Is The United States Really Experiencing A Skills Gap?

Employers like to complain that there is a skills gap. They claim that they want to hire workers, but there are none qualified. Positions remain unfilled while job-seekers continue trying to find employment.

A reporter for the New York Times attempts to debunk this narrative in a piece called Skills Don’t Pay The Bills. It claims the problem is not a skills gap but low pay. Compensation is so low for high-tech jobs (manufacturing engineering is used as an example) that there is no incentive for anyone to attain the needed technical skills.

This is partly because advanced manufacturing is really complicated. Running these machines requires a basic understanding of metallurgy, physics, chemistry, pneumatics, electrical wiring and computer code. It also requires a worker with the ability to figure out what’s going on when the machine isn’t working properly. And aspiring workers often need to spend a considerable amount of time and money taking classes like Goldenberg’s to even be considered. Every one of Goldenberg’s students, he says, will probably have a job for as long as he or she wants one.

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Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.

Many comments to the article highlight the greed of the company owners, but let’s follow that thought to a logical conclusion. Capitalists want to make as much money as they can. They take risks with their investments to purchase labor and capital in order to operate a business and reap profits. Their goal is to minimize their investment while maximizing profit, but they will almost always invest $1 if it will make them more than $1.

What’s happening is that leaving positions unfilled doesn’t hurt profits compared to filling them at a wage that the NY Times or job-seekers would find to be most agreeable. For whatever reason that you can attribute (e.g., slack in demand or uncertain global manufacturing conditions), it is not worth the capitalists’ investment to hire more labor. More investment will not give them more profit, or else they would do it.

It’s also not hard to find out about other corporations that are sitting on a mountain of money without hiring labor. If these companies are truly greedy, they would expand their operations to make even more money, but again, current economic conditions signal to them that an increase in investment will not yield more profit.

Articles in mainstream publications like this inform labor that manufacturing engineering does not pay. They now have a choice to avoid that industry. When the capitalist senses that expanding his operation would yield greater profit, he will increase his starting salary from $15 an hour.

The fault lies neither with the capitalist nor labor. The fault lies in an economy that doesn’t justify expansion or high wages. Greed is actually the driver of investment, greater profits, and employment, not for limiting the size of businesses.