‘s New York Times It’s the Economy column is sumarized as follows: “Adam Davidson translates often confusing and sometimes terrifying economic and financial news.”
 This is certainly true of his article titled Skills Don’t Pay The Bills, in which he debunks the myth of the so-called “skills gap. It appears that this,  like the myth that unions make companies noncompetitive, is way off the mark.

Where Have All The Manufacturing Jobs Gone?

A third of all manufacturing jobs – totaling six million – have disappeared since 2000, but where have they gone? Some are clearly not coming back:
  • Many jobs were lost to competition with low-wage countries.
  • Even more were lost to computer-driven machinery.

But manufacturing can still have a future, which many believe depends on training a new generation for highly skilled work — in other words, teaching people to run the computers that run the manufacturing machines. This is a complex field that requires knowledge of numerous disciplines:

Running these machines requires a basic understanding of metallurgy, physics, chemistry, pneumatics, electrical wiring and computer code. It also requires a worker with the ability to figure out what’s going on when the machine isn’t working properly. And aspiring workers often need to spend a considerable amount of time and money taking classes like [Queensborough Community College engineering technology program instructor] Joseph Goldenberg’s to even be considered. Every one of Goldenberg’s students, he says, will probably have a job for as long as he or she wants one.

The So-Called “Skills Gap” Is Really a Wage Gap

Although these clases are filled to capacity, ironically hundreds of thousands of U.S. factories lack skilled workers. During the 2012 presidential campaign, both candidates referenced a study claiming that nearly 80% of manufacturers have jobs they can’t fill. The National Association of Manufacturers also estimates that about 600,000 jobs are  available for candidates with advanced skills.

So what gives? Ridiculously low wages. According to Davidson:

I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.

Davidson points to a study by the Boston Consulting Group that concludes that few young people choose to invest in training for jobs that pay fast-food wages. The result: the United States may have a hard time competing in the global economy. The study states that the so-called “skills gap” is actually a wage gap:

Trying to hire high-skilled workers at rock-bottom rates is not a skills gap.

Low Wages Are Making America Noncompetitive

It isn’t labor unions, as the corporate right wing media would have you believe, but the fact that unions have declined that is making America globally noncompetitive. How can this be?

According to the study’a lead author, Hal Sirkin, the average age of a highly skilled factory worker in the U.S. is 56, and since many are already in their 60s and will soon retire, there are just not enough trainees in the pipeline to replace them.

Time For a New Social Contract

American manufacturing is in a bind. Manufacturers, facing competition from low-wage countries, feel they can’t pay higher wages, but their failure to pay decent wages leads potential workers to choose more promising career paths. Brookings Institution economist Howard Wial points out, according to Davidson,  that a new paradigm needs to be thought out:

In earlier decades, Wial says, manufacturing workers could expect decent-paying jobs that would last a long time, and it was easy to match worker supply and demand. Since then, with the confluence of computers, increased trade and weakened unions, the social contract has collapsed, and worker-employer matches have become harder to make. Now workers and manufacturers “need to recreate a system” — a new social contract — in which their incentives are aligned.

Comments and Conclusions

It seems that we can no longer return to the post-World War II industrial model that rewarded skilled workers with decent wages, benefits and job security.  But dismantling these things has not proven to be the answer, and manufacturing has suffered as a result. Given the lack of skilled workers, there now needs to be a reversal if that trend. Yet, too few high school graduates have the advanced math and science skills to succeed, and the wages are too low to encourage them to try. The American education system needs improve math and science teaching. And the comments on Davidson’s article suggest that the shops that succeed are the ones that pay higher wages. One commentator states:

The apprentices at our shop start out at $15.00 per hour with a quarterly review and raises ranging from $.50 to $1.00 an hour until they reach journeyman’s wages which are around $30.00 per hour. Our shop, so far, is successful and is certainly not insulated from foreign competition. Every day we have to make tools and provide engineering assistance that our customers need are willing to pay our prices.

Manufacturers also need to be willing to invest in employee development. Another commentator writes:

In all of the years that I’ve worked in manufacturing, I can count on one hand and have fingers left of the number of companies who provided on-the-job training.

Finally, government policy has an important role to play. A living wage needs to be encouraged, as another commentator points out:

In 1976 I earned $8.65 per hour working for UPS night shifts. Not an easy schedule to live on, but it was a real living wage for 20 year old with no degree yet. I was able to support myself quite comfortably sharing and apt, owning a car and paying the bills, still having disposable income. This is not the case today. For those who work at that level of society, wages by no means have kept pace with costs of living by a long shot.

Instead of simply demonizing labor, and faulting unions for the problems that manufacturers face, a more effective partnership between management and labor must be created. Instead, too often, management has just taken the easy way out by cutting labor out of the equation, either deliberately or through incompetence in management. Considering the far reaching implications of this problem for society in general, government needs to take an honest and realistic look at the problem. There’s been too much grandstanding on both sides of the aisle – Republicans dishonestly blaming labor for America’s problem, and Democrats downplaying management’s side.  It’s time for a serious, nonpartisan governmental investigation of the issue leading to realistic recommendations to achieve the right balance between management and labor.