How to Help Low-Skilled Workers Find Jobs
The U.S. economy is adding jobs–but employment prospects aren’t improving for everyone. As AIER economists Steven Cunningham and Zinnia Mukherjee write in “Labor Market Recovers Unevenly,” much of the current job growth is being driven by fields like health care, accounting, information, and professional and business services–all of which are dominated by high-skilled workers. That leaves low-skilled workers in the lurch. They explain:
Higher rates of unemployment tend to occur in industries dominated by low-skilled workers, whereas lower rates occur in industries dominated by high-skilled workers. The unemployment rate for those 25 years and older who have at least a bachelor’s degree is currently 3.8 percent. Most economists would refer to a rate that low as essentially full employment.
This suggests a potential problem that could limit growth and shorter-term improvements to the unemployment rate. If the industries critical to growth have used up their labor pools, they are going to hit hard constraints to growth. If industries that employ low-skilled workers are not growing, those workers are likely to stay unemployed.
This is almost the definition of a structural unemployment problem. It also helps to explain why U.S. firms are hiring so many high-skill foreigners while Americans go unemployed and overall unemployment rates remain high.
If there’s a skills mismatch between jobs and workers, the question is: What should we do about it? I asked Mukherjee for her recommendations about how to help low-skilled workers find jobs.
In the short term, Mukherjee says there are several things low-skilled workers can do to navigate a lackluster economy:
1. Pick up multiple skills. “Not all low-skilled occupations are equally affected in a recession,” Mukherjee explains. “But if you only have one skill–you know how to mow a lawn–then when people want to take care of lawns themselves, you’ll no longer be needed. Having multiple skills is a way of insuring yourself against income loss, though not necessarily job loss.” Mukherjee says this was one of Henry Ford’s guiding principles when he founded his trade school in 1916. “His vision was to empower students with a range of skills so that they could easily find jobs and be useful to their employers,” she says. Today’s training programs would do well to adopt the same policy.
While having a range of abilities may not protect low-skilled workers from cutbacks, Mukherjee says it certainly can’t hurt. “Even within the same company,” Mukherjee says, “if your boss knows you can play multiple roles, you’ll be one of the last people to get laid off.”
2. Stay informed, and be prepared. Mukherjee notes that some industries dominated by low-skilled workers, such as construction, tend to be more vulnerable to employment shocks than others. Workers who know their industries often suffer from periodic layoffs and higher-than-average unemployment rates can prepare themselves for the worst by building up emergency savings and incorporating that knowledge into their financial decisions.
These recommendations won’t just help low-skilled workers protect themselves–they can also provide schools, employers, and training programs with ideas about how to improve low-skilled workers’ financial futures. But in the long term, Mukherjee says, the solution to the skills mismatch is all about education.
“A good quality education will give you higher earnings and protection from job loss, or at least a lower probability of losing your job,” Mukherjee says. But she adds that right now, higher education isn’t a viable option for everyone, or else more than 30 percent of Americans would have a college degree. That brings Mukherjee to the big-picture solution:
Create an education system that encourages more people to get a college degree. Mukherjee says that high tuition rates and the prospect of being saddled with long-term student loans can deter high school graduates from pursuing higher education. “Easy availability of college funds, with few or no strings attached, may encourage students to go for higher degrees,” Mukherjee says. “That will give them higher earnings and more job security during hard economic times.”
Unfortunately, there’s a hitch to this plan: Mukherjee says that even if more low-skilled workers pursue higher education, it will take a long time for the skills mismatch to even out. For one thing, many American employers have found that hiring high-skilled foreign workers is more affordable. For that reason, Mukherjee says, “we cannot expect demand and supply of high-skilled American workers to even out in the near future–the next two decades–since the wage difference across countries remains significant.”
With that in mind, I’m opening the floor up to you, Daily Economy readers. What can we do to fix the skills mismatch–and how can we help the low-skilled workers who’ve been affected by it?