To the “Three R’s” Add One More: Writhing

Companies will feel ever more pain as the shortage of technically skilled workers intensifies.

It may rank as the most curious dichotomy wrought by the recession: at a time when millions of people remain unemployed, many companies are having a hard time filling key open positions. What gives?

Call it the technical-skills gap. With businesses increasingly turning to more-sophisticated automation to drive efficiencies (and, eventually, scale up), many are worried that they won’t be able to find enough technically skilled workers over the next decade. The shortage is already being felt in manufacturing, utilities, energy, health care, and other industries that are growing more dependent on skilled labor. But almost any company is a candidate to feel the pinch as the demand for skilled IT workers, researchers, and other positions outstrips the supply.

With the economy only beginning to pick up steam, this may seem like a minor headache, but in fact the ramifications could be enormous. When a company can’t hire enough qualified workers, it may risk a loss of production, or it may have to resort to a mix of expensive strategies like paying more overtime, hiring people at higher wages, or calling in consultants.

In a recent survey by AC Nielsen on behalf of Advanced Technology Services (ATS), a provider of outsourced factory maintenance, more than two-thirds of responding companies said they expect the looming talent shortage to cost them at least $50 million. And one-third of those with revenues of more than $1 billion indicated the hit would top $100 million.

The trend is already apparent in recent data from the Bureau of Labor Statistics. In manufacturing, for example, the seasonally adjusted number of job openings swelled by 45% between October 2009 and October 2010. But the number of actual hires rose by only 11%. That’s no anomaly: a similar pattern was present for every month of the year.

The shortage of technically skilled workers is not new — it was first identified in the early 1990s — but many interested observers expect it to worsen dramatically over the next few years, because of two converging factors. One is that few students today are pursuing technically oriented career paths, a development that is not without irony. “Our young people do love technology,” says Edward Gordon, an author and former college professor who consults with companies on workforce issues, particularly concerning the skilled-labor shortage. “But they don’t want to design, manufacture, repair, or manage it. They consider those jobs inferior and socially uncool.”

That perception is reinforced by attitudes among guidance counselors and parents, says ATS president Jeff Owens. A recent study by the Organization for Economic Cooperation and Development found that fewer than 10% of American teens plan to pursue skilled-trade careers.

The other factor is that the big wave of baby-boomer retirements, while perhaps delayed by the economic downturn, will nonetheless be upon us soon. That is a particular problem for manufacturers and utilities, where it is not uncommon for the median age of skilled workers to be between 50 and 60, or beyond.


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