Nice column by Arthur Foulkes in the Terre Haute TribStar entitled Closing the Skills Gap: The Issue: Matching employee job skills with job openings. He notes that, among the political class, there is little doubt that the skills gap exists and that it is a significant source of unemployment. In the academic community, however, the consensus seems to be that the skills gap is a myth.
High unemployment is mainly the result of a deficiency in aggregate demand and slow economic growth, not because workers lack the right education or skills. The skills of the labor force did not suddenly erode between 2007 and 2009, when the unemployment rate more than doubled, so it makes no sense to claim that high unemployment in 2009 and through today has been caused by a soaring number of “unqualified” workers.
Wages are another pretty significant tell. If there was unmet demand for skilled laborers, you’d see wages rising to attract the existing supply. That’s not happening.
Nevertheless, it’s a pretty good bet that Indiana is going to spend money based on legislators’ unfounded belief in this myth; creating the Indiana Career Council and handing out a contract for development of a “Workforce Intelligence System.”
My sense is that the love for the skills gap myth has to do with the underlying desire to view the economy as a morality play where the hard working and clever prosper while the only ones who suffer are those who are too lazy or stupid to make money. The idea of a skills mismatch gap allows lawmakers to “do something” without disrupting that narrative too much. After all, what else are we supposed to do? You can’t just stimulate demand by giving people money to spend or having the government hire them to build infrastructure because freedom and communism. Also too, immoral.