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Skills Mismatch in the U.S. Labor Market

October 3, 2011

An often-heard statement in the immigration debates is that immigrants are not necessary to fill jobs in the United States because there are so many unemployed U.S. workers who could do the work.

Is this an accurate statement? Is there truly a surplus of U.S. workers to perform the jobs which businesses are seeking to fill?

The issue of “skills mismatch,” or workers who lack the skills required for available positions, has been widely reported by researchers and in press. There are differing opinions as to how much of the current unemployment rate is due to structural unemployment resulting from skills mismatch.

Data from a working paper published by two International Monetary Fund researchers demonstrates

The recent [economic] crisis was not only very deep but produced significant sectoral and geographic dislocations in the U.S. economy. Our work shows that, as a result of these dislocations, mismatches between the demand and supply of labor market skills have risen in the economy as a whole and to a greater extent in some states.

A recent McKinsey Global Institute study reported that, of the businesses in the survey who plan to hire in the next 12 months, 40% had positions open for 6 months or longer because they could not find the right applicant with the right skills. The most difficult categories to fill were in science and engineering fields followed by computer programmers and information technology workers. (See page 16 of the report as well as Appendix B.) Although we are in a period of historically high unemployment in the United States when viewed in the aggregate, clearly there are businesses who cannot find qualified workers to fill their positions.

It is also important to recognize that multinational businesses view the labor force on a global, rather than on a national, basis. An Op-Ed this past Sunday by Thomas Friedman makes the point that the term “outsourcing” is, in fact, out-of-date with the concept of a global labor force.

There is no more “out” anymore. Firms can and will seek the best leaders and talent to achieve their goals anywhere in the world. Dov Seidman is the C.E.O. of LRN, a firm that helps businesses develop principled corporate cultures, and the author of “How: Why How We Do Anything Means Everything.” He describes the mind-set of many C.E.O.’s he works with: “I run a global company with a global mission and one set of shared values in pursuit of global objectives. My employees are all over the world — more than half outside the U.S. — and more than half of my revenues and my plans for growth are out there, too. So you tell me: What is out and what is in anymore?”

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