Economist Writing Every Day

Andrew Weaver is doing interesting work on “the skills gap.” One of his key methods is to create new data by interviewing firms. As someone who has looked hard for good data on the skills gap, I can say that we need more work like his.

Weaver’s 2017 paper with Paul Osterman is about data for U.S. manufacturing firms. These findings may or may not generalize perfectly outside of manufacturing, but I think this was a great place to start. There is plenty of talk about the decline of U.S. manufacturing and at least some of the talk was about a lack of skilled Americans to meet the great demand for high-tech doings. For this survey, they only ask about “core workers” who are doing the specialized roles of making widgets.  

Here are two important empirical questions:  a.) do American manufacturing firms want high-skill workers? b.) do they have trouble finding them? The authors answer, “not as much as you might think from policy discussions.”

There are lots of details in the paper that I don’t have time to cover. In table 2, they go over the determinants of a firm facing long-term vacancies. What is common among the (minority of) firms that report having long-term vacancies? Advanced computer proficiency is not associated with difficulty of filling jobs. The implication is that most manufacturing companies around 2017 were able to find workers who had the computer-related skills needed to do the core production tasks. What seemed to be a limiting factor was not computer skills but advanced reading skills. Half of the establishments surveyed said that they require workers with extended reading skills. That could mean, for example, reading a 10-page technical article in a trade journal.

It was hard for them to find highly literate workers. Is that about the culture, the salary, or the location of these firms? What about unemployed poetry majors wandering the cities? I’m not sure. The policy implications are surprising. More AP English! Not just more AP Computer Science. By the way, in the experiment I ran on computer programming, I found that AP Computer Science had no effect on the behavior of college students.

Another significant determinant in table 2 was advanced math skills. However, less firms said they require advanced math skills compared to extended reading. So, if you could only pick one, it seems like literacy would be the more important skill to invest in.

Demands for hard skills varied, but soft skills were always important. What proportion said it was “moderately or very important” for workers to “cooperate with other employees”? 99.3%  Trust falls and Tolkien is the prescription for this workforce. Just kidding. Computer classes are important, too.

The economy benefits from having a better workforce. That’s true whether or not you can find evidence of mismatch and long-term vacancies associated with high-tech skills. Secondly, when you see in this paper what skills are needed on the factory floor, you might actually worry that the skill set sounds too basic. What if America were to become a place where most college graduates cannot find work that suits advanced skills? Evidence of no skills gap, if there were such evidence, wouldn’t necessarily be good news. Andrew Weaver is at it again, and this time he strikes closer to the tech industry. His new paper on IT workers just came out: “Who Has Trouble Hiring? Evidence from a National IT Survey”

Where is that skills gap?

This time he presents a “nationally representative survey of information technology (IT) helpdesks that contains detailed measurements of skill requirements, organizational characteristics, and market structure.”

Here’s the core of the abstract, “The results indicate that the incidence of persistent hiring difficulties is modest, and that measures of technology and technical skill demands are not associated with greater hiring problems. Organizational attributes and market structure are generally more predictive of hiring frictions than are skill requirements.”

Because of the nature of this one-time cross-sectional survey, no causality can be inferred from just this data. However, if you have a certain story about the American economy, then you can see if this new data is consistent with your story. A study from 2012 that Weaver cites claimed that half of all helpdesks struggle to find worker who can fill technician jobs. If half of all major organization in the US cannot find people to keep the computer systems running, that is very alarming. By contrast, Weaver finds that 85% of the establishments who responded to his survey have no long-term vacancies, and 70% had no vacancies at all.

Weaver points out that if “the skills gap” is in fact the problem, then “establishments with higher skill requirements will experience greater hiring frictions.”

The data indicates that jobs requiring more advanced computer skills are not harder to fill. So, most establishments don’t have trouble filling positions at the helpdesk, and if they do have a long-term vacancy, it does not seem to be advanced computer skills that cause a problem. Weaver found some other skills that are statistically associated with long-term vacancies, but those skills cannot be taught at a coding bootcamp.

Helpdesk work requires less training than cutting-edge software development. Maybe there is a skills gap somewhere. With the manufacturing paper and the new IT helpdesk paper, Andrew Weaver is gradually eliminating the places where it might manifest. The evidence he provides is valuable for focusing the policy discussion and challenging assumptions.