The real skills gap

Odds are, you’ve heard by now that there’s a serious skills gap in this country. And there certainly is one – though it’s just not the one you’re thinking of.

There’s a been a lot of talk in Michigan about the shortage of Michiganders prepared for skilled trade jobs. The rationale is that there are well-paying jobs to be had that require some education beyond high school, but short of a bachelor’s degree. Some also claim the need for skilled trade workers will only widen in the coming years, as baby boomer electricians, carpenters, and welders retire, with too few skilled young folks to fill their spots.

This narrative isn’t altogether wrong. There are indeed thousands of jobs in Michigan that require some training beyond high school short of a bachelor’s degree, many of which offer a decent salary.

The question, however, is why we’re placing so much emphasis on these mid-skill jobs when all evidence suggests that we’re still under-producing bachelor’s degrees – by a long shot.

One reason the narrative persists that we’re overproducing four-year degrees and under-producing in the skilled trades is plentiful anecdotes. There’s all these baristas running around with bachelor’s degrees, meanwhile I can’t find a good carpenter! Or something along those lines.

But when you look at the data, a completely different story emerges.

Economic theory would predict that if we were oversupplying the economy with four-year degrees, the income gap between four-year degree holders and everyone else would diminish. This hasn’t happened. Based on data from the American Community Survey analyzed by Brookings, those with a bachelor’s degree (and not an advanced degree) earned almost $51,000 in 2015, versus $29,000 for high school grads and $34,000 for “middle-skill” jobs. This is a reflection both of higher wages paid to college grads, and more work available to them (the unemployment rate for four-year college grads is just 2.4%, though the American public believe it’s much higher). And the BA wage premium has only increased in recent years, despite the fact that the more and more BA’s are flooding the market.

Indeed, the data on new jobs created since the recession, from the Georgetown Center for Education and the Workforce, should leave us pushing four-year degrees like crazy. Since the start of the recession, 8.4 million jobs have been added to the economy for those with a BA, versus a net-gain of 1.3 million mid-skill jobs (1.7 million lost during the recession, followed by 3 million gained), and a loss of 5.5 million for those with a high school degree or below. Jobs requiring a BA were both recession-proof, and have been by far the dominant type of jobs generated since the recession.

And not only did the vast majority of new jobs go to BA holders, but all the good paying jobs did as well. Of the 2.9 million jobs added to the economy between 2010 and 2014 with salaries of over $53,000, 2.8 million went to those with a BA or higher.

Just what were all these well-paying, bachelor’s-requiring jobs? The majority are classified in the general category of “managerial and professional office jobs,” which include various types of “managers” and “analysts.” These jobs that have been gaining ground require good research and communication skills, collaboration, self-direction, and the ability to deal with ambiguity. In other words, the skills you learn in a liberal, four-year postsecondary education.

Armed with this data, the emphasis on middle-skill jobs is curious. The signs that these jobs are in-demand – more jobs added to the economy and rising wages for these occupations – haven’t emerged. If anything, some of the core occupations that would absorb skilled trade jobs, like production and construction, saw the biggest losses during the recession, and the jobs have not come back (see p. 20 of the report for the breakdown by occupation group).

Meanwhile, jobs requiring a BA still see a significant wage premium, and new “knowledge” jobs continue to be created.

This faulty narrative matters because by and large it’s the non-affluent targeted for these middle-skill jobs, because a four-year degree “isn’t for everyone.” And while a four-year college may not be for everyone, policymakers shouldn’t be the ones deciding that for students – because they actually have no idea who college is “for.” Recent studies have found that low-income students with low test scores who went to a four-year school versus observationally equivalent peers with similar scores who didn’t were far more likely to have earned a degree (both four-year and two-year), and were earning more by their late 20s.

These were kids who “weren’t college material,” yet gave it a shot. Some thrived. Some tacked back and earned a two-year degree. On the whole they were better off.

The point is that while there are certainly a lot of good, middle-skill jobs out there, there’s no reason we should be selling these jobs over those requiring more education – particularly when all evidence points us the other way.













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