Skills Mismatch a Factor in Labor Market Woes

Skills mismatch, the situation in which workers lack the skills that employers need, appears to account for some of the rise in unemployment during the Great Recession.

Joblessness caused by skills mismatch can arise as the result of an economic downturn when job losses are concentrated in certain industries but job openings are in other industries. Between 2007 and 2013, about half of all jobs lost were in manufacturing and construction, while roughly 90 percent of new positions opened in other industries, according to the U.S. Bureau of Labor Statistics. That disparity suggests that “sectoral mismatch” may have increased. This sectoral imbalance of job losses and job openings held true in the Southeast as well as the nation.

Skills mismatch is a real issue. However, the evidence is not conclusive on the degree to which higher joblessness during 2013 was caused primarily by persistent mismatch between available jobs and the skills of people seeking to fill them. Unemployment declined through the year roughly in proportion to the increase in job openings, which might suggest that more vacancies will absorb more job seekers. On the other hand, an Atlanta Fed poll of employers and providers of training and social services to low-wage earners in the Southeast revealed that lack of technical skills and lack of experience were the two biggest hurdles to low-wage individuals seeking jobs. On balance, though, it appears that skills mismatch may be part of the story for the less-than-desirable job growth the economy has experienced—but it’s far from the full story.

The mismatch can also partly explain why there is an unusually large share of unemployed individuals who have been unemployed for a long time.


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