Posted on October 17, 2012

Skilled-Worker Shortage Is Exaggerated, Says Study

Paul Davidson, CNBC, October 15, 2012

A shortage of skilled manufacturing workers that’s blamed for helping push up unemployment is far smaller than believed, according to a study out today.

The study by Boston Consulting Group (BCG) says manufacturers may have openings they can’t fill, but it’s not because workers aren’t out there. It’s because companies are being too selective about who they hire and are unwiwlling to pay a competitive wage.

The report acknowledges a mild skills gap. U.S. manufacturers could use an additional 80,000 to 100,000 highly skilled employees — less than 1% of all factory workers and less than 8% of highly skilled workers, the study says. Workers in highest demand are welders, machinists and mechanics.

But that’s far less than the deficit of 600,000 skilled workers cited in a survey last summer by Deloitte and the Manufacturing Institute.

“There’s a relatively small skills gap that can be managed,” says BCG senior partner Hal Sirkin.


It says 58% of high-skill manufacturing and engineering jobs remain open at least three to six months. But Sirkin says that’s partly because employers are not committed enough to hiring the workers.

A genuine skills gap would have pushed average annual wage growth 3 percentage points above the rate of inflation over the past five years, the study says, citing a common economic benchmark. Instead, manufacturing wages have grown roughly in line with a below-3% inflation rate.


Also, he says, companies have sharply cut back training of entry-level workers. A skills gap, he says, doesn’t exist if manufacturers can train young workers with solid math skills to run computer-controlled machines within a few months.


The study warns there could be a severe shortage by 2020 as Baby Boomers retire and manufacturers bring more production to the U.S. from overseas — if training programs aren’t expanded.