Obama’s Going to Close the Skills Gap. But Does It Even Exist?

Americans are stomping mad about the economy in general and unemployment in particular, and it appears the President has gotten the message. In his latest State of the Union address, President Obama laid out a raft of economic proposals designed to ferry the unemployed back into work, including training programs for those who need to update their skills.

While nearly no one would argue with the aim of getting more Americans working, in a political climate as charged and a economy as complex as ours, not even the most straightforward seeming proposals fail to stir up controversy. So what could possibly be the trouble with more retraining to close the ‘skills gap’? Simple, say some, it doesn’t exist.

Skills Gap, What Skills Gap?

Nobel laureate and New York Times columnist Paul Krugman has long led the charge of those asserting the skills gap is mostly fictional. It’s just an excuse for those who are ideologically opposed to the notion that weak demand is behind our economic woes and that more money from the government is the answer, according to Krugman.

Structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions,” he has written. If a skills gap was holding us back, he says:

“There should be significant labor shortages somewhere in America — major industries that are trying to expand but are having trouble hiring, major classes of workers who find their skills in great demand, major parts of the country with low unemployment even as the rest of the nation suffers. None of these things exist.”

Meanwhile, others, including BusinessWeek have questioned retraining not because no skills gap exists, but because existing programs to get workers the skills they need have a spotty history and may not be the most efficient use of taxpayer dollars. How about fixing our schools so workers get better skills the first time around? How about more direct spending on infrastructure and other job-creating programs?

Experts vs. Industry

So, is Krugman right? Is the president boxing with shadows? Expert estimates vary when it comes to explaining how much of the unemployment rate comes down to a skills gap. A paper from the International Monetary Fund, for example, says the problem accounts for a quarter of unemployment. Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, puts it at a third. The Roosevelt Institute, on the other hand, asserts that the fact that so many people are underemployed — i.e. have the know-how to get a job but can’t get enough hours of work — shows the primary problem is weak demand, not lack of skills. In short, academics and the politically committed disagree.

Those down in the trenches, however, seem to have largely reached a consensus. The HuffPost’s Dave Jamieson and Arthur Delaney report, for instance, that senior administration officials told them, “Steve Jobs … urged Obama to put forth such proposals in a past meeting of the two men.” And Jobs isn’t the only business leader to have pushed for programs to close the skills gap. Notoriously, lack of tech skills among Americans has the tech industry looking abroad for talent and executives in industries as diverse as chemicals and aerospace are also crying out for more skilled workers. Heart-breaking stories of the human cost for those who don’t have the skills to match decent, open jobs have also recently appeared in the press, but you may have heard plenty in your own community.

Perhaps then this is a case of academic and political bickering about ideal solutions and exact percentages (not a difficult thing to imagine). Perhaps Krugman is right and government action to pump money into the economy should be a higher priority (and, of course, he’s just doing his job to say so). Perhaps those that would like to more fundamentally address the flaws of the American education system have a case. But perhaps none of that matters. It’s doubtful that business leaders and struggling single mothers are making up their alarm over the skills gap — clearly there’s a problem of some magnitude and relative level of priority.

In a case like this, should the perfect be the enemy of the good, or should the president press for what’s politically imaginable, even if it’s not the ideal or only answer?

Image used under Creative Commons by Flickr user Secretary of Defense.

London-based Jessica Stillman blogs about generational issues and trends in the workforce for Inc.com, GigaOM and Brazen Careerist.