry!), you’ve likely already set your alarm and two snooze backups.

Oh, you’re not a labor economist? Planning to sleep in tomorrow instead? Rearrange your sock drawer? Or, I don’t know, get up and go to work, maybe? If so, here are two spoilers:

  • The headline U.S. unemployment rate (‘U3’) will be close to the lowest recorded.

  • Headlines and op-eds decrying or debunking “the skills gap” will follow.

As exciting as the seasonal adjustment footnotes will be for true enthusiasts, most mainstream analysis of tomorrow’s U.S. employment numbers will be entirely predictable, but not entirely convincing, like Casablanca’s Captain Renault raiding Rick’s Café: I’m shocked — shocked! — to learn that gambling is going on in this establishment!” and “Round up the usual suspects!”

After business journalists interview CEOs (big skills gap!) and economists (no skills gap!), here are three of “the usual suspects” once again to be trotted out and interrogated:

  • Not enough school: “More jobs ‘require’ college degrees than we have college grads.”

  • Not enough STEM: “Too many liberal arts grads; new jobs need math and science.”

  • Not enough salary: “If companies need more skills, can’t they just pay people more?”

There’s a dollop of truth in each of these narratives, but none of them explain nor even usefully frame the underlying patterns of dysfunction in the U.S. labor market, of which “the skills gap” is a symptom. Worse, they make us spectators when it’s time to act. Let’s examine each in turn.

Not Enough School?

In their outstanding 2010 book, The Race Between Education and Technology,economists Claudia Goldin and Larry Katz showed convincingly that U.S. growth diminished and inequality rose when educational attainment slowed its century-long rise in the 1970s. This original rise was driven by the universal high school movement, massive expansion of public colleges and universities, the G.I. Bill and Pell grants, which expanded demand and supply of high-quality post-secondary education. By contrast, in the last 15 years, employers have reclassified middle-class jobs as “college graduate jobs” much faster than any rise in college degrees or notable changes to the skills obtained in college (Burning Glass Technologies calls this “up-credentialing”). When only 20% of administrative assistants have a bachelor’s degree but almost two-thirds of new job postings for admins require a B.A. to be considered, such practices make college degrees more of an arbitrary barrier than an inclusive bridge to middle-class work.

Not Enough STEM?

Should more students master STEM disciplines such as engineering, computer science and statistics? According to LinkedIn, definitely yes: There’s a strong and growing job demand in these fields, although good logic, writing and listening skills go a long way, too. Nonetheless, pinning an economy-wide skills gap on STEM has a (rather ironic) problem: The numbers just don’t add up! Even by the most generous definition, “tech” jobs are less than 10% of U.S. jobs. Software developer jobs are growing fast, but demand for personal care and home health aides is growing even faster. In absolute terms, the latest BLS 10-year projections predict 10x more new nursing, personal/health aide, restaurant and janitorial jobs than app developers.

Not Enough Salary?

Three decades of stagnating wages — rising just 0.2% annually since the early 1970s, adjusted for inflation — means an economic five-alarm fire. But are wages insufficient to motivate people to skill up; or a smoking gun of the labor market irrelevance of education? No and no. Despite overall wage stagnation, the compensation gap between more and less “degreed” workers has widened, and college graduates who majored in engineering and other high-demand fields earn much higher starting and lifetime pay. There is no ‘reserve army’ of data scientists waiting at home until they get a decent salary offer. However, chronic wage stagnation does reflect much deeper problems — under-investment in both private and public sectors, institutional barriers to labor mobility (e.g., an absurd proliferation of non-compete agreements) and structural factors keeping millions of “caring economy” jobs as low wage, precarious jobs, even as demographic change makes them all the more essential to the quality of our lives and to societal well-being.

The Show Is Over. Time To Get Serious.

Some may take comfort from replaying these “skills gap” narratives, like watching a favorite film time after time. The lead characters are a bit cartoonish but familiar: ‘Technology,’ ‘Education,’ ‘Business,’ ‘Government.’ As the story unfolds, we can watch and speculate on these heroes or villains, according to our ideological taste. Whose jobs will ‘Technology’ destroy? Will ‘Business’ invest more in people? Will ‘Education’ rise to the challenge? We just can’t wait to find out…

Scratch that: I mean we can’t just wait to find out. Showtime is over; game time is now. It’s well past time we leave our passive spectating ways behind. The U.S. has arrived at an inflection point in our economy, technology and demography that demands a reality check on the sorry state of our labor market, and the — i.e., our — institutional practices that produce it.

Our employers complain they can’t find the needed skills, but never assess the skills of most of their job applicants. We preach “meritocracy” and performance, but we practice “alma mater-ocracy” and pedigree. Policymakers say jobs are their №1 priority; businesses insist their most important asset is their people; we say college is essential, then rate colleges by how many applicants they can reject. Commentators stroke their chins and refer to impersonal forces of technology, markets and systems — as if these were created in some other way than cumulative and collective human choices. Our cluelessness can be comical, but its net effect is tragic: a U.S. job market that’s broken for half of Americans, in ways barely noticed by so many who make the rules. The so-called “skills gap” is really an opportunity gap, which generates a gap (chasm, in fact) in confidence and trust, dividing our country by income, education, class, gender, race and region.

Let’s get serious.

Let’s realize that the “future of work” depends on us: our choices; our actions. What institutional policies, practices we as workers, managers, educators, voters, voices and leaders in the fields of business, learning, innovation, governing and civil society organizing will we allow to persist? What new institutional supports and tools, norms and rules will we create — and for whom?

Beautiful Friendships?

During most of Casablanca, both Rick and Captain Renault are committed to doing only what serves their short-term interests, bigger picture be damned. In the film’s final scene, they face a stark choice: they can keep hiding losing cards from each other, hoping no one calls their bluff; or join forces to reshuffle the deck. Happily, they both chose to work together for a larger cause.

It’s certainly less cinematic, but the condition of our job market — i.e., the ability to make progress in America through meaningful work — is a crisis, no matter what you may read tomorrow about “a good jobs report” marred only by “a skills gap.” Don’t be lulled by that lullaby. We are far from where we need to be, and we can’t arrive at an innovative, inclusive ‘future of work’ by accident, nor each on our own. Fortunately, a growing cadre of executives and entrepreneurs, educators and social enterprises, technologists and trade unionists, mayors and governors are embarking on this journey: on purpose, and together. It may be the beginning of some beautiful friendships.


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