Hey, That Famous 'Skills Shortage' You've Heard About? It's a Myth

Are we good enough, smart enough, and, doggone it, do people like us? 

Okay, ignore that last question, and focus on the first two. The issue of whether our workers are talented enough and clever enough for the jobs that actually are out there is an enormously important one. If our workers don't have the right skills, then there's very little policymakers can do to bring down unemployment, because it's a "structural" crisis. More monetary or fiscal stimulus won't make us more skilled.

The structural story -- what will all those construction workers and ex-mortgage brokers do now? -- certainly has intuitive appeal. All it needs is some evidence.

We would expect wages to be rising much faster in sectors where employers can't find enough qualified workers if a skills mismatch really was holding the economy back. But that hasn't really been the case. The chart below from the Chicago Fed tries to quantify how big an impact there's been from a skills shortage. The answer: not much.

StructuralUnemployment.png


The chart shows employer demand for low (blue), medium (black), and high (gray) skill work has changed since the end of the housing bubble era. If employers really couldn't find enough high-skill workers, we would expect the demand for them to increase substantially faster than for other workers. It hasn't. Instead, demand for all types of work has more or less moved in tandem. This is what a general shortfall of demand looks like.

So the next time you see a talking head claim that there's nothing we can do about unemployment because of a skills mismatch, remember that the biggest skills mismatch is in their understanding of the data.
Presented by

Matthew O'Brien

Matthew O'Brien is a former senior associate editor at The Atlantic.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open For 1,300 Years

It's one of the oldest family businesses in the world.

Video

What Happens Inside a Dying Mind?

Science cannot fully explain near-death experiences.

More in Business

Just In