A recent Deloitte Consulting study concludes that nearly 83 % of manufacturers surveyed report serious shortage of skilled production workers. In addition nearly three-quarters of the manufacturers report that shortage of skilled production workers translates into adverse impact on productivity as well as plant expansion .It means passing up of new business opportunities .
According to the Wall Street Journal (Nov 26-27,2011), AAR Corporation,a Chicago based aviation-parts manufacturer has currently 600 job openings in welding and maintenance mechanics.These jobs do not require college diplomas but require mechanical skills and pay well.The company is unable to start a third shift but can’t do it because of shortage of skilled workers.
Skilled worker shortage has ripple effects.When businesses can’t expand because of lack of skilled workers means fewer opportunities for less skilled workers such as security personnel,forklift drivers, maintenance and janitorial staff.It also adversely affects those who work in the supply chain such as parts suppliers.
In most economic recoveries there is the problem of mismatch of skills between available jobs and job seekers. In the aftermath of the great recession of 2007-2009 the mismatch has been huge.Why? Partly it is because of demographics.Manufacturing employment peaked in the 1980’s and those who were hired then are nearing retirement now and replacing them has been a great challenge because of disappearance of vocational education at the high school level.In addition in-company training via labor unions has eroded.
Another reason for the lack of supply of trained workers in manufacturing has been the declining attractiveness of blue-collar jobs to young people.In addition parents have not encouraged their children to seek work in manufacturing because of lack of societal status and perceived instability of the manufacturing sector. According to another Deloitte study this attitude has existed despite the fact that a large majority of Americans think that a strong manufacturing sector is important for America.Only one out of three would support their children to have a career in manufacturing.
Finally some companies themselves are a factor underlying the problem as they have become fussy in their hiring because of a weak economy.Acording to Manpower Inc,a worldwide staffing company, with weak demand for their products businesses have become pickier in choosing candidates.They only hire those who fit the job description completely.If they can’t find such candidates they postpone hiring and leave the job unfilled and hope for better times to fill the vacancy.
Dana Saporta, economist with Credit Suisse,estimates that economy wide structural factors such as lack of skilled workers enhance the rate of unemployment by 1.5%. (WSJ,Nov.26-27,2011) .Without the structural problems in the economy the unemployment level today in America will be 7.5% intead of 9% .