Since the end of the Great Recession, firms have increasingly cited the presence of a skills gap as a key factor in the sluggish hiring levels. A 2013 survey found that 39 percent of U.S. businesses cited difficulties in finding qualified talent. (1) This mismatch forces job seekers to search longer to find work and leaves vacant positions open longer because it is harder for employers to find qualified applicants. (2)
The problem seems especially acute in manufacturing, where advanced techniques are dramatically increasing the demand for postsecondary skills in addition to experience. (3) The Georgetown Center for Education and Workforce estimates that of the 55 million projected new U.S. jobs between 2010 and 2020, two-thirds will likely require at least some postsecondary education--with more than half of these (middle-skill jobs) requiring workers with an associate degree or postsecondary vocational certificate. (4)
In Indiana, of the nearly 1.1 million job vacancies projected for the current decade, 60 percent will require some postsecondary education, with 38 percent requiring an associate degree or more. (5) The Alliance for Science and Technology Research in America (ASTRA) reported that Indiana will have demand for 123,000 STEM-related jobs by 2018, and the National Skills Coalition projects Indiana to have a total of 550,000 middle-skill job openings by 2020 (half of all openings).
Complaints about Indiana's skills mismatch tend to come from the state's prominent industry clusters, especially advanced manufacturing and health care. These are key drivers of the Indiana economy, along with life sciences, defense and aerospace, logistics, and energy. In these high value-added clusters, the occupational skill requirements are notably different than in many other sectors, and they change more rapidly.
Manufacturers recruiting STEM workers have noted a significant shortage of technicians and skilled workers to implement the new technologies that are necessary to stay competitive in their fields. For example, with increased automation and innovation, skilled workers such as maintenance engineers are needed to operate and fix the machines. (6) A 2005 American Association of Manufacturers survey found that 35 percent of manufacturers expected a shortage of scientists and engineers, but twice as many anticipated a shortage of skilled production workers--primarily middle-skill workers. (7)
Similarly, hospital administrators report increasing reliance on technical specialties. The pressure to operate more efficiently in an environment of declining reimbursements forces hospitals and other health care facilities to focus more on technology-based procedures, in both patient care and administration, to improve financial performance. (8)
These technical skills, termed "hard" skills, are just one piece of the puzzle, however; employers are also looking for "soft" skills--abilities in areas such as communication, problem solving, professionalism, interpersonal interaction, work flexibility and adaptability, as well as overall work ethic, attitude and reliability, in fact, among manufacturing firms, the most serious skills deficiencies were ranked as inadequate problem-solving skills, followed by a lack of basic technical/vocational training, with inadequate basic employability skills in third place. (9)
The ideal employee would be a "renaissance technician" with well-developed critical thinking and problem-solving skills, strong familiarity with several technical disciplines (developed in an applications framework) and the decision-making skills to optimize production in a complex industrial environment. (10)
Slightly more than half of the employers responding to a 2013 workforce skills survey indicated that additional job training or continuing education would benefit most of their workers. (11) Another 18 percent said it would benefit half of their workers. However, many businesses lack intensive in-house training programs and would like to have academic institutions fill the knowledge gap.
For example, life science firms would like academic institutions to develop post-baccalaureate curricula geared toward industry-specific topics. High priority topics include FDA regulations (including good manufacturing practices, good laboratory practices and quality assurance), project management, an overview of the pharmaceutical and medical device industries, and the U.S. health care delivery system.
Job Training: From On-the-Job to In-the-Classroom
On-the-job training has gradually been replaced by formal education programs over the past 30 years. (12) To stay afloat during challenging economic times, many firms have focused on productivity and adopted lean business practices--which eliminated many on-the-job training programs. Businesses now prefer to hire a new employee who's able to hit the ground running, possessing a usable skill set and needing only light on-the-job training to get up to speed. They are no longer willing or able to mold non-skilled workers into skilled workers (especially in mass numbers), which translates into more demand for workers with higher levels of educational attainment. (13)
Interestingly, the perceived presence and severity of a skills gap depends on a firm's willingness...