A bad jobs market has been tough on the young. A college degree often provides inadequate insulation. Student loan defaults are at record levels. Many graduates settle for jobs that don’t use their degrees.
And many degrees have limited economic utility. French history for $100, Alex?
At the same time, businesses offering great career opportunities struggle to find qualified workers. A new report by the Washington Roundtable and the Boston Consulting Group explains the problem, which is the “gap between the skills needed by employers and those possessed by potential employees.” Closing that skills gap will create jobs and boosts the economy.
In some respects, the report is more confirmation than revelation. Educators and employers have long acknowledged the importance of preparing students for productive careers. The issue is such an Olympia staple that it merits official mention in Chapter Two, Section A, subpart (d) in the “For the Kids” policy manual found in legislative offices. The consequence of familiar policy prescriptions is not contempt but neglect. Talking substitutes for doing as interest group politics militates against change. The discussion becomes background noise, persistent but not urgent.
This latest report brings us back to urgency. Combining analyses of publicly-available employment and education data with executive interviews, BCG was able to document the economic impact of the skills gap in Washington. The researchers estimate that the mismatch accounts for 25,000 unfilled jobs in Washington today. They count only those jobs that have been unfilled for more than three months because of a lack of qualified candidates. Of those 25,000 jobs, 80 percent are in STEM (science, technology, engineering, and math) fields or high-demand health care occupations. The shortfall is expected to double by 2017, with the STEM and health care share increasing to 90 percent.
Because filling these jobs generates additional employment demand, BCG calculates that successfully addressing the problem could create an additional 110,000 jobs in 2017. That gain could reduce the unemployment rate by as much as 1.8 percentage points.
The new jobs would also stimulate economic activity and increase state tax revenues by $720 million annually. There’s a nice symmetry to the approach. A refocused education program tailored to the demands of the workplace is one that will also provide the economic growth required to boost school funding.
Failure to close the gap has consequences. Employers recruit nationally and internationally to fill positions that could otherwise go to state residents. Lacking roots here, the new hires are more mobile, more apt to leave for other opportunities. Washington students lose out because their education did not equip them with marketable skills. The state economy underperforms.
Eventually, jobs go elsewhere. As a tech executive told BCG, “Companies aren’t moving corporate headquarters; they’re just moving growth.” It’s erosion — incremental, quiet, unnoticed — that ultimately removes the ground on which successful entrepreneurs build the foundations for prosperity.
At service club meetings, chamber of commerce breakfasts, and legislative hearings employers speak of their hiring challenges. Adding weight to the anecdotal testimony is the documented experience of the state’s major employers. BCG found that 40 percent of Roundtable members have moved positions out of state because they couldn’t find necessary workers here. Half of them have resorted to hiring under-qualified workers to fill vacancies, an unacceptable option that leads to diminished productivity and higher costs.
The good news is that the problem can be overcome. Among the recommendations that will expand opportunities for current residents and satisfy employer demand: increase STEM and health care capacity in the state’s colleges and universities, improve STEM performance and interest in the public schools, and better align community and technical college coursework with the job market.
The recommendations address identified weaknesses in our education system. Two out of three qualified students are being turned away from high-demand degree programs. Too many students graduate from high school without math and science proficiency. And, despite progress, the state continues to educate people for jobs that don’t exist.
A polarizing debate between lawmakers who want to increase education funding and their colleagues who want first to boost accountability misses the fundamental point. We need to do both, now.
Richard S. Davis is president of the Washington Research Council. His email address is rsdavis@simeonpartners.com
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