Fiscal Times: Economists Skeptical About Skills Gap

Wednesday, 20 Aug 2014 12:48 PM

By Dan Weil

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One explanation frequently offered for the nation's persistent unemployment is that a skills gap makes it difficult for employers to attract qualified workers.

"Workers, the story goes, simply don’t have the educational background or professional training for the kinds of jobs that exist in today’s knowledge economy," writes Rob Garver in the Fiscal Times.

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But many economists have come to doubt that explanation. Stagnant wages are one reason why. "After all, if skilled workers were in high demand but short supply, the laws of economics suggest they would be able to demand, and get, higher wages," Garver says.

Wages rose only 2 percent in the 12 months through July.

Garver cites a new paper by University of Pennsylvania professor Peter Cappelli, who finds little evidence in support of the skills gap. The real skills problem is that many people are overqualified for the job in which they're working, Cappelli writes.

The skills gap theory comes from a combination of employers seeking to hold down wages and an effort to transfer responsibility for training workers from employers to the taxpayer, he says.

To be sure, many economists voiced enthusiasm about the employment situation after the report that payrolls grew 209,000 in July. That marked the sixth straight month of gains more than 200,000, the longest streak since 1997.

The job market "does look to be on a healthy growth track right now," Princeton University economist Alan Blinder told Bloomberg. "It means less social distress from unemployment and an inability to find jobs. Secondly, it means more spendable income for the U.S. workforce."

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