Employers responding to skill shortages
There is a lot of skepticism about a skill shortage in technical occupations –– the most publicized are in manufacturing –– because employers seem to be doing the opposite of what they should to respond to shortages. Mainly not raising (in many cases cutting) wages and benefits, but also erecting barriers to hiring, filling vacancies with contingent and/or part time work, etc. (The MIT study I wrote about recently which declared the manufacturing skills shortage a myth is representative of this wide spread skepticism.)
MiBiz deals with the subject in an interesting story on manufacturing in West Michigan. The article reports on a presentation by Upjohn Institute economist George Erickcek to the Economic Club of Grand Rapids:
“I’m not sure there is so much of a skills gap, as a wage gap,” he said. “Wages for production workers across the Midwest have stagnated over the past three to five years. It’s possible some of the firms who are paying low wages are unable to attract the workers they need because of the inadequate wage and benefit packages they are offering. Nationwide, a lot of employers also are being picky about their new hires. They want to find a person who fits in well, needs little training, and is willing to work for lower wages. Otherwise, they don’t fill the open jobs.” (Emphasis added.)
The article also features the hiring practices of Autocam Corp. Contrast them to the all too common employer practices Erickcek identified:
Now Bueche (Madalyn Bueche, a manufacturing apprentice) works 25 hours each week at Autocam and takes three or four classes during the afternoons at Grand Rapids Community College via the Advanced Manufacturing Partnership (AMP) program. … Autocam pays her while working and also pays for her college classes. Autocam workers in the AMP apprenticeship program start at $13 an hour while taking courses and can make more than $17 per hour by the end of the program. In a few years, when Bueche earns her associate degree at GRCC, she’ll be eligible to pursue a bachelor’s degree in manufacturing engineering at Ferris State University. Autocam will pick up the tab for her undergraduate degree as well. Both programs are taught at the GRCC Applied Technology Center in downtown Grand Rapids. … “We found some of these individuals became great techs and wanted to go beyond an associate’s degree,” he (John Kennedy, Autocam President) said. “So we sent them to engineering school, and they came out with bachelor’s degrees. Now they have hands-on work experience as well as college experience. When they reach the top and become hot-shot techs, they’ll be making $30 an hour and travel the world to our other plants to fix problems.”
$13 an hour as an apprentice, $17 an hour as a technician, $30 an hour as an engineer and tuition at both community college and university paid for. And Ms. Bunche found out about the occupation and apprentice program at an employer open house. That is how employers deal with labor/skill shortages. Economics 101 teaches that when demand exceeds supply prices (in this case wages and benefits) go up. Its how you bring supply and demand into equilibrium. Its what market economies do well. No need for government intervention to pick occupations for students to pursue or to provide training subsidies for chosen industries and occupations.