Bacon's Rebellion

Virginia and the Skills Mismatch

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by

James A. Bacon
in

How quickly will Virginia’s employment bounce back from the mother of all recessions? That will depend upon the extent to which employment is “structural,” in the sense that there is little demand for the skills that unemployed workers have, as opposed to the skills required for new and emerging jobs.

The skills mismatch is particularly acute for industries less likely to recover quickly, such as manufacturing, construction and finance. Further, the mismatch is aggravated by low housing prices, which inhibit people from selling their houses, possibly at a loss, and moving to other parts of the country where job prospects are better.

That’s the thinking of the International Monetary Fund, in its annual “Selected Issues” paper on the United States. The IMF publishes a map showing the increase in the Skill Mismatch Index since the onset of the recession for the 50 states. Virginia is in the second quartile (the 1st quartile being the best), suggesting that Virginians’ skill mismatch is less severe than the national average. That consideration, combined with the “best state” business climate and the ongoing expansion of federal employment, bodes well for the economy in the near-term. (Go out 15 years, when Boomergeddon strikes, and it’s a different story.)

If Gov. Bob McDonnell is looking for an innovative way to boost employment in Virginia, he should encourage his economic development brain trust to address this issue. One good place to start would be to consult with Chmura Economics & Analytics, a Richmond-based economic consulting firm that has developed proprietary software and databases for that very purpose. (My apologies if those consultations are taking place.) This map, taken from Chmura’s “Underemployment in the United States” ranking, shows where highly skilled workers are in most excess supply, broken down by metropolitan statistical area.

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14 responses to “Virginia and the Skills Mismatch”

  1. Gooze Views Avatar
    Gooze Views

    Jim,
    Interesting post. I hear the same thing all the time. What's happening is that this recession has prompted a fundamental jobs shift. There will likely be new jobs, but they haven't had time to form yet while the failed jobs of laid off people need to be destroyed, creative destruction style.
    A big issue will be the number of new jobs and whether that will be enough to sustain all the layoffs.
    I would guess that health care will continue to be a strong sector. You would think financial services would be dead but I gather that's far from the ase and I don't get it.

    Peter Galuszka

  2. Larry G Avatar
    Larry G

    What a refreshing change from the late spate of bommergeddon gloom!

    Thanks JIM – and an issue worthy of everyone's attention including the Gov and those who see the link to our education policies.

    Here's a map I'd like to see – one of NoVa and Hampton Roads but subtract out all jobs associated with the government.

    How would Virginia's NoVa and Hampton Roads economies compare with RoVa economies without the influence of government jobs?

    Would that be a more honest measure of leadership in creating jobs for Virginia?

    Would NoVa and Hampton Roads look more like Richmond Charlottesville, Roanoke and Lynchburg without sucking on the govt teat?

    What should Va be doing to point itself to the future if we are headed for a smaller Federal government?

    What should our schools look like if we are to prepare our kids to compete for 21st century private sector jobs vice relying on govt jobs?

    Would the holy grail of "more places" be a more likely possibility if we pursued such jobs?

  3. Anonymous Avatar
    Anonymous

    Even though the Finance, Insurance, and Real Estate industry has become unpopular among the general public it is still a favorite of business students. In the recession, students who are lucky enough to get jobs are settling for positions in compliance, accountancy, and government (read as regulators).

    Considering the amount of cash companies are stilling on, their investment banking expenditure are bound to explode once the economy bonces back. Also, if the credit market comes back, lots of middle market investment banking opportunities could arise, so the second financial centers (ie Salt Lake City, or even Richmond) would see some action.
    -Jason

  4. Anonymous Avatar
    Anonymous

    Based on a recent discussion group, I suspect Dr. Risse would say most are barking up the wrong tree on this topic.

    The issue is not about the job someone else will create, it is about the job YOU will create.

    Fix things, make things work, get together with a friend to start an Enterprise that provides something others will pay for or barter for.

    Shop Craft as Soul Craft.

    Hand crafted small vehicles to replace Large, Private Vehicles…

    Self Help

    Dooryard and Cluster sharing to lower costs.

    The future is not about finding a way to earn enough to buy something just like the Household down the street already has…

    One surprising idea:

    Now 3 percent of the population feeds the other 97 percent. That needs to shift 20 percent feeding 80 percent with more expensive but more healthful food. Food raised on reconsolidated subdivision lots with McMansions converted to greenhouses to generate and store heat and energy and raise out-of-season crops close to consumers.

    AZA

  5. Larry G Avatar
    Larry G

    IN Virginia – what skills should be taught in the schools to provide kids with the education they will need to compete for the 21st century jobs?

    or… do we just rely on the kids planning on getting govt jobs in NoVa and Hampton Roads?

  6. Groveton Avatar
    Groveton

    This is one hard graphic to understand. Let's start with the colors and the key … (hint: I had to go to the original article to make much sense of this) …

    "Negative values indicate the supply of high-skilled workers is lower than demand.)"

    So, negative numbers indicate where the MSA needs more high skilled workers. Meaning there are employment opportunities for high skilled workers.?

    And … blue is the most negative while orange is the most positive.

    So, there is an undersupply of skilled workers in blue areas and an oversupply in orange areas.

    Lynchburg and Danville (blue) have too few skilled workers relative to demand while Richmond and Washington, DC (yellow / orange) have too many?

    You would think our employment problems in Virginia would be fairly simple to solve. Or, at least the skilled worker part of the employment issue …

    Get skilled workers in NoVa and Richmond to move to Lynchburg and Danville. Simple, right?

    Not so fast.

    The authors cast a wide net with their definition of skilled worker. If you go to the original article, you find …

    " Workers are classified into three categories according to their highest educational attainment: "high" – bachelor's degree or higher; "medium" – associate's degree or some college; and "low" – high school graduate or lower.".

    And a quick look under the covers shows …

    Washington-Arlington-Alexandria, DC-VA-MD-WV MSA

    low: -7.0%
    medium: -6.6%
    high: 13.6%

    So, the Washington MSA has too many high skilled college grads and too few high skilled high school and associates degree holders.

    Now, Danville …

    Danville, VA MSA

    low: 11.9%
    med: -0.6%
    high: -11.3%

    Danville needs highly skilled college graduates but has a surplus of highly skilled high school graduates (or lower).

    A trade seems in order …

    Danville send plumbers to NoVa while NoVa sends accountants to Danville.

    One big challenge with this survey is the skewing of colleges and universities in the results. Places like Ann Arbor and Charlottesville get interesting ratings. I have to believe that some of the "high education" surplus is people stretching their college years out a bit hanging around the University of Michigan or UVA tending bar.

    The other problem is relating the underemployment numbers to economic health. One would think that areas of underemployment would be economically stagnant. Instead, you find Detroit showing much less underemployment than Richmond. I've been to both cities recently – it's hard to imagine that Richmond has less economic momentum than Detroit.

    I guess it comes down to migration.

    Highly skilled college graduates are more prone to pack up and leave an area which is losing economic momentum when the going gets tough. Highly skilled associates degree holders and high school graduates (and lower) are more likely to stay put. That leaves places like Danville and Detroit with a deficit of doctors and a surplus of mechanics while Richmond and Washington have too many programmers and too few plumbers.

    At least, that's what I am getting out of looking at these graphics.

  7. Larry G Avatar
    Larry G

    Pretty good analysis Groveton:

    but this statement:

    " Highly skilled college graduates are more prone to pack up and leave an area which is losing economic momentum when the going gets tough."

    You need to better understand the folks who grow up in an agree to parents are 3rd generation residents – whose only education came from the local public schools.

    These folks often own land and can put a small house or trailer on it and survive at doing local work – that moving to a place like NoVa where they might make more money but housing and the cost of living horrendous in comparison.

    This is why – it is so important for THEIR KIDS to get a very good education and to get some higher education because if they don't – they're not going to migrate – but instead stay where they are.

    One of the big factors that I think is not well recognized is what happens to kids from rural areas who go to college.

    and that is – they get their degree – and they realize that going back to work locally is just an option – along with the option to move somewhere else and get a better job, potentially better career and better standard of living.

    This is why I feel that the Virginia way of funding education is correct.

    The better the kids in RoVA are educated – the better it is for NoVa.

  8. Groveton Avatar
    Groveton

    "This is why I feel that the Virginia way of funding education is correct.

    The better the kids in RoVA are educated – the better it is for NoVa.".

    I see no evidence of this despite decades of the tax and transfer education funding formula.

  9. Groveton Avatar
    Groveton

    "You need to better understand the folks who grow up in an agree to parents are 3rd generation residents – whose only education came from the local public schools.

    These folks often own land and can put a small house or trailer on it and survive at doing local work – that moving to a place like NoVa where they might make more money but housing and the cost of living horrendous in comparison.".

    Failing to pay their full location variable costs which include the cost of living in areas of insufficient employment and wanting to pay taxes too low to educate your own children.

    One reason the cost of living is lower is that these areas are not paying to educate their own children.

    Deciding to live in a low cost area where there is insufficient employment is a choice. People should pay for their choices.

  10. Larry G Avatar
    Larry G

    "I see no evidence of this despite decades of the tax and transfer education funding formula."

    not sure that you have evidence in either direction but certainly the game has changed since the conventional job-producing, blue-collar industries has declined dramatically in RoVa and the only way that kids growing up in those places are going to be able to find jobs is by having educations good enough to let them migrate to where the jobs are.

    To a certain extent, it is no longer acceptable to teach what they have been traditionally taught but instead to upgrade the curriculum to provide them with the education that they will need to find jobs outside of RoVa.

    This is yet another reason why "creating jobs" in Va – requires an education system capable of providing RoVa kids with a competitive world-class education.

    When you talk of mismatch of job skills – how do you address the situation in RoVa if not with even more/better education?

    Do we want NoVa to not pay for education but instead for welfare for succeeding generations?

    Youse guys kills me sometimes.

    You get all atwitter about the Fairfax County education and all resentful about how RoVa is funded but when it comes times to talk about jobs – RoVa education gets kicks out of the conversation.

    The way to improve Virginia's competitiveness in a world economy is to get our RoVa kids educations that are competitive for world jobs.

    I'd say Virginia has a choice – provide those better educations are pay for welfare and other entitlements for people who are trapped and cannot escape RoVa.

  11. Anonymous Avatar
    Anonymous

    Groveton:

    I agree with Larry:

    A very good analysis and sorting out of what the graphic is intended to show.

    The problem is what it is intended to show and what might be done to ‘balance’ the pluses and minuses does not make any difference.

    As Prof. Risse said a long time ago on these pages: “

    What the US needs is:

    “Jobs for the uninspired, unmotivated and poorly trained who are unwilling or unable to move or get further education / training”

    However, these same citizens vote and they can rally behind demagogues who promise ‘opportunity, closing the Wealth Gap and freedom…”

    I also think AZA is correct that this whole discussion is “barking up the wrong tree.”

    The economy ‘needs’ a Fundamental Transformation focused on making citizens happy and safe, not on consumption and ‘growth.’

    There are no resources to support the current levels of consumption, even if there were the resources it has been demonstrated beyond a shadow of a doubt that it is not possible to rely on ‘growth’ and trickle down to close the Wealth Gap.

    The first step is to change the unreasonable expectations generated by pandering politicians thus the need for a Fundamental Transformation in the governance structure.

    Second, as Florida points out it is not possible to provide big, or even modest, OWNERSHIP of DETACHED shelter. That means more shared ownership and more fine grained CoMixture of uses and less reliance on Large, Private Vehicles for Mobility and Access. What do you know? Fundamental Transformation of settlement patterns.

    CJC

  12. Larry G Avatar
    Larry G

    re: " Deciding to live in a low cost area where there is insufficient employment is a choice. People should pay for their choices. "

    the kids – Groveton – did not decide to live there – they had no say in it – and the jobs that their parents had are gone – which also takes away their ability to fund education adequately.

    do you want to blame the kids?

    and even if you do – won't it ultimately end up with NoVa funding the entitlements for those who are unemployed and cannot move to areas with jobs because they do not have competitive educations?

  13. Darrell -- Chesapeake Avatar
    Darrell -- Chesapeake

    The whole education thing has become another scam. NoVa has too many college grads, RoVa has too few. The maps tell us the truth? Bah!

    Look at any entry level job posting. The first requirement is Must Have BA/BS degree, or 10 years of directly related experience if no degree. For a 10 dollar job.

    And if you are an old geezer who may have 30 years experience fixing things, well you are better off applying for SS than wasting time applying for the job. You obviously have no ambition or you would have been a captain of industry by now, loser.

    From what I see, the Boomers are the least of this nation's problems. There's another 40 percent of the population buying into this higher education scam who will find themselves in a rickity boat with no bail can and an expensive motor that refuses to start.

  14. Hydra Avatar
    Hydra

    If you go from 3% feeding the rest to 20% feeding the rest you could easily see food prices increase by 10X. In1925 food cost consumed 25% of the family budget and it is a fraction of that today.

    If aza Cjc don't think we have the resurces for transformation today, how is this going to help?

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