Nearly every business you pass on the road has a sign in the window or on their marquee begging you to come join their team. Unemployment is at an all-time low (3.6%), and the labor force quite simply doesn’t have enough workers.
Isn’t that a good problem to have? Wouldn’t we rather have low unemployment than high unemployment? Well, yes and no. Of course people need to be gainfully employed, but when unemployment rates get too low, it can cause its own set of problems for companies, namely (Umass Global):
- Recruitment and retention become more difficult
- Productivity suffers
- A potential recession is on the horizon
Employers are struggling to find people to fill vacant positions. Many open positions require specific experience and skills which lead to a great challenge for companies because most people in the job market do not possess the skills and knowledge needed to fill these positions. This difference between the skills job seekers have and the knowledge and experience employers need is called the “skills gap” (Business Round Table). The low unemployment rate combined with the skills gap are keeping nearly 60% of employers from being able to fill jobs within 12 weeks.
Industries Hit Hardest
The skills gap hits industries that require very specialized skills the hardest. According to the Korn Ferry Institute’s latest research, the three U.S. industries that will face the worst talent shortages by 2030 are:
- Financial Services
- Technology, media, and telecommunications
Other industries that are affected include (The Under Cover Recruiter):
- Logistics and Material Handling
However, these lists are by no means exhaustive. Any knowledge-based industry, such as education or healthcare, is also at risk of not being able to find people with the requisite expertise.
What Caused the Skills Gap?
No one thing caused the skills gap. It’s the result of a kind of perfect storm of circumstances.
We’re losing a lot of our workers simply because they’re aging out. The Baby Boomers, who had long been (until 2021) our largest population sector, are retiring in droves and taking their skills with them.
Unfortunately, many colleges and universities are perpetuating the skills gap by offering outdated degrees that simply don’t reflect the skills graduates will need in today’s work landscape. In his white paper America’s Skills Gap: Why It’s Real and Why It Matters, managing director of University Ventures Ryan Craig says, “Academic programs at accredited postsecondary institutions are controlled by faculty members who typically aren’t incentivized to align curricula to employer needs.”
In the schools’ defense, however, it’s hard for them to develop educational programs fast enough to keep up with technological advancements. In fact, an institution’s cutting-edge program can easily become obsolete in as little as five to ten years (Progressive Policy).
The Bottom Line for Employers
According to one study, the skills gap can cost companies up to one million dollars per year in terms of unfilled vacancies and lost productivity.
In the next article, we’ll discuss how corporations are contributing to the skills gap problem.