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.


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.

37 thoughts on “Is The United States Really Experiencing A Skills Gap?”

  1. “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.”
    “The fault lies in an economy that doesn’t justify expansion or high wages.”
    I’m not sure it’s that simple.
    I believe that if you create a system it will yield results according to how it is set up. And if it’s complex enough it gets hard or impossible to predict the outcome. That’s why there’s different economic theories. But as for low wages / sitting on a mountain of money: There’s surely other factors that influence decision making. I am not an economist so I can just guess, but things like shareholder value, taxation, return on venture capital investment, labor laws, inflation, procurement difficulties, limits of organization, (, yadayada, … and so forth) come to mind.
    Now that I think of it, I should hang out in expensive hotel bars more. Maybe I’ll find a very pretty and incredibly smart young female CFO there, make sweet love and then ask her about this stuff. 😉

    1. “Maybe I’ll find a very pretty and incredibly smart young female CFO there”
      What the fuck are you smoking, dreamer? You’ll have a better chance of finding a unicorn playing the Star Spangled Banner on the bagpipes.

  2. The corporate management drones are trying the same tactics they used in the 90’s by complaining that there’s a desperate shortage of workers. Usually they have some legislative lobbying goal, such as loosening of H1B restrictions, as their ulterior motive.
    But even in the 90’s it wasn’t hard to find talented employees as long as you didn’t drown them in bureaucracy and paid them a reasonable rate. See Norman Matloff’s brilliant debunking of the shortage myth:

  3. Thought provoking analysis. It’s a pleasure to watch this blog in its process of becoming whatever it eventually will be.

  4. The bigger problem is that workers now compete on a global level. So even if there’s a shortage of workers in the USA, that doesn’t mean there’s a shortage of workers in China.
    In China, I hear they pump out Engineering degrees the same way the USA pumps out Liberal Arts degrees.
    I think the effects of degree inflation are what we are witnessing here.

  5. Lots of good points Roosh. As a former C level employee of a tech company, it is 100% true that there is a lack of “skills” for current job openings (we ALWAYS had at least 50-75 positions we would hire if we found the right person (in our 1k person organization)). However, its just PC bullshit to say “workers dont have the proper skills”, implying all that is needed is some training. The real answer is that most people are stupid and only very bright people can fill these positions (in our org it was software developers and analytics professionals in short supply). With only 25-30% of the population going to college (even the shitty ones!), the gap is only going to widen between the haves and the have nots. It’s not like back in the day where someone weaker can do the same manual job but just at 75% of the top guy. Now the lower level dumbass can’t even get the job at all.

      1. Depends on experience. Starting software developers start around $80-$90k but can quickly hit $130k. Analytics is similar but slightly less cash (and generally requires more education…most have masters in stats)

    1. I would also argue that companies are really fucking cheap with training in addition to wages they are willing to pay. It was a bitch to get a job offer out of grad school even though i had did a degree that was 90% of the way there in fulfilling the analytics role. I managed to eek my way into a well known tech firm due to an alumni and they helped me learn the analytics profession by mentoring and giving me time to self-study.
      Afterwards everyone suddenly wanted to hire me since someone else had already paid for the training. I would have stuck it out with my old company due to loyalty in helping me, and the fact i liked my team, but the team got “reorganized”.

      1. For most companies, “training” = internships. We weren’t large enough to have formal training programs.

  6. The underlying problem here is simple greed.
    All the owners (but more the investors) want is more money. If you’re not making more money than yesterday you’re doing bad. Take Google for instance. They had less profit compared to last year’s same period, so it wasn’t going so well for the company. They still made a profit of several billion dollars. with a large increase in revenue. When is it enough!?
    Imagine how many people they would be able to employ by limiting their profits to 1 billion dollars. Same goes for other large companies and even to some extent for medium sized companies.
    However, this leads to the question of ‘should we employ people even if they’re not contributing to the profit of our company?’ The obvious answer from a capitalist point of view would be a large emphatic NO! Companies have to grow, make profit, expand, make more profit, etc. Makes perfect sense.
    Also there is the supply and demand balance. This not only controls prices, but also production. What we are seeing currently is that demand is going down. The normal reaction of the balance is that first prices and then production goes down. This leads to job loss, etc. The main problem of unemployment is that demand will keep going down (no money to spend). If you take this reasoning to its extreme, then at one point there will be no companies anymore, because there is no demand, because no one is working. A crash of the system.
    So by employing more people and decreasing profits you are not only helping the system, but also yourself indirectly by creating a healthy market supply and demand.
    But this is just one part of the theories and equation. Combine this effect with the human psychology (huge fear for loss, so hoarding of money when things look dire), overinvesting banks, and bad government and labour policies (example of this given in the post by Roosh) and you’re well underway in destroying your own economy. All driven by human greed.
    Is this a bad thing? Not necessarily. Every system humans will create will be inherently flawed because of human nature. Also, as communism has shown, there is a need for reward, otherwise people will just fall into lethargy and don’t do anything. These systems will auto-correct itself over time as people gain hope and the amount of greed goes down. But before that to happen it probably has to come crashing down first. And then the cycle starts over again.

    1. “The underlying problem here is simple greed.”
      Good luck getting rid of that, dumbass. And the problem with men is that they like pretty faces and chicks who aren’t fat, and the problem with women is that they want an alpha male, and the problem with the weather is that sometimes it rains. Get your head out of the clouds.
      “So by employing more people and decreasing profits you are not only helping the system, but also yourself indirectly by creating a healthy market supply and demand.”
      No, you’re wasting you’re fucking time. I’ll just use my time and smarts to let others mooch off of me for the common good. If I have less, that means you’ll have more! Kind of like if Roosh just stopped getting laid so much it would end my dry spell.
      People have been predicting the crash of free markets since Marx for slightly varying reasons, but the only thing that will crash capitalism is idiots forcing us to try to reform human nature.
      Demand that talented people not be greedy and devote their time, money, and effort to the “common good” and they’ll drop out of society.
      You won’t realize how little they’ve been “exploiting” us until they stop.

      1. I was going to comment but Martel pretty much covered every point. And Thomas, instead of calling profit “greed”, try “delivering value to a customer for the lowest possible cost”.

  7. What can you do as a person, regardless of intelligence?
    Just get some skills. Either be a plumber, brick layer, house builder, software programmer, farmer, engineer. Something that you can actually do with your hands. And nothing of that fancy Arts crap. You’ll be able to work, if not now, you can after a crash because people with skills and not just fancy words will be what is needed to rebuild.
    The problem is that most people in the western world think themselves to good for the ‘low-paying’ jobs that actually build society. We’ll outsource those boring ass dumb jobs! Just get your hands dirty already and stop whining.

  8. Let’s take into account the increase in automation thus reducing the need for human labor. As technology continues to make human workers obsolete, businesses will naturally shed employees or pay less. This is a naturally occuring phenomon and always has been. Think about how many less workers were needed because of the Cotton Gin. Life will always find the most efficent way of doing things, call it greed or whatever-it is just the way things are.

  9. What’s really going on is something called the dependency trap is destroying American willingness to work at middle class jobs.
    What’s happening is that there are many free government benefits available to low income people, including, food, housing, health care, child care, energy, telephone, grants, EITC etc. These benefits phase out and disappear at the same level that progressive higher income taxes rates kick in (thanks Bush). The result is that a single mother with 2 kids earning $29k takes home more pay after welfare and taxes than her single dad earning $72k. Once she gets to $29k in income, it no longer pays for her to take extra shifts or learn skills, because she will literally be poorer for her extra effort.
    When a man earning 40k cannot be motivated to work harder and learn extra skills to get his income to 50k (because most of that income disappears when he loses his benefits and pays higher tax rates), the the work doesn’t get done and the skills don’t get learned.
    Of course, one solution is for employers to avoid the trap by literally double salaries, from 40k to 80k, so that it is once again possible to motivate workers to work harder and learn skills. Maybe employers are greedy for not doing so. Or maybe the numbers just don’t work.
    The loophole that keeps these middle class occupations working, despite the trap is immigration. Immigrants don’t have all the benefits to lose by working harder, so they o work harder.

    1. “The result is that a single mother with 2 kids earning $29k takes home more pay after welfare and taxes than her single dad earning $72k. ”
      What “welfare” does a mom earning that much get? She does not get EBT or any cash from the government. At the most she might get medicaid for her kids, that she pays for out of her paycheck.

      1. The linked article shows that the woman earning $29k earns slightly more than the same Oman earning $69k. Assume that the single man father of her two kids does not have custody, and can’t claim the kuds as dependents, and the single mom earning $29k out earns the man earning 72k.
        Please note that this analysis, and data taken from the Penn sec/state does not take into account child support, and does not take into account that, starting next year, the 69k/72k earner will be forced to purchase health insurances that the 29k earner gets for free.
        The general point remains: working a middle class job instead of an easier job is a sucker’s bet as long as the dependency trap is in place.

  10. I think the guys talking about intelligence and automation nail it. The problem is that anybody with an IQ under about 100 is not employable at anywhere near a middle class wage. That’s half the population. The high wage positions all now require an IQ of 125+. You simply can’t train up and get the skills to be a highly paid software developer if your IQ is 110. It’s just not going to happen.
    A smart person running machines can now do the work of hundreds. A mere handful of guys at google and craigslist now do what thousands of middle-class newspaper people used to do putting together the classified section. A crew of about 20 guys builds an entire skyscraper now, whereas there used to be hundreds of guys running around with wheel barrows. A couple guys unload an entire ship, whereas there used to be hundreds of longshoremen running around.
    It’s what Vonnegut wrote about in “Player Piano”, and it’s also discussed in the Unabomber Manifesto. Society needs a more frank discussion of IQ and its implications in highly technological society, but for whatever reason it’s totally taboo to talk about innate inteligence and potential. You have various well-off people thinking they got there by working harder and better than everyone else, rather than a huge part of it being the luck of having been born smart. And you have masses of poor people thinking somebody must have screwed them over with a trick, because they are just as good as those wealthy people. Both sides need to know the truth.

    1. Good follow up, from my perspective as a ‘smart guy’ it has become incredibly easy to change industry fields over the past 10 years. I’ve gotten work soley because I can ‘think on my feet’, learn and analyse faster than my peers in the same job.
      The fact that technical knowledge is more easily accessible has changed job descriptions down to personality traits. Maybe things will end up like Gattaca once a few people are ballsy enough to discriminate for those skills.

    2. blargh said:

      Society needs a more frank discussion of IQ and its implications in highly technological society, but for whatever reason it’s totally taboo to talk about innate inteligence and potential.

      I’d agree that a certain ability is required for intellectually demanding positions, but I totally disagree that it’s valid to state you need a certain cutoff IQ to do a certain job. That’s almost like saying you need a certain height to play on a basketball team. Tell that to Mugsy. The strategy any one human being uses to gain success in a given field can be completely different from what another becomes successful doing. I don’t think a single measure like IQ has yet progressed to predicting the potential to succeed with widely different strategies. This applies equally in the sciences, in the performing and literary arts, and in everything else human beings do. Aside from statistical outliers who lack obvious attributes for success, the most accurate way of determining whether someone will succeed … is letting them try. An honest discussion is always good (in my books at least). But many want to run off and lobby for the implementation of policies with DRAMATIC implications based on questions that haven’t been fully answered. THAT is rightfully looked on with suspicion IMHO.

    3. I think there’s some truth in the general concept of what you’re preaching here, I can’t buy your general premise that most people are just too stupid to qualify for a middle class standard of living. It’s not like the only jobs that pay middle class wages are high-tech fields. A person of average intelligence can become a nurse or an respiratory therapist and easily make a middle-class or even decent living. One buddy I know is a paralegal and makes about 60k a year. His job doesn’t require an IQ of 125. I know a guy who went to school to be a studio recording engineer. I don’t know what he makes but he seems to be doing fine. Cops make middle class wages and that doesn’t require 2 standard deviations of IQ. I know a couple teachers that have middle class standards of living even though teachers frequently complain about their pay. It also depends where you live. Being a grade school teacher in Akron, Ohio will get you a lot further along than being one in San Francisco where that same wage might be virtually poverty.
      Your explanation that society is just to dumb to be middle class is overly simplistic.

      1. Perhaps I do oversatate my case above a bit, but I think you are underestimating the intelligence of your nurse, cop, and paralegal friends. People with a 90 IQ have some difficulty preparing you the right order at McDonalds without a lot of training. 90 and below is, what, about a third of the population?

  11. The paradox of the idea stated is that – as previously mentioned in responses thus far – pay scales are lowering for previously high paying positions even as training and qualifications are outpacing pay, or so it seems. Are we just all getting too smart or is the rest of the world just getting too much smarter, or maybe neither? America did not account for the affect implementations that the GATT-to-WTO changes would have, something I would debate this in class with professors while obtaining my liberal arts degrees in business. Some of my professors worked in DC for the gov’t in economics. My university ironically changed its business arts program to business science programs a few years after my graduation. Our government, with all of its might, did little to soften the blow of opening the floodgates of world trade for middle class and upper middle class skilled positions. Simultaneously, we had a technological revolution occur. While India and China produce engineers & scientists with equivocal credentials, no labor shift contingency plan was ever put in place, and no business owner education courses were required as to how to handle the labor value shift due to the change as jobs were exported, even skilled positions or immigrant intellectuals stressed the job market. We quite literally went from a manufacturing nation to service-based nation in about 15 years for the most part.
    The position I have now “business developer,” feeds the wealthy that I work for quite well. I’ve had to learn general concepts of thermal dynamics, fluid dynamics, the equipment associated with large scale industrial installs of such equipment, energy management, energy development – and all the while not allowing the marketing department to loose sight of visceral, qualitative indicators in the land of “quantitative numbers are all that matters -” well enough to have in-depth conversations with project management teams and company executives to qualify these projects. While everyone “sells” where I work, the compartmentalized notion of having just and “engineer” for engineering, and just a “business developer” making the market while companies are becoming “flatter” organizations in corporate hierarchical structure is just plain silly. Yet, people across the whole spectrum typically resist that business is a “shades of gray” environment and not so black and white anymore.
    Many companies pay packages are based on a position’s title STILL, rather than true value, yet they market themselves to the workforce as a “cutting edge,” Google-like environment with a great culture and opportunities for advancement. Thus, everyone bitches, both presidents/CEOs and and skilled labor alike.
    In my own experience and others I know who have good business building skills, advancement opportunities are not so common compared to just a decade ago. Moreover, the U.S. colleges are just not able, in their current state, to keep up with skilled positions required to navigate bubble economics as fast as it occurs. By the time you get a healthcare degree, everyone has gone to school for that. By the time you get an engineering degree in a focused field, that field is flooded as well. Simply put, a well-rounded skills package that creates true value for a company with little need for years of training, or trial and error hiring and firing, is not taught in any cohesiveness at colleges, as if one has to be born with this ability (no they don’t, but of course a 120+ IQ always helps), and the type of “experience” that might make up for that lack of skill is being diluted with each passing day.
    The changes in business due to global pressures, technological changes, and domestic restructuring, and the skill-sets that higher-ed is pumping out did not/does not accommodate these changes very well. I’m not sure you can teach people-skills in college when everyone is glued to their smart phones, but maybe we will eventually see less need for people skills as the world becomes more automated technologically. And for the <115 IQ folks, well should we tell them China is hiring on a production line, or just keep the unions alive out-pricing our products globally while similar products can be bought here during the continuing trade deficit?
    Skills Gap? Its more like a value gap from both the employer’s perspective as well as the employee. The employee can’t understand why all this schooling isn’t worth more in the job place. Answer: Because 90% of what you are tested on and waste time slaving over learning has little real-world applicability, shame on higher-ed programs not being about the educational market value of their student customers, but rather the $$$ for their shareholders. I believe it was in 2004/2005 during the bankruptcy law changes that many schools were required to register as for-profit entities. Hmmm.
    The employer can’t understand why they can’t find the skilled labor they are looking for. Answer: You are not realizing that you MUST hire people on potential, behavior, and personality, and sometimes these things alone, because the colleges just are NOT providing exactly what you’re looking for in high numbers. Allow the employee to create and mold themselves into a position that brings true value to your company (often within cellular team format), and pay them well for taking charge and being accountable for what they’ve created of value if they succeed. Don’t wait 5 years for the 15-20k raise, do it within the first year or two and have a star employee for life. Make it hard for them to leave if they’re valuable in an uncertain economy, instead of the costly cycle of hire, train, and fire of large numbers of employees. This holds especially true for an entire generation raised on social media and constant praise entering the workforce.

    1. Learn to work with your hands. It’s hell trying to find electricians, welders, millwrights, diesel mechanics, etc. I’m an electrician and I make over 100k/yr and have to work insane overtime because we can’t find more electricians.

  12. If even half of the article is true (it is the NYT), that really does not bode well for anyone. If a trade like manufacturing engineering pays so badly that it does not compensate for the cost of the training, let alone the opportunity cost of getting an education instead of working, it makes one wonder what the point is in learning other trades like welding, carpentry, electrician, and auto mechanic.
    If people are not allowed to be economically productive by their government, all the education in the world won’t let them make a decent living.

  13. I agree with blargh and John Galt. There’s just not enough intelligence in this country to satisfy the needs of the average company. I see this every day at work. One of the underlying reasons that drives companies to hire consultants is that consultants have the intelligence to complete the projects that the average employee is too dumb for.

  14. I have a different take on this subject. It seems to me that the problem is employment regulations.
    How much time, energy, and money does it take to hire a single employee? How much more to fire him? Each comes with an absurd level of regulatory costs. Why should an employer be responsible for my health care? My retirement? Why should he have to pay for insurance to cover my living expenses, in case he has to fire me for being useless? Why should I be able to sue him, if I find the working conditions to be hostile?
    100 years ago, people didn’t have jobs. People had work. If they were productive, they were asked to come back until the work was done. If they weren’t, they didn’t even have to be fired. They just didn’t get invited back. Why have we made work so complicated?

  15. The basic solution to corporations sitting on cash and not using it to hire and expand is to simply tax them and use the money for needed infrastructure. Use it to pay workers to build public trabsport as gas prices skyrocket. Use it to pay for national healthcare. Use it to hire teachers to make sure our kids get a proper education.
    These things are a given in every rich country besides the united states. Its only a question of polutucal will.

  16. There is a shortage of CHEAP SKILLED labor – in many cases driven by the Government itself by attempting to pay less per hour of work. So they will put out a contract where the going rate for people with that skillset is X and they will say they want this contract to pay on average 0.8X – a 20% pay cut. Then the contractors will say they cannot find labor at that rate, which translates into “there aren’t enough people with those skills” which is true – if there were more with that skillset out of work people would be willing to work for less.
    But when they want 10 yrs of experience in X (and 9 yrn 9mths doesn’t make it) they should expect to pay for it. Instead they will attempt to import people who will work for less, due to the idea that they will be able to move to the US and then demand higher pay. That is why so many people who are here cannot find a job, and you hear these bogus numbers about there being a shortage.
    There IS a shortage of slave labor – which is what is being looked for… It is understandable when you have an idiot who has no idea of how economics or the free-market works at the helm. But this has been going on for years – started by M$ and adopted by others as a way to maximize profits. Ask the people who majored in those fields who are US Citizens and you’ll find the truth – there is no shortage of people, their is a shortage of CHEAP LABOR so they want to import it…

  17. “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.”
    This is by far the best summation of our current climate and I have never heard it uttered so plainly before.

  18. I always suspected that companies were dirty games not because they couldn’t find workers, but because they wanted to save money by not hiring people.

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