Maine Dems still in search of Sasquatch
On September 10, 2013 At 10:46 am
Responses : One Comment
SASQUATCH is a mythical being that few people believe exist. Of course, like most myths, there are those who spend an inordinate amount of time and resources attempting to prove its existence. The proof of Sasquatch’s existence is anecdotal and speculative at best, but that does little to deter the believers who view the Patterson-Gimlin film as the ultimate proof of Sasquatch. Similarly, Maine Democrats have their own Sasquatch, and working tirelessly to prove its existence with speculation and anecdotes. Unlike the animal, proof of this Sasquatch can be refuted by data, but that does little to deter the Maine Dems from their quest of proving . . . the skills gap.
In short, the current skills argument goes like this; the unemployment problem in our country is structural, driven by workers lacking the necessary skills to gain employment. The obvious assumption made in that arguments is that there are jobs available, it’s just workers are not qualified to get them. In Maine, Democrats are bent on passing legislation to close this purported skills gap through various measures. For instance, the following is from an op-ed in the KJ written by Rep. Gay Grant:
We focus a great deal on educating our youth, as we should. We also must consider our incumbent workforce, however, people like the man I spoke to whose skills need to be updated for him to remain competitive in today’s marketplace.
These workers need opportunities to develop new skills and build upon the strengths and experiences they have so they can thrive in today’s economy.
By building a well-educated, well-trained and resilient workforce, we can grow our economy and middle class. For adults, the key is resiliency, the ability to adapt and learn new skills so they can overcome challenges, identify new opportunities and thrive in new jobs.
As a member of the Joint Select Committee on Maine’s Workforce and Economic Future, I have learned that Mainers do have reason to be hopeful. The committee is tasked with developing legislation to strengthen our economy and help create new opportunities for Maine workers.
Although she does not state it explicitly, implicit in her statements about developing new skills and opportunities is the argument that the skills gap is occurring in the STEM fields. Similarly, others are sounding the alarm bells that their is a current shortage of workers with the requisite technical skills, and the problem is going to get even worse in the next decade. Jean Moon of Tidemark Institute even suggests that the cure to Maine’s economic problems is structural rather than cyclical:
Where Maine is concerned, the content is far from unfamiliar. It hits squarely on causes of and challenges to worker employability, the unemployment rate and a tenacious skills gap between current and future workforce needs.
For states like Maine that are having a difficult time fully rebounding from the financial tumult of 2008 and 2009, could anything be more important than proactively, yet thoughtfully with data in hand, closing this skills gap? If Maine’s economy is going to revitalize itself, this gap must be closed.
Specious. The entire argument is specious for several reasons. First, on the national level, the skills gap, is largely overblown. Research (here, here, here, here, here) points to cyclical problems in the economy as the root cause of high unemployment, not structural problems such as the skills gap, and there are two major points that proponents of the skills gap cannot overcome. First, there was no talk of a skills gap pre-recession, and as economist Edward Lazear notes, “[t]he structure of a modern economy does not change that quickly.” In other words, how is it that in just a few years the workforce’s skills have depleted so rapidly?
Even accepting the skills gap argument in general, there is little evidence of it in the STEM fields. First, from a recent CNBC poll of 500 top executives:
What’s more important for getting a job: Being able to write computer code or understanding what your boss says?
Either way, there’s a problem, according to a recent telephone survey of 500 top executives.
Ninety-two percent of them said there’s a job skills gap. And of that overwhelming majority, nearly half believed the gap was in “soft skills”—communication, critical thinking, creativity and collaboration.
Likewise, from Business Insider:
Unfortunately, literacy and numeracy are not especially sexy topics for business and HR professionals. But our unwillingness to take up this issue with seriousness ignores the significant returns that it could offer our organizations. Simply put, the tendency to focus our energy and anxiety exclusively on the so-called skills gap for specialized positions is a bit like letting our horses starve to death because we’re busy searching the Malaysian jungle for a unicorn.
Of course it’s not just about how this real skills gap impacts our companies right now, it’s about how these gaps cheat us of potential top talent. It’s clear that we can only expect the sought-after, top-tier ‘talent unicorns’ to become increasingly rare if we don’t give the masses the foundational skills that might allow them to develop into one of these specialized workers. That is, in the end this is a question of mobility into jobs and professions requiring a higher skill level. Indeed, the Conference Board of Canada reports that:
“Employees with higher literacy skills earn more income, are less likely to be unemployed, have greater opportunities for job mobility, are more likely to find full-time work, and are more likely to receive further training”
If schools are rubber stamping scads of graduates who lack fundamental skills, whose grades may still qualify them for admittance into post-graduate institutions that are ill-equipped to provide the required remedial education, and who then subsequently seek employment with organizations unwilling to invest in training, it might conceivably result in a situation that looks a whole lot like our current reality. That is, an escalating ‘educational arms race’ that still seems incapable of slaking the corporate thirst for talented, immediately productive workers at a variety of levels, while at the same time we witness a sea of frustrated job-seekers and workers whose school debt does not seem to be offering them much ROI.
As to the STEM skills gap argument specifically, Robert Charette did an excellent piece of the topic in a recently for IEEE Spectrum. In that piece, he writes:
What’s perhaps most perplexing about the claim of a STEM worker shortage is that many studies have directly contradicted it, including reports from Duke University, the Rochester Institute of Technology, the Alfred P. Sloan Foundation, and the Rand Corp. A 2004 Rand study, for example, stated that there was no evidence “that such shortages have existed at least since 1990, nor that they are on the horizon.”
That report argued that the best indicator of a shortfall would be a widespread rise in salaries throughout the STEM community. But the price of labor has not risen, as you would expect it to do if STEM workers were scarce. In computing and IT, wages have generally been stagnant for the past decade, according to the EPI and other analyses. And over the past 30 years, according to the Georgetown report, engineers’ and engineering technicians’ wages have grown the least of all STEM wages and also more slowly than those in non-STEM fields; while STEM workers as a group have seen wages rise 33 percent and non-STEM workers’ wages rose by 23 percent, engineering salaries grew by just 18 percent. The situation is even more grim for those who get a Ph.D. in science, math, or engineering. The Georgetown study states it succinctly: “At the highest levels of educational attainment, STEM wages are not competitive.”
Given all of the above, it is difficult to make a case that there has been, is, or will soon be a STEM labor shortage. “If there was really a STEM labor market crisis, you’d be seeing very different behaviors from companies,” notes Ron Hira, an associate professor of public policy at the Rochester Institute of Technology, in New York state. “You wouldn’t see companies cutting their retirement contributions, or hiring new workers and giving them worse benefits packages. Instead you would see signing bonuses, you’d see wage increases. You would see these companies really training their incumbent workers.”
“None of those things are observable,” Hira says. “In fact, they’re operating in the opposite way.”
Second, and as Charette notes about the STEM fields specifically if there were labor shortages in some areas, we should see increased wages. We don’t.
The speciousness of the national skills gap argument is applicable to Maine as well. As I previously wrote:
I will come back to the Georgetown study, but first I want to look at the IT industry, an often cited industry with a large skills gap, to see if there is an indication of a skills gap; specifically by looking at average weekly wages* which would indicate either increased pay, increased hours, or both since Q4 of 2007 when the recession began through Q4 of 2012:
Information - $938 to $869
Data Processing – $1,672 to $1,172
Professional and Technical Services – $1,298 to $1,305
Telecommunications – $1,132 to $1,147
In 2012 dollars using BLS inflation calculator
The issue of wages and the purported Maine skills gap is, for some reason, an often overlooked issue. From a June Portland Press article:
That’s been Kumiszcza’s experience as head of TechMaine. He said that of the top five fastest-growing IT occupations between now and 2020, including software developers and database administrators, Maine’s wages are 15 percent below the national mean, 19 percent below New Hampshire’s, and 22 percent below Massachusetts’.
“It isn’t going to take long for a recent STEM graduate with a BS to figure out the math,” he said, noting that a database manager can earn $85,900 in New Hampshire, which doesn’t assess income tax, compared to $62,500 in Maine.
“Some Maine employers aren’t paying a competitive wage, and for the life of me I can’t figure out why,” Kumiszcza said
Maine has long struggled with its brain drain–college grads leaving the state to find work elsewhere–driven largely by the overall lack of opportunity, and the lack of pay in what opportunities remain. What’s interesting is that while Dems such as Grant argue the skills gap is the barrier to employment, they hedge their bets oh so slightly by addressing the fiscal constraints of staying in Maine. From Grant:
The Educational Opportunity Tax Credit, more commonly known as Opportunity Maine, was established in 2007 to reduce student debt for Maine students by providing graduates who stay in Maine to work with a tax credit for student loan payments.
It was hoped this program would help stem the tide of college graduates leaving the state. Unfortunately, only about 600 Mainers have taken advantage of this opportunity.
For this reason, I drafted legislation to promote and expand awareness of the Educational Opportunity Tax Credit. This new law will help raise awareness of the Opportunity Maine program so that more Mainers will take advantage of the tax credit for which they are eligible. The average benefit is more than $2,000 per year. This credit could effectively wipe out student loans incurred by adults who return to school to earn associate or bachelor’s degrees.
Growing an educated and skilled workforce will help bring businesses and well-paying jobs to Maine. Attracting and keeping young people in Maine and helping our incumbent workers re-train for new opportunities are vital to our economic recovery.
This sounds more like an acknowledgement of some demand/cyclical problems in the economy, not structural. Regardless, while this part of Grant’s op-ed piece ebbs closer to the problem (fiscal constraints on workers staying in Maine), it falls woefully short. Once again, reducing some debt for college grads is not going to be the same motivator to stay in Maine as opportunities and wages. The latter two elements are demand side problems, and cannot be cured by a more educated and skilled workforce. Again, from the Portland Press piece:
[L]abor economist Mark Price, who works at Keystone Research Center in Harrisburg, Pa., a nonpartisan policy and research institute, said training more workers wouldn’t automatically solve the problem.
“There’s just not enough demand,” he said. “It’s very easy to get up on a stump and say, ‘We need more STEM.’ Training a bunch of people with STEM without STEM jobs there makes no sense. A field doesn’t grow out of nowhere. You’re not going to train a lot of STEM graduates and become Silicon Valley.”
So what’s the problem with focusing on the skills gap? Several problems arise, and most to the benefit of business to the detriment of labor. First, government spends where it doesn’t need to training workers and absorbing labor costs for the private sector, as the Maine legislature is proposing to do. Second, by flooding the market with more trained workers in particular fields, wages get suppressed, again reducing labor costs. Third, universities benefit because with subsidies from the state and federal governments come opportunities to expand. Meanwhile, the labor market tightens, wages remain stagnant or fall, the ROI on college continues to inch downward, and taxpayers foot the bill with their low paying jobs.