Even at the peak of the Great Recession when the official unemployment rate in the United States neared double digits, it was an article of faith that the problem with the labor market wasn’t a shortage of jobs, but a lack of qualified employees. I have just written a review in Strategy+Business magazine of a new book by Peter Cappelli, a prominent business professor at the University of Pennsylvania’s Wharton School, which challenges that idea.
In his book, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It, Cappelli, who is Wharton’s George W. Taylor Professor of Management and director of Wharton’s Center for Human Resources, points to corporate employment practices as the primary cause of the gap between the know-how companies say they want and the skills that current and new employees can bring to their jobs.
Cappelli describes a “Home Depot view of the hiring process” in which employers hire new employees the same way consumers buy a replacement part for a washing machine. “Job requirements have very precise specifications,” he writes. “Job candidates must fit them perfectly or the job won’t be filled.”
Cappelli sites several problems:
- Diminished HR departments—a result of cost-cutting during the Great Recession—and increasing reliance on automated hiring systems that screen out applications that don’t use precisely the right keywords in a job description.
- A self-defeating cycle of companies cutting back on training and resorting to poaching employees from other companies, which leads to further cut-backs in training and more poaching. While on-the-job training used to be ubiquitous, close to 80 percent of employees received no training at all according to a 2011 survey by Accenture.
- The disappearance of vocational training, at least partly due to a decline in unions, which were closely tied to high-school vocational training programs.
- A “free agent” approach to hiring in Silicon Valley, which has made it difficult for even highly trained engineers and scientists to find jobs and hold on to them; high-tech jobs often last only as long as the life span of the latest hot product.
Not surprisingly, countries with strong apprenticeship programs, such as Germany and Norway, are least likely to report a skills gap.
Cappelli also debunks the idea that that deterioration in public-school education is to blame. He sites a raft of international data, including improvements in NAEP scores, showing that education in the U.S. has improved since the 1970s. Of course, international competition is stiffer than ever before, which suggests the need for not just further improvements in education, but more, and better, vocational and on-the-job training