Tuesday, August 19, 2014

Peter Cappelli on the skills gap

Peter Cappelli is a Wharton School professor and the author of Why Good People Can't Get Jobs. He has written a long National Bureau of Economic Research working paper on the so-called "skills gap." It's worth noting that Professor Cappelli is a 'skills gap' skeptic. Here's a small excerpt:
More generally, if the labor market is not enticing students to pursue particular fields, should public policy push them to do so? Manufacturers, for example, have long complained about the shortage of students interested in machinist training programs and assert that the cause has been that schools and guidance counsellors were not advocating for those programs. But the pay for such jobs has declined by 20 percent in real terms over the past two decades while the skill requirements for those jobs have shifted toward computer use, a field with better pay. The number of machinist jobs has already declined by 20 percent in that period (the total number of jobs in the economy has increased by 40 percent) and is expected to decline further (Cappelli 2012). The reasons why there has been a decline in the number of students taking vocational education courses that could prepare them for manufacturing jobs merits further attention, but we should not assume that it is independent from the attractiveness of the jobs offered at the end of those programs.
Of course, I find this paper compelling and worthwhile, but I would, wouldn't I? Read the whole thing -- I have more comments later.

UPDATE: I don't know why, but it seems that people are having a paywall for the NBER and I did not. Here's a Google Docs version. 

28 comments:

  1. I think it should be de rigueur to mention paywalls.

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    1. I think that's fair, but this isn't paywalled!

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    2. I am very interested in reading the whole thing, but it seems to cost $5. Or maybe I just don't have the skills to figure it out. ;-)

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    3. Huh, that's weird. Hang on a second.

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  2. "if the labor market is not enticing students to pursue particular fields, should public policy push them to do so?"

    Well, we all know the answer to that with regards to chemistry, don't we? Could public policy, with the lax financing and grant system that feeds useless PhD factories by the thousands, have been more pushing towards life science education?

    The result: a glut of mis-qualified scientist who could teach a class about chiral synthesis but don't understand what PKPD stands for...

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    1. I doubt the pharmacologists are any better off than the organic chemists.

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    2. Yeah, the NIH-funded fields have cranked out a metric shit-ton of new PhDs, but it's not like industry demand expanded commensurately. So anything biomed-related is bursting with perma-postdocs.

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  3. "You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy."

    I will look for you, I will find you, and I will unemploy you.

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  4. If you could choose one paper about the skills gap or STEM 'Shortage' to show to your local congress person what would you choose? I'm volunteering with a campaign and was told I could forward any articles I thought the candidate should be aware of.

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    1. Gee, great question. I'm not sure, but Beryl Benderly's "The Real Science Gap" has its flaws, but is a good place to start:

      http://www.psmag.com/science/the-real-science-gap-16191/

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    2. Let me know if you were thinking something more academic in nature.

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    3. That's perfect. Thank you.

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    4. Quoting from "The Real Science Gap":
      "Academic science functioned as an apprenticeship system, with graduate students and postdocs accepting meager pay and long hours, knowing that their teachers took personal responsibility for launching their careers. Indeed, the success of senior scientists’ students was an important measure of their professional standing,"

      Indeed. On one hand, I wish that my doctoral and post-doctoral supervisors were reading this article.

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  5. Does this also apply to biomanufacturing jobs? I thought there were opportunities in downstream biomanufacturing field....

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  6. Quoting from Peter Capelli's report:
    "Individual employers have also produced reports claiming that there are nationwide skills problems. For example, the health science company Bayer issued a report (Bayer 2013) based on a survey of recruiters at Fortune 1000 companies reporting that their companies were creating more jobs for STEM graduates than for those with any other credentials...."

    So, of course I immediately visited the Bayer HR website and entered "organic chemistry" as a search criterion (leaving all other fields unspecified): there were 3 hits, of which 1 was in Shanghai. Of the other 2, one was for a natural products chemist in Davis, CA and the other appears to be for a technician, who " will drive an electric cart to pick up samples".

    Does it take STEM skills to drive an electric cart? :-)

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    1. Does the cart have a speedometer? Does understanding numbers qualify as an M skill in STEM?
      Some people seem to think so.

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    2. "The other appears to be for a technician, who " will drive an electric cart to pick up samples". "

      They really ask someone with advanced academic credentials for this position? Somehow, I'm not surprised.

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    3. This day in age, the cart driver will either be 7.25 an hour with no benefits, or be required to have a master's degree in Logistics. There can be no middle ground!

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  7. I firmly believe that "skills gap" reflects the gap between the pool of workers and employers' lack of capability to find them.

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  8. I have found that if one doesn't possess the exact skill set that the company is looking for, they aren't going to hire. They will repost the job ever 6 months or so. The schools train to be well-rounded with a solid foundation and the ability to problem solve whereas the employers prefer the opposite. They have a nail, and they are looking for a hammer nothing more, nothing less. They don't want anyone that can easily learn how to be a hammer since that does take some time and energy. This is the skills gap that employers speak of. There is a refusal to train people on the job even though recent graduates cannot obtain those skills without work experience. In 5-10 years, I have a feeling a lot of these employers are going to in for a world of pain. At the same time, you will have a glut of highly educated individuals who will be left behind working outside their field.

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    1. It seems like a repetition of priors, but that seems to be what Capelli is saying - employers want employees to take full responsibility for their training (spending lots of money on job-based education that either has no flexibility or for a market in which flexibility is irrelevant, and paying for the debt and permanent lower pay when the field doesn't pan out) while paying at best the same pay as previous (at best). This would appear to parallel employer-driven changes in benefits (shifting benefits costs such as health care to workers with little if any increase in pay to cover them) and the argument over inversions (the tax burden of society should be borne solely by individuals - employees and consumers - and not by businesses).

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    2. I've been noticing this for the last few years now, you echoed exactly what I've been saying to my friends who can't get jobs for this very reason. Sadly in this economy it's a buyers market so companies can afford to sit on positions for months or years until they find the ONE person that fits all of the criteria they're looking for to a T.

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  9. I suspect that the "skill" that's missing in a lot of these deficient skill-sets is the ability to happily work a lot for a lot less than one's true worth.

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    1. That is a "valuable" skill. . . ?

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  10. I see that Atkinson (ITIF) is hoisted by his own petard in Footnote 7.

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    1. Sort of...if the point is valid, and as Capelli notes, there are a paucity of advocates for students or workers, and that very few people outside groups with a direct stake in the matter are speaking, then downgrading the reliability of the few organizations that have reason not to advocate for worker oversupply ultimately benefits his organization. If the discussion becomes an argument based on volume, because (almost) no one actually arguing is trustworthy because they all have a stake and discussing the merits of an argument is verboten and difficult in the absence of quantitative data and listener logic, then Atkinson's paymasters have the money and the legislators.

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    2. You do have a point from a macroscopic, strategic view. Atkinson's job is to provide enough fig leaves to lawmakers who would like to write laws for ITIF's funders. Union-funding of the counter-argument is another leaf for the pols in right-leaning districts. (He'll happily supply lefties with their own versions.)

      From the standpoint of the debate, however, I believe Atkinson did discredit himself in his attempt to discredit his opponents. (It's so obvious a blunder that I can't help but think Atkinson just doesn't care, which argues the case you're making.)

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