Saturday, February 27, 2016

Weekend discussion: "The 'skills gap' is fake"

Via the progressive magazine The American Prospect, an interview by Rachel Cohen with Marshall Steinbaum, an economist with the Washington Center for Equitable Growth. Mr. Steinbaum has a lot of interesting points, but I really enjoyed this set of comments: 
...What kinds of evidence challenge the "skills gap" narrative? 
There are two broad sets of evidence that show it’s false. The first is that people who do have skills haven’t been getting wage increases. Even in sectors like tech and engineering, nobody is getting raises. The only people who do get raises are in the top 1 percent. 
What about people who are not trying to get raises but who just want to earn a decent salary? 
That gets to the second set of evidence. People who do have good skills, credentials, and qualifications are generally taking jobs that are lower down the job ladder than they would have taken before. You have a lot of people with BAs taking jobs that before wouldn’t have required a BA, and you have people without BAs basically getting forced out of the labor market altogether. 
A 2014 National Bureau of Economic Research study* found that although students who major in things that traditionally lead to higher-paying jobs are historically more “protected” against the effect of graduating into a bad labor market, the extent of that protection was substantially lower in the Great Recession. In other words, it helps to have a STEM degree, but much, much less than it used to. 
How do your views compare to those of other economists who are looking at these issues? 
The whole idea that the “skills gap” is fake and that higher educational attainment is not a solution to the labor market’s problems is gaining traction within the academic economist community. But that basically creates a vacuum....
Of course, this is music to my ears. Mr. Steinbaum goes further in the rest of the article, saying "college is not the solution to multi-generational wealth inequality." I think that is a real challenge to the conventional wisdom around college, and an important counter-narrative to consider. 


  1. A good reason to attend college was given by Robert Zimmerman in his musical essay Subterranean Homesick Blues:

    "Twenty years of schoolin’
    And they put you on the day shift"

    And if you can't find a position,

    "Join the army, if you fail".

  2. Really interesting article on the aspects beyond those you quote too. There are similarities in the UK, though student loans are only paid off after student hits an earning threshold and are written off if they never do, as I understand. I wonder if that might help in the US?

    1. Respectfully, I don't think it would. Though it sounds like it's meant to be a safety net for students, it would make it easier for employers to keep wages suppressed. In effect, it's more corporate welfare.