The Great Jobs-Skills Mismatch

by James A. Bacon

Much of the unemployment in the United States is tied to cyclical economic factors like swings in housing starts and industrial production but some of it stems from a mismatch between the jobs available and the skills of unemployed workers, contends Brookings Institution scholar Jonathan Rothwell in a new article, “Education, Job Openings and Unemployment in Metropolitan America.”

On average, the jobs being created require more education than American workers possess. In an analysis of the nation’s 100 largest metropolitan statistical areas (MSAs), Rothwell also found that the mismatch was more acute in some MSAs than others. Indeed, the Richmond region ranked 72nd out of 100 in his “education gap” index (in which 1st represents the smallest mismatch). Virginia Beach (ranked 40th) and the Washington MSA (4th) fared considerably better.

The mismatch is of more than academic significance. “Metro areas with higher education gaps,” Rothwell writes, “have experienced lower rates of job creation and job openings over the past few years.”

Here is a closer look at the numbers. (Click on links to see regional profiles.)

Richmond MSA: 43.1% of all job openings in January/February 2012 required a bachelor’s degree or higher, compared to 21.8% of unemployed workers and 31.7% of all adults with B.A.s.

Hampton Roads MSA: 39.3% of all job openings required a bachelor’s degree or higher, compared to 15% of unemployed workers and 28.5% of all adults with B.A.s.

Washington MSA: 49.6% of all job openings required a bachelor’s degree or higher, compared to 30.3% of unemployed workers and 46.8% of all adults with B.A.s.

Bacon’s bottom line: To the extent that MSAs with high education gaps, like Richmond, tend to experience lower rates of job creation, Rothwell highlights a problem that needs to be solved. But I also see the gap as an opportunity.

The Richmond region has one of the highest education gaps in the country. But that’s not entirely a bad thing. It means that Richmond-area employers are creating jobs that require a high level of skills and, presumably, would command higher-than-average salaries. Turn the picture around. Would you rather live in a region where the jobs being created required less education? That would be an economy of proverbial hamburger flippers.

An education gap gives people a concrete reason to pursue higher education, even in the face of runaway tuition and fees. The message: The jobs are out there if you make the effort to acquire the skills.

From a public policy perspective, an education gap points the way to a different way of thinking about economic development. Economic development in Virginia is geared primarily to recruiting new businesses to the region, and secondarily to stimulating new business start-ups. Both of those approaches overlook the fact that existing businesses are creating lots of jobs that they can’t fill locally….

Which brings me back to a familiar theme: If the Richmond region (or Hampton Roads, Roanoke, Charlottesville or any other region) wants to stimulate economic development, it needs to create the kind of place where educated people want to move to and, once they get here, want to stay.

What attributes and amenities do educated people look for… other than a great paycheck? That depends significantly upon an individual’s (or family’s) stage of life. Young singles yearn for places where they can meet other young singles. Married couples with children look for good places to raise their kids. That’s basic. But what else?

Rothwell observes a tendency of college graduates to stay in the same state as their university. “Indeed, 70 percent of college graduates live in the same state at their college five years after graduation and 61 percent 10 years after.  The share is only slightly less for tech entrepreneurs; 45 percent of the founders of large companies created their business in the same state where they attended school.  This is one of the reasons why many of the metro areas with the highest college attainment rates also have large research universities, like Austin, Boulder, San Francisco, Boston, and Madison.”

Richard Florida, of creative class fame, says that educated Americans gravitate toward communities that are open to outsiders and have what he calls “authenticity” in its local culture. That’s all very good, but those concepts are hard to build public policy around. I have seen very little other research done on the subject, and what I have seen is several years old and probably outdated. The fact is, we really don’t know what people look for when they move to a new region. If we want our regions to become magnets for educated and talented workers, we need to find out.

Update: When I went back and re-read Rothwell’s piece, I saw that I missed a key point. America’s problem isn’t an inability to fill the jobs with higher educational requirements, as I suggested by focusing on the need to recruit communities that could recruit and retain educated members of the creative class. The problem is the lack of jobs for people with lower educational attainment. That calls for a different set of remedies than what I called for in my “bottom line” analysis.

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  1. thebyurokrat Avatar

    I’m not sure that these statistics necessarily mean what is implied. Just because the percentage of job openings requiring bachelor’s degrees is greater than the percentage of unemployed persons with BAs does not mean that the number of job openings is greater than the number of people with the required skills.

    For example, assume 50% of 1,000 job openings require BAs and 25% of 5,000 unemployed people possess BAs. In such a scenario, even though the percentage requiring BAs was twice as high as the percentage with BAs, the actual number of qualified employees would still be twice as high as the number of open positions.

    The report doesn’t clarify this, and I’m a bit skeptical.

  2. That’s a good point. There may in fact be a jobs/skills mismatch but Rothwell doesn’t show it by comparing percentages. I suspect he has the absolute numbers but, for whatever reason, chose not to publish them in the profiles.

    Judging by the percentages I quoted in the post, Richmond seems to have no greater education gap than Hampton Roads… yet Rothwell ranks Richmond far lower in his index. I suspect that discrepancy can be accounted for by differences in absolute numbers.

  3. for young people today – especially those of limited means or parents who cannot afford to send them to college – a BETTER alternative than burying yourself in debt is to take the “bootstrap” approach via one of Virginia’s Community Colleges.

    A 2 yr degree with a certification in something like operating a ultra-sound or imaging device or similar will get you a job and set you up to get the next 2yrs on your timeline in the field you choose but based on some real work work knowledge that you gain with that 2 year certification.

    Another way is to joint the Armed Services, do good on the entrance Aptitude test then get your schooling that then can be leveraged back in civilian life.

    Health Care is a booming business now days (at least until they cut Medicare and MedicAid!)

    there are lots of opportunities for jobs that will provide you with a living even if you may never get rich at it but many of those jobs can be a path to higher level jobs – even ultimately going to medical school!

    I have a pretty dim view of many of our Higher Ed institutions that have become bloated and just plain expensive for most people but I believe that the Community College system is solid GOLD and vastly under appreciated by many people who think the 4-yr College route is the only way forward.

  4. Community college students whose grades meet specified levels are guaranteed admission to most Virginia colleges and universities, including the flagship schools. I’m with Larry on this one.

  5. Darrell Avatar

    Yeah, I keep hearing about this skills mismatch. If that’s the case then why does the company hire know nothings instead of know somethings?

    Job available. Must have BS degree and ten years of experience in esoteric programming. Who do they hire? A college intern who isn’t even sure of their major but got an A in Beginning Keyboard. And why does someone need a BS to man a help desk?

  6. young and dumb are preferred to savvy veterans. they are easier to intimidate and tend to do any/all jobs they are told to do to “please” and not yet at the point where they worry whether they are getting the same compensation as their co-workers.

    In general the young and dumb are just easier to deal with.

  7. here’s an example of jobs that are going begging:

    Serious shortage of skilled auto mechanics looming

    ” A generation who grew up playing Xbox games instead of rebuilding carburetors doesn’t seem to have the fascination with auto repair as earlier generations who grew up as shade-tree mechanics.
    There is already competition among auto dealers in many parts of the nation to hire or retain good technicians. The bigger worry is whether there will be enough younger workers in a few years as a wave of midcareer mechanics hits retirement age.”

    and yet our local community college discontinued auto technology a few years ago…

    I recently received an ultra-sound and as my usual style, I asked the gal what kind of training she got and where and I was not surprised to hear that she got it at a community college but I WAS surprised to hear that she did not get it at the local CC but at one much further away – BUT she got much of her training – ONLINE! She had to show up for hand-ons stuff and some tests but here she was sitting next to me operating the equipment – and earning a living for her and her 2 yr old child.

    This may not be the preferred destiny of some kids whose parents want them to go to a flagship University for a 4-year degree but it is a realistic destiny for many people who simply cannot afford the traditional 4-yr college route OR they don’t want to go into debt up to their eyeballs OR their parents don’t want to use up every last bit of equity in their home (the ones that still have equity).

    There are options available for people. There are options available for RoVa kids to escape their geographically and economically-disadvantaged circumstances and the more than do this – the less the burden on NoVa.

    We should forget the 4-yr institutions – let them look out for themselves, they seem to be doing a good job of it and it’s time for them to become more accountable for the value proposition they offer.

    Instead, we should concentrate on Community Colleges across the state but especially in areas where there are pockets of chronic unemployment and higher than normal use of food stamps, medicAid, etc.

    DJ thinks this is not a state job and that NoVa should be left alone.

    I think this IS a very appropriate state job AND it is in NoVa’s self-interest to help promote it.

    I think it also ought to be in the interest of Universities like UVA but if they don’t want to be part of it – so be it – just move the efforts around them.

    the key to a strong economy in Va is going to require better efforts at education that directly supports employment. Job training as opposed to generic 4-yr degrees.

  8. DJRippert Avatar

    “I think this IS a very appropriate state job AND it is in NoVa’s self-interest to help promote it.”.

    When Dear Leader is re-elected he will combine the Washington suburbs and the District of Columbia into the 51st state – named, Columbia.

    We will inherit the University of Maryland, College Park. That is the right university in the right location because the Maryland state legislature is competent.

    Like Kentucky and West Virginia, Northern Virginia will finally be free of Richmond.

    Frankly, the plan I just described is every bit as viable as waiting for the Imperial Clown Show in Richmond to act on behalf of the Commonwealth.

    If you want to fix Virginia, you must start by immolating (figuratively speaking) the General Assembly and broken governance structure in the state.

  9. DJRippert Avatar

    The jobs mismatch occurs in Richmond and Tidewater because there are no top universities (especially with regard to STEM programs) in those cities. There are no top universities (especially with regard to STEM programs) because the state government in Virginia is corrupt and incompetent.

    If uniformly low taxes everywhere in a state really made that state “the best for business” then Austin, Boston, Portland and San Francisco wouldn’t exist.

    Our state legislature has their collective heads so far up their rectums that they don’t know whether it is day or night. You want to reduce the “education gap” in Tidewater? Start by reducing the competence gap in Richmond.

  10. DJ – do you think electing more no-mo-tax GOP will fix this?

    Do you think the GOP is going to publically fund more Universities?

    Do you think the GOP will increase the gas tax to fix transportation?

    How many more Republicans in Richmond will it take to neuter the Clown show? or is the Clown Show really the Va GOP to start with?

    What say you DJ?

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