Wharton Professor: Don't Blame Worker Shortfall on Skills Gap

There is no skills gap.

That is the contention of Peter Cappelli, professor of management and director of the Center for Human Resources at the University of Pennsylvania's Wharton School.

He says manufacturers seeking qualified workers need to stop wishing for employees that meet all of their requirements and take a proactive, aggressive approach to finding suitable workers and training them.

Peter Cappelli Peter Cappelli

Cappelli has spent years studying business practices, especially as they pertain to hiring. He believes that the shortage of skilled workers that manufacturers are experiencing is more a case of impractical management practices than a real problem.

In previous articles, manufacturers interviewed by ThomasNet News expressed the difficulties they have in finding qualified workers, blaming the skills gap while trying to overcome them by introducing apprenticeships, recruitment programs, and other initiatives to find and develop workers.

However, there are skeptics, including Cappelli, who contend that there are plenty of viable candidates for manufacturing jobs. They say employers have to give them opportunities to acquire skills, and this means training.

In an interview via email, Cappelli states that the "skills gap" needs to be better defined.

"What exactly is a skills gap? If that means I can't find what I'm looking for at the price I want to pay, then we all have that problem every day," Cappelli said. "But if I say I can't find a house with what I want in it at the price I want to pay, we don't say, 'I have a housing shortage.' We say, 'I need to adjust my expectations, including what I expect to pay.'"

With manufacturing jobs, "hiring requirements have been going up, but pay has been flat," Cappelli noted. Most employers are reluctant to invest in training new hires or current workers, or they are shy from paying competitive wages, he says.

Are these factors really deal-breakers, considering the number of people looking for work or better jobs?

Most assuredly, Cappelli responded: "How could they not be? How can you expect to buy something if you pay below fair-market price?"

Cappelli also points to the counter-intuitive aspect of manufacturing employers' statements that they cannot find good employees. "What is so unusual about the complaints is that they increased when we went into recession (in late 2007)," he said. "They seem to have peaked when there were roughly six people looking for every vacancy, which is another reason for thinking that the complaints do not reflect reality."

A significant problem in the employment landscape is that seismic shifts in manufacturing, whether they involve work going offshore or companies downsizing or being broken up and sold, are changing the dynamics of hiring and, most important, training.

"The big employers who used to hire right out of high school and train [those new workers] are gone, and the ability to hire those people away [from other manufacturers] is gone as well," Cappelli remarked. "The union apprenticeship programs are gone ... or have shrunk enormously. And, to some extent, traditional vocational education programs have shifted direction. So we now have smaller employers who have not had to train workers themselves and can't find people to hire.

"The industry has got to solve this problem or at least be heavily involved" in helping develop solutions, he continued. "And I don't hear any discussion of this. All I hear from the industry groups is that someone else has to solve the problem of getting workers to employers, which would be unprecedented."

That "someone else" refers to the U.S. education system and state and federal governments. Can government entities be effective partners with industry on the skills gap issue?

"They can help provide some funding," Cappelli said, but "the key issue here is work-based skills, as in apprenticeships. How are we going to [develop required skills] if employers don't get more involved?"

Manufacturing employers routinely cite the lack of STEM (science, technology, education and mathematics) skills as a reason why they can't hire young applicants, but Cappelli says this isn't the case. "There is no evidence from hiring managers that there is any shortfall of academic skills," he said. "The complaints are all about behavioral skills, as they have been for decades."

He argues further that education, whether it is a two-year technical college or a four-year engineering degree program, is largely irrelevant in the issue. "The big shortfall is in hands-on skills, which only employers can provide," Cappelli contended.

Companies, he says, need to view training investments as a part of capital spending. "They should think about this the way they think about other aspects of their supply chain," he advised manufacturers.

"Kids are knocking themselves out trying to figure out where the good jobs are," he said. "If you are an employer, you've got to get involved in the supply chain. Simply expecting that, somehow, the right skills at the right price will show up at your door is a bad move. Would you do that with any other supplier?"


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