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Skills Gap: Reality or Myth?
 

Skills Gap: Reality or Myth?

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Skills gap: reality or myth? ...

Skills gap: reality or myth?

The presumed mismatch between the skills of the workforce and the needs of employers, commonly referred to as the “skills gap,” has garnered the attention of politicians, employers, economic developers, and professionals in workforce and education. A number of authoritative sources—Manpower, Deloitte, McKinsey—point to statistics which show that, despite relatively high levels of unemployment, a number of jobs are going unfilled because employers can’t find candidates with the skills they want. This issue will be the subject of discussion led by TIP’s president and CEO, Tom Stellman, at the Texas Economic Development Council’s 2013 Legislative Conference this week. Get a preview of his slides here.

Several factors are contributing to this gap, including an aging workforce, an education system focused on 4-year degrees, the growing use of automation, and distortions caused by the labor demands of the energy sector. Yet some argue the current situation is less of a “skills” gap than a “wage” gap. Manufacturing wages have stagnated as the value of goods produced per worker has soared. This lackluster performance can make it even harder to attract young workers to manufacturing careers, particularly in a culture that often perceives the industry as a less–than-desirable option for its children.

Even if we could agree on its existence, the question of how best to fill it remains. Focusing on education is at the heart of many initiatives. Yet even if education is the answer, the challenges of timing the flow of workers with the needs of industry remains. Trying to predict which skills will be in demand can result in well-meaning training programs that produce a number of workers in a particular industry only to find that the economy has moved on and left these newly minted skills in the dust.

So, reality or myth? Maybe, like many of life’s questions, the answer is a little of both.

NOTE: The Geography of Jobs slide is a data visualization- go to http://tipstrategies.com/geography-of-jobs/ to see the animation

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  • “Complete” employment figures (versus other federal figures which only include “covered” workers).
  • AUTHOR'S / SPONSOR'S STATEMENT OF INTENT Current law provides for three public high school graduation plans: minimum, recommended, and distinguished. All students are required to satisfy four credits each in English language arts, mathematics, science, and social studies. To opt out of this default program, students and their parents must sign a permission form. As a result, most students have very limited options to pursue other rigorous applied programs in career and technology courses.  C.S.S.B. 3 transforms the current structure by creating a single diploma, the foundation program, with endorsements in business and industry, academic achievement in arts and humanities or STEM, and distinguished. Each endorsement enables students to focus on their own academic goals and prepares them for higher education and the workforce.  C.S.S.B. 3 also provides for weighted career and technology education funding in the eighth grade, in order to provide students with a course in career explorations. This one-semester course will provide students with an overview of the different endorsement options and the possible career paths available to them. All students will begin an individual graduation plan to help prepare them and their parents for high school.  C.S.S.B. 3 amends current law relating to public high school graduation, including curriculum and assessment requirements for graduation and funding in support of certain curriculum authorized for graduation.

Skills Gap: Reality or Myth? Skills Gap: Reality or Myth? Presentation Transcript

  • Texas Manufacturing Skills Gap A presentation to the Texas Economic Development Council TIP Strategies | Tom Stellman, president & CEO | February 28, 2013
  • Agenda • About TIP • Relevant trends • Manufacturing trends • Skills gap in the spotlight • Responses
  • Based in Austin, Texas Helping clients with economic & workforce development analytics & strategy 3
  • Our experience We have 17 years of experience in over 100 communities, across 29 states & 4 countries
  • Geography of Jobs
  • Total unemployed in the US TOTAL UNEMPLOYED, 16 YEARS AND OVER in Millions, Seasonally Adjusted Nov 2012 (preliminary) 16 12.08 14 million unemployed 12 10 8 6 4 2 0 1950 1960 1970 1980 1990 2000 2010 Source: U.S. Bureau of Labor Statistics (Current Population Survey).
  • Educational attainment of the labor force age 25 years and over Share that has earned at least a bachelor’s degree Source: US Bureau of Labor Statistics (Current Population Survey). Share that does not have a 4-year degree
  • 10.0% 5.0% Peak unemployment rate for the share of the labor force over 25 without a fouryear degree Peak unemployment rate for the share of the labor force over 25 that has earned at least a bachelor’s degree Source: US Bureau of Labor Statistics (Current Population Survey). Unemployment for those without a 4-year degree peaked in Oct 2009; unemployment for those with a 4-year degree peaked in Sept 2009.
  • The tightening labor market GROWTH OF THE WORKING AGE POPULATION Projected net annual change for the US population age 18-64 2,250,000 projections  2,000,000 1,750,000 1,500,000 1,250,000 1,000,000 750,000 500,000 250,000 0 2005 2010 2015 2020 2025 2030 2035 2040 Sources: US Census Bureau, estimated (2005-2011); projected (2012-2040) .
  • The view for Texas GROWTH OF THE WORKING AGE POPULATION Projected net annual change for the TEXAS population age 18-64 600,000 projections  500,000 400,000 300,000 200,000 100,000 0 2005 2010 2015 2020 2025 2030 2035 2040 Sources: US Census Bureau, estimated (2005-2010); projected (2011-2040) .
  • Manufacturing trends
  • Since 1970, total US employment in manufacturing has fallen by 7 million
  • INDUSTRY SHARE OF TOTAL US GDP, 1970-2010 30% This chart provides greater context for employment changes by comparing the share of all jobs in the US 25% Manufacturing Financial activities 20% Trade, transport & utilities 15% Government 10% 5% Health services Prof. & business services Leisure & hospitality 0% 1970 1975 1980 SOURCE: U.S. Bureau of Economic Analysis 1985 1990 1995 2000 2005 2010
  • US manufacturing trends | Productivity increases have yielded steady output with fewer and fewer jobs Jobs (in millions) Shipments (in $ trillions)* $6 20 18 16 14 12 10 8 6 4 2 0 $5 $4 $3 $2 $1 $0 1977 2011 1977 2011 SOURCE: U.S. Census Bureau, Economic Census and Annual Survey of Manufactures (various years) *inflation-adjusted (2011 dollars) Value of Shipments per Worker* $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 1977 2011
  • Total manufacturing jobs (in millions) US Texas ~900k ~12.5 m Source: EMSI Complete Employment – 2012.4; TIP Strategies.
  • Two different views Manufacturing As a share of total employment Manufacturing Employment relative to 2002 Texas Texas US 10.0% 9.6% 1.1 8.0% 7.0% 8.1% 6.0% 6.0% 4.0% 2002 = 1.0 1.2 1.0 0.92 0.9 0.80 0.8 Source: EMSI Complete Employment – 2012.4; TIP Strategies 2012 2010 2008 2006 2004 2002 2012 2010 0.6 2008 0.0% 2006 0.7 2004 2.0% 2002 As a share of total employment 12.0% US
  • Skills gap?
  • In the spotlight
  • « As many as 600,000 jobs are going unfilled … at the same time the national education curriculum is not producing workers with the basic skills manufacturers need. » A survey of 1,123 manufacturing executives conducted by Deloitte and The Manufacturing Institute, October 2011.
  • 52 percent of US companies struggled to fill key jobs in 2011 According to ManpowerGroup's 2011 Talent Shortage Survey, the highest percentage in the six-year history of the survey
  • Top 10 Hard-to-Fill Jobs: • • • • • • • • • • Skilled trades Engineers IT staff Sales representatives Accounting & finance staff Drivers Mechanics Nurses Machinist/machine operators Teachers
  • Recruiting challenges | 2011 SHRM Poll % of respondents having a difficult time recruiting for specific job openings 0% 20% 40% 60% High-Tech 80% 71% Manufacturing 68% Professional services 59% Overall 52% Construction, mining, oil and gas 51% Health 50% Finance 49% State and local government Federal government 33% 31% Source: Society for Human Resource Manager. 2011 SHRM Poll: The Ongoing Impact of the Recession – Recruiting and Skill Gaps. Survey of 2,286 randomly selected SHRM members in eight industry sectors. Recruiting challenge questions asked only of respondents whose organizations were currently hiring full-time staff. Figures represent share of respondents expressing an opinion; “don’t know” responses were excluded.
  • Hard-to-fill occupations | All industries 0% 20% 40% 60% 80% Engineers 100% 88% High-skilled medical… 86% High-skilled technical… 85% Scientists 83% Managers and executives 78% Sales representatives 72% Skilled trades (e.g., electricians, carpenters 68% Accounting and finance professionals 54% Production operators 52% HR professionals 49% Drivers Customer service representatives Hourly laborers Administrative support staff 36% 34% 29% 24% 2011 SHRM Poll Source: Society for Human Resource Managers. 2011 SHRM Poll: The Ongoing Impact of the Recession – Recruiting and Skill Gaps. Note: N=104-610. Chart represents the job categories in which survey participants found recruiting "Somewhat difficult" and “Very difficult.” "Not applicable" responses were excluded from this analysis. Only respondents whose organizations were having a difficult time recruiting for certain types of jobs were asked this question. 23
  • Hard-to-fill occupations | Manufacturing 0% 20% 40% 60% 80% High-skilled technical… 100% 89% Engineers 88% Skilled trades (e.g., electricians, carpenters 83% Managers and executives 80% Sales representatives 74% Scientists 72% HR professionals 64% Production operators 56% Accounting and finance professionals 50% Hourly laborers 39% Drivers 38% Customer service representatives Administrative support staff 28% 17% 2011 SHRM Poll Source: Society for Human Resource Managers. 2011 SHRM Poll: The Ongoing Impact of the Recession – Recruiting and Skill Gaps. Note: N=104-610. Chart represents the job categories in which survey participants found recruiting "Somewhat difficult" and “Very difficult.” "Not applicable" responses were excluded from this analysis. Only respondents whose organizations were having a difficult time recruiting for certain types of jobs were asked this question. 24
  • DEMOGRAPHICS POLICIES WAGES SCREENING Skills gap? AUTOMATION CULTURE EDUCATION TRAINING IMAGE
  • 1 in 5 workers is 55 years or older Age distribution of US mfg. workforce 65+ Years 65+ Years 3.8% 55-64 Years 18.7% 45-54 Years 30.1% 35-44 Years 23.6% 25-34 Years Less than 24 years Age distribution of Texas mfg. workforce 17.4% 6.3% Source: EMSI Complete Employment – 2012.4; TIP Strategies 4.6% 55-64 Years 17.5% 45-54 Years 28.6% 35-44 Years 23.9% 25-34 Years Less than 24 years 18.5% 6.8%
  • Today’s manufacturing is less likely to look like this ….
  • And more likely to look like this …
  • Skills gap … or wage gap? US MANUFACTURING EMPLOYMENT TRENDS, 1940 to 2012 Production and nonsupervisory employees (left) and inflation-adjusted ave. hourly earnings (right) Source: US Bureau of Labor Statistics, Current Employment Statistics 2010 2005 2000 1995 1990 1985 Average hourly earnings of production and non supervisory employees (2012 dollars) $0.00 1980 $5.00 1975 4,000 1970 $10.00 1965 8,000 1960 $15.00 1955 12,000 1950 $20.00 1945 16,000 1940 $25.00 0 Number of production and nonsupervisory employees (in thousands) 20,000
  • Deep thoughts this week: 1. There is no skills gap. 2. Who will operate a highly sophisticated machine for $10 an hour? 3. Not a lot of people 4. As a result, there is going to be a skills gap. By Adam Davidson Published: November 20, 2012
  • Failure to pass HR screening Table 4. Positivity Rates By Testing Reason - Urine Drug Tests For General US Workforce. Based on >4.8 million tests from January to December 2011 TESTING REASON 2007 2008 2009 2010 2011 Follow-Up 7.7% 7.6% 7.5% 6.5% 6.6% For Cause 19.2% 22.0% 26.8% 26.9% 26.8% Periodic 1.4% 1.4% 1.5% 1.3% 1.3% Post-Accident 5.8% 5.6% 5.3% 5.3% 5.3% Pre-Employment 3.9% 3.6% 3.4% 3.6% 3.5% Random 5.7% 5.3% 5.4% 5.3% 5.2% Returned to Duty 5.6% 5.3% 4.6% 5.2% 5.2% Source: The Drug Testing Index © 2012 Quest Diagnostics Incorporated. All rights reserved. The Quest Diagnostics Drug Testing Index is published as a public service for government, media and industry and has been considered a benchmark for national trends since its inception in 1988. It examines positivity rates - the proportion of positive results for each drug to all such drug tests performed - among three major testing populations: federally mandated, safety-sensitive workers; the general workforce; and the combined US workforce.
  • The Geography of Drug Tests? Overall Positivity by 3-Digit ZIP Code Urine Drug Tests | January to December 2011
  • Disruptions | Shale plays
  • Top 35 Occupations: Total impacts (direct, indirect and induced) 2011 Occupations impacted in 14 producing Eagle Ford Shale counties: SOC Code Occupations impacted Number Share of total Total 14-county impact 38,000 100.0% 1 53-3032 Truck drivers, heavy and tractor-trailer 1,864 4.9% 2 47-2031 Carpenters 1,192 3.1% 3 47-2061 Construction laborers 1,127 3.0% 4 47-2073 Operating engineers and other construction equipment operators 1,036 2.7% 5 43-9061 Office clerks, general 969 2.5% 6 47-1011 First-line supervisors/mgrs of construction trades and extraction workers 914 2.4% 7 41-2031 Retail salespersons 811 2.1% 8 43-3031 Bookkeeping, accounting, and auditing clerks 748 2.0% 9 11-1021 General and operations managers 712 1.9% 10 53-7062 Laborers and freight, stock, and material movers, hand 705 1.9% 11 41-2011 Cashiers, except gaming 689 1.8% 12 53-7032 Excavating and loading machine and dragline operators 685 1.8% 13 49-9042 Maintenance and repair workers, general 596 1.6% Labor force impact | Eagle Ford Shale 14 43-6014 Secretaries, except legal, medical, and executive 575 1.5% Source: Workforce Analysis for the Eagle Ford Shale, October 2012, prepared by Center for Community and Business Research at the University of Texas at San Antonio’s Institute for Economic Development. Counties included in analysis: Atascosa, Bee, DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Live Oak, Maverick, McMullen, Webb, 15 43-6011 Executive secretaries and administrative assistants 564 1.5% Wilson, and Zavala.
  • Responses
  • « [I]nitiatives in manufacturing, energy, infrastructure, hou sing all these things will help entrepreneurs and small business owners expand and create new jobs. But none of it will matter unless we also equip our citizens with the skills and training to fill those jobs. » President Obama 2013 State of the Union
  • • Manufacturing Innovation Institute Network. One-time $1 billion investment to create a national network of 15 mfg. innovation institutes. • Community College to Career Fund. $8 billion to forge new partnerships between community colleges and businesses to train 2 million workers. Supports “pay for performance” strategies. • Manufacturing Technology Acceleration Centers. $25 million to launch industryspecific centers that can serve as a coordination point within key supply chains. Investing in Manufacturing proposals 2013 State of the Union Address Source: http://www.whitehouse.gov/
  • Statewide business coalition. “Pushing bills that would loosen high school graduation requirements and foster better career and technical training” (AAS – 2/16/2013) SB3, carried by Ed. Committee Chairman Dan Patrick, R-Houston would: • Create single HS diploma (currently 3 graduation plans – minimum, recommended, and distinguished) • Relax 4x4 standards (e.g., substitute diesel mechanics for required science) • Increase CTE 83rd Texas Legislature Statewide
  • TAM priorities for 2013 session: • Energy affordability and reliability • Critical infrastructure, esp. water • Taxation on capital intensive businesses • Preserving tort reforms • Efficient permitting process • Education system flexibility • Incentivizing R&D activity • Business attraction and retention. Texas Association of Manufacturers Statewide
  • • Industry-driven (initiated by Toyota) • Focused (single, high-impact industry) • Scalable (grew from quickly from single state – KY– to multiple states) • Private-sector engagement (members were required to bring partner to the table with them) • Outcomes-based (program has common set of standards to assess student success; part of NSF’s Advanced Technological Education Centers program) Automotive Mfg. Technical Education Collaborative (AMTEC ) Multiple states | www.autoworkforce.org
  • • Skills-focused (goal to create pipeline of workers for automotive and advanced mfg. employers with skills in automated control systems, robotics, and mechatronics and other industry needs) • Multiple industry partners (members include range of automakers and suppliers) • Outreach model (begins in secondary system to attract, enroll, and graduate a diverse population of students ) • One of 39 regional Advanced Technological Education (ATE) Centers under the National Science Foundation’s ATE Program. Consortium for Alabama Regional Center for Automotive Mfg. (CARCAM) Alabama | www.carcam.org
  • Advanced Technological Education (ATE) Centers In Texas CONVERGENCE TECHNOLOGY CENTER Collin College | Frisco CENTER FOR THE ADVANCEMENT OF PROCESS TECHNOLOGY College of the Mainland |Texas City NATL. CENTER FOR OPTICS AND PHOTONICS EDUCATION Univ. of Central Florida | Waco NATL. GEOSPATIAL TECHNOLOGY CENTER OF EXCELLENCE Del Mar College | Corpus Christi Based on http://atecenters.org/centers-map/
  • • Industry-initiated (group of 5 advanced manufacturing companies) • Scalable (expanded to include > 15 cos.) • Targeted at specific occupational shortage (CNC machinists) • Tailored curriculum (Tarrant County College used existing funds to purchase equipment needed to simulate desired work environment) • Multiple funding approaches (College equipment, state and federal grants, private sector donations of time and expertise) • Outreach (“Gotta Make It” video available to local students on DVD and via YouTube) Advanced Manufacturing/ CNC Consortium Fort Worth area
  • Industry-driven partnership. Includes cities (San Antonio, New Braunfels, and Seguin), The Alamo Colleges, school districts, chambers of commerce, Port of San Antonio, Workforce Solutions Alamo and local employers. Designed to create bridge between K-12 and post-secondary systems. Focused on building pipeline. Graduates of 2-year program earn 31-34 college semester hours at no personal cost and receive a Level I Certificate of Completion through the Alamo Colleges along with high school diploma. Offered via four academies: • Aerospace • Information Technology & Security • Advanced Technology & Manufacturing • Health Professions Alamo Area Academies San Antonio area | www.alamo.edu/academies
  • Critical labor shortages. Initiative is designed to address critical shortages in the manufacturing and energy industries. Industry-driven. Fox Tank Company in Kerr County partnered with Alamo Colleges to custom-train 135 new and current workers in basic and advanced welding. New facility. Training will be offered at 40,000 square foot state-of-the-art Workforce Center of Excellence opened November 2012. Skills Development Fund. Training is funded through a $304,848 grant from the Texas Workforce Commission. Customized Training – Basic & Advanced Welding Skills Development Fund award | Kerr County “Teaming up for Kerrville,” Hill Country Community Journal
  • Industry partnerships. Customized training programs for careers in oil and gas, alternative energy, or mechanized (automated) production for corporate partners (e.g., Haliburton, Anadarko, and Baker Hughes) Response to “The Big Crew Change.” 2011 study* points to “outflow of more than 22,000 senior key petro-technical professionals (in the energy and production industries) by 2015.” State-of-the-art facility. Focused on technical and engineering skills required by industry. Construction of 80,000 square-foot dedicated facility approved in Sept. 2012. Lone Star College Energy & Manufacturing Institute Houston area *Study conducted by Schlumberger Business Consulting as cited in http://www.lonestar.edu/news/19782.htm
  • Parental involvement. Initiative designed to increase involvement of Hispanic parents in their children’s education. Early intervention. Started with 5th grade. Designed to keep parents involved as kids make critical transition into middle school. Focused on improvement in four areas: parent-teacher communication; at-home engagement (e.g., helping with homework); home learning environment; and parental volunteering at school. Data driven. Worked with E3 Alliance, a regional, data-driven education collaborative based in Austin. Latinos Educated and Dedicated (LEAD) Austin area | Hispanic Austin Leadership
  • • Pharr-San Juan-Alamo (PSJA) ISD focused on improving HS graduation rates. Completion rate has increased from 62.4% in 2007 to 86.7% in 2010 • College, Career & Technology Academy. “Dropout recovery” program for students between 18-26 years of age who lack high school credits and or exit exams to graduate. • Countdown to Zero campaign. Door-todoor approach to invite non-completers to return to school, coupled with preventive work at PSJA ISD campuses to ensure students that are falling behind are caught up and graduate on time. Since the CC&T Academy opened in 2007, close to 1,000 students have received their high school diploma and have been connected to postsecondary education, 212 of those students over the age of 21. Career & Technical Academy Texas Lower Rio Grande Valley http://www.psjaisd.us/apps/news/show_news.jsp?REC_ID=256017&id=0
  • thank you. 49