A Look Ahead with The Economist
The labor market is tight. Very tight. The number of US job openings is a million higher than the total number of unemployed persons. In Texas, the unemployment rate stands at about 3.5%, and the state continues to add jobs in impressive numbers.
With few people to hire, finding needed skillsets is a growing challenge. Further complicating the situation is the fact that the requirements of companies are changing rapidly with technological advances. PwC recently surveyed more than 22,000 workers and found that 53% of them believe automation will significantly change or render their jobs obsolete within the next 10 years.
Shortages and skills mismatches are a large and growing problem, and part of the answer is “upskilling,” or giving people the chance to learn what they need to fill open or future jobs. While training (or retraining) is not a new idea, the difference is that firms are now increasingly embracing and paying for upskilling, investing billions in training their current workers rather than trying to hire new ones.
In addition to saving companies the difficult task of finding and luring new employees, upskilling also allows corporations to fulfill emerging objectives. As firms move away from a singular focus on shareholder value and toward broader social concerns, employees are an important stakeholder group which benefits from upskilling. It’s a win-win, with workers avoiding the upheaval associated with losing a job and firms retaining valuable workers. People are willing, with the PwC survey indicating that 77% of adults would learn new skills now or completely retrain to improve their future employability. Similarly, learning opportunities and chances for professional growth are a top reason cited by new hires in job decisions.
Not every effort at upskilling has been successful. Unless employees have the appropriate incentives (such as higher compensation or expanded opportunities), they may not participate. If methods of delivering new information are inconvenient, overly time consuming, or poorly structured, they may not be successful. There are also instances where the mismatch between existing employees and new required skills is such that the investment is not cost-effective. Nonetheless, well-conceived programs can yield impressive results.
Worker shortages are likely to get worse (potentially far worse) even with labor-saving automation and artificial intelligence. The number of people of workforce age is basically static due to demographic patterns, labor force participation rates are stubbornly low, and immigration is declining. Throughout history, technological advances have on balance created jobs, but in the process have displaced those without needed qualifications. The US has generally failed in public policy initiatives to provide transitional training (much to our detriment). Hiring talent is increasingly difficult, and upskilling is likely to be a crucial strategy for many firms.
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.
