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Tuesday, June 18, 2013

State Skills Gap Myth Gets Shot Down Again

Researchers say Wisconsin has more educated workers than jobs

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A second economic study shows that Wisconsin’s sluggish economy isn’t being plagued by a skills gap between job openings and job seekers.

The team of researchers from UW-Madison, working on behalf of the nonpartisan Wisconsin Legislative Council, found that “only a few occupations may see a skills shortage in coming years.”

Workers with in-demand skills will include computer and IT workers, human resources experts, physicians and surgeons, lawyers, pharmacists and physical therapists.

At the same time, Wisconsin will have a glut of workers with associate’s, bachelor’s and master’s degrees in other fields who will be looking for high-skill work.

 

Got a Degree? You’re Out of Luck

The researchers from the UW-Madison La Follette School of Public Affairs predicted that by 2020 there would be up to a half-million more workers in Wisconsin with at least some college education than job openings that require that level of education.

That’s because 71% of the 1 million new jobs projected to open up between 2010 and 2020 will require a high school diploma or less. [Editor's note: this was first reported by Marc Levine, senior fellow of UW-Milwaukee's Center for Economic Development.]

According to data from the state Department of Workforce Development (DWD), the occupations with the largest projected job growth in the next decade are:

  • Cashiers, with 34,010 openings
  • Food prep and fast food workers, with 32,500 openings
  • Retail salespersons, with 30,650 openings
  • Waiters and waitresses, with 30,220 openings

None of those positions require a high school diploma.

In fact, only three of the top 19 in-demand occupations in the coming decade—registered nurses; nursing aides, orderlies and attendants; and elementary school teachers—require more than a high school diploma.

The out-of-luck educated workers will have to settle for jobs that don’t require a degree, the researchers from the UW-Madison La Follette School of Public Affairs concluded. That’s already happened. An eye-popping 60% of all retail salespeople in Wisconsin have some post-secondary education, as do 57% of bartenders, 56% of telephone operators and 49% of wait staff.

Phil Sletten, a former graduate student who worked on the UW study, said he was surprised by the size of the mismatch between the supply of the state’s highly educated workers and the demand for them.

“These are hundreds of thousands of people who are not going to find a job at their education level, if these projections hold,” Sletten said. “That’s something that surprised me because there is a big push for people to go on to higher education because we are going to need a more educated, more nimble workforce.”

Sletten said that the DWD’s planned Labor Market Information System would help to track projected labor shortages more quickly, which could help students and job seekers prepare for a changing marketplace. The researchers also called for more assistance given to developing a high-skill economy, including providing more incentives for entrepreneurs and employers of highly skilled workers, so that they don’t leave the state for better opportunities.

 

A Jobs Gap as Wisconsin Loses More Jobs

The UW-Madison study supports an analysis from UW-Milwaukee’s Marc Levine, who determined that Wisconsin faces a “jobs gap,” not a skills gap.

Levine said that if Wisconsin had a skills gap, in-demand workers would see their wages rise. Instead, real wages have fallen, even among workers with marketable skills, such as trained welders.

Although the country as a whole is recovering from the Great Recession, Wisconsin continues to shed jobs. On Friday, news broke that Wisconsin lost 6,800 jobs between April 2012 and April 2013, the highest losses of any state.

When his study was released, Levine told the Shepherd that the state’s high unemployment rate and sluggish economy couldn’t be attributed to skill-lacking workers, since these workers were employed just before the Great Recession and had enough skills to satisfy employers as recently as two years ago.

Levine argued that employers are hiring in low-wage areas, such as Texas or Mexico, where workers are less skilled and employers can make higher profits and maximize benefits from the government. For example, Bucyrus generated headlines in 2008 when the company’s then-CEO, Tim Sullivan, complained of a shortage of skilled welders in Milwaukee. Bucyrus then set up a new factory in Kilgore, Texas, where welders are less skilled and earn less than they do in Milwaukee. Bucyrus also received state subsidies for setting up its plant and training workers in Kilgore.

While Levine had focused on welders, the UW-Madison researchers also found that despite the heavy demand for computer and IT workers in the state, Wisconsin computer science professionals in Wisconsin earn about $12,000 less than their peers nationally.

 

Walker and WMC’s Morgan Buy Into the Skills Gap

The new studies contradict the conventional wisdom pushed in the corporate media that Wisconsin employers cannot find qualified workers locally, even during a time of high unemployment. The argument is so strong that Gov. Scott Walker has secured $96 million in state funds to be invested in workforce development programs, including those targeted at closing the skills gap via improved worker training.

Jim Morgan, president of the Wisconsin Manufacturers & Commerce (WMC) Foundation, is a believer in the skills gap.

“I think it’s real,” Morgan said.

He pointed to the WMC’s survey of 364 CEOs last month, which found that more than half of the CEOs said they had trouble hiring employees; about three-quarters of them said it was due to the lack of qualified applicants. The survey didn’t indicate which industries had a lack of qualified workers, but the survey as a whole was dominated by the WMC’s manufacturing members, Morgan told the Shepherd.

At the same time the WMC CEOs were complaining of a lack of skilled workers, a whopping 63% said they spent 3% or less of payroll on employee training, indicating that employers were expecting to hire already-trained workers.

“When you’ve got a tight budget, training is the first thing to go,” Morgan said.

Despite the CEO’s complaints about their workers, just 11% of them said that the biggest concern facing their company was a labor shortage and only 4% said that education was the one thing that state government could do to help their business.

Education is a big portion of Walker’s workforce investment, although the state’s technical colleges have already begun revamping their courses to suit employers’ needs.

For example, welding instructor Sue Silverstein recently helped to upgrade the welding curriculum at Milwaukee Area Technical College (MATC), which was approved by an advisory committee, where employers are represented.

“The people who have done the complaining have never talked to us or come to MATC to see what they’re doing,” Silverstein. “They just complain. It’s frustrating.”

 

Local Manufacturing Volatility

WMC’s Morgan said there’s a stigma around manufacturing that’s preventing young people from seeing it as a viable career. The field is dominated by workers in their 50s who will be retiring soon, Morgan said, and will need to be replaced.

That said, the young workers’ unwillingness to get into manufacturing may be due to the heavy losses Milwaukee has endured in that industry. According to data presented by UWM’s Levine, the city lost more than three-quarters of its industrial jobs since the 1960s. Those losses have hit African-American Milwaukeeans the hardest.

Larry Gross, an MATC welding instructor, said he wouldn’t encourage his son or daughter to get into welding because of the volatility of local manufacturing and stagnant wages.

“We get promises from companies that they’re going to stick around, and then you turn around and see layoffs,” Gross said.

Gross said there was “scant attendance” from employers at MATC’s most recent job fair for welders, even though employers have complained about a lack of skilled welders.

Large employers gave more attention to the national American Welding Society conference and exhibition for robotic arc welding that MATC hosted on June 4 and 5. The conference drew about 170 people from around the country and raised scholarship funds for welders.

Despite the conference’s success, the Milwaukee Journal Sentinel declined to cover the event. The paper—which has pushed the skills gap myth on its front pages—hasn’t reported on the UW-Madison skills gap-debunking study. Barbara Miner wrote about Levine’s study on her Journal Sentinel blog, but no staff reporter has covered it in depth.

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