Are Students Ready for the Workforce?

The recent economic downturn brings education and necessary skills front of mind. If students aren’t prepared with relevant skills, how can they succeed when fewer businesses are hiring? Unfortunately, today’s students don’t always possess these needed skills. In the United States and across the world, nations are facing a serious education disconnect. The problem is not a lack of education — secondary schools are graduating more students and sending them on to college.

The percentage of students enrolling in college in the fall immediately following high school completion rose from 63.3 percent in 2000 to 69.8 percent in 2016, according to the National Center for Education Statistics. High school dropouts have declined by 10.9 percent. Nevertheless, though secondary schools are sending more people on to higher education, employers across the board are plagued by labor shortages and a widening gap between the skills they need and the capabilities workers have to offer.

These problems pose a real threat to the world’s economies, and unless fundamental changes occur, projections show they are likely to grow worse. School administrators and teachers hold the key to providing today’s students with promising futures — and employers with the skilled workers that they need. Through a combination of solid academic coursework and up-to-date career and technical education, they can better prepare students for the real world while increasing motivation and graduation rates. Students who gain confidence from practicing in-demand skills have better choices. They may decide to further develop their skills in college or attend college while doing meaningful and well-paying work. Or they may jump straight into the arms of a grateful employer. In today’s labor market, the world is their oyster.

Solving the skills gap won’t happen overnight, but with the right programs in place, the pieces will start to come together. The solution lies in connecting students with the training they need to succeed. As partnerships between schools, students, and employers grow, they will create a vital feedback loop that helps ensure continued success.

Identifying the Issue: An Acute Labor Shortage

Employers are facing a crisis. Retiring baby boomers and a shrinking labor base create a growing pool of unfilled jobs. A recent Federal Reserve study found labor shortages across the United States, with numbers increasing sharply. Though digital skills are in high demand, the problem extends well beyond the technology sector. Offices and manufacturing plants can’t find enough qualified workers. Jobs regularly go begging in construction, healthcare, finance, and hospitality.

In a survey by Associated General Contractors of America, 73 percent of businesses said they had a difficult time finding qualified workers. The problem affects everyone from big corporations to mom-and-pops, and it’s keeping the economy from growing. In a U.S. Bank survey of small business owners, 61 percent said they couldn’t find enough skilled workers to expand their businesses.

Part of the problem is that there just aren’t enough people to fill all the jobs. According to a recent U.S. Bureau of Labor Statistics report, the labor force has declined from a peak of 67 percent of the population in 2000 to less than 63 percent today, and will shrink to 61 percent by 2026. In the meantime, the number of jobs continues to grow. From now to 2027, the nation will face a shortage of 8.2 million workers, according to Thomas Lee, head of research at Fundstrat Global Advisors.

This labor shortage isn’t confined to the United States. It’s a global issue as well. Japan is facing its worst employment crisis in 40 years, with an unemployment rate of just 2.8 percent. Continental Europe, the UK, and other Asian countries are also extremely short on workers.

A Growing Skills Gap

Though demographics play a role in the labor shortage, the most serious problem employers face is a skills gap. They need help now, and job applicants aren’t prepared to hit the ground running.

There are several reasons for this. Retiring older workers have knowledge and experience that’s hard to replace. Younger workers are better educated than they used to be, but they lack practical skills, especially digital skills, which are in high demand and ever-changing. At the same time, employers have cut back on expensive on-the-job training. They want someone who can solve problems now, not someone they have to pay to learn those skills.

The problem has been going on for some time. Even before the Great Recession, employer sponsored training was on the wane. Today, there are just 200,000 new apprentices per year in a labor force of 160 million, according to the Society for Human Resource Management (SHRM).

Not having enough qualified workers is costing companies money. The average cost HR managers incur for extended job vacancies is more than $800,000 a year, according to a CareerBuilder survey. The survey found that 55 percent of employers experienced negative business impacts due to job vacancies, with 45 percent reporting a loss in productivity and 37 percent suffering from lower quality work. Sixty-eight percent of employers had openings they couldn’t fill, and 67 percent said they were concerned about the growing skills gap.

Abroad, the picture is just as bad, if not worse. In Japan, 81 percent of firms have difficulty finding qualified employees, as do over 60 percent of companies in India, Brazil, and Turkey, according to recent data from the OECD. More than four in 10 firms in Latin America and Europe have similar problems. The result is a workforce that’s not as productive or effective as it should be. Employers hire the best candidates they can find, but many workers know they’re not really up to the job. In an OECD survey, 45 percent of workers worldwide—and 40 percent in the supposedly advanced European Union—felt they lacked the appropriate skills to perform their jobs effectively. Their lack of skill also impedes mobility. Just three in 10 workers believed they had enough skill to cope with more demanding work.

So how do educators create a bridge between their classroom and the workforce? Find out more in our upcoming articles. You can also learn about the power of certification in bridging the skills gap here.