The first part of this series, The Skills Gap and the State of the Economy, introduced a startling gulf between the skills the current American workforce has and the skills it needs to remain competitive. What this gap means for American business, however, is the real story.
While 92% of the 500 executives that we polled believe a skills gap exists, only 13% reportedly believe that the gap is a major threat to the U.S. economy. The reason for such a disparity may be the simple fact that the skills gap hasn’t negatively impacted most businesses — yet.
A 2012 report by McKinsey & Company features alarming predictions for the future of the labor market: by 2020, there will be 40 million fewer workers worldwide with the education and skills that employers need. Meanwhile, the surplus of unskilled or low-skill workers will surge to almost 95 million.
This is a dire prediction indeed. The manufacturing sector is likely to be hit the hardest by this gap, a finding supported by our survey results. 30% of those surveyed believed that the existing gap affects manufacturing the most, with technology (21%) and professional and business services (19%) close behind.
Even though a relatively small number of those polled believe the gap to be an imminent threat to the U.S. economy, three other statistics from our survey provide a glimpse of what the future might look like if the gap goes unaddressed.
First, nearly half (45%) of the executives that participated believe that businesses across the board are missing out on growth opportunities as a result of the skills gap. Second, 34% find that research and development on new or improved products suffers from an inadequately skilled workforce.
These two findings are easy to understand. Today, the global marketplace can shift and evolve with a velocity unheard of before the digital era. Opportunities for new products or business lines appear literally overnight. But without a suitably skilled workforce, it’s difficult — or perhaps impossible — for many companies to capitalize on these opportunities. Meanwhile, other countries whose workforces do not suffer from skills gaps are able to move in to markets with a speed that many U.S. companies simply can’t match.
The third and most troubling statistic is that a staggering 64% of respondents believe that the single greatest threat to U.S. businesses is investment going abroad rather than staying in the U.S.
And it’s no wonder. While cost is certainly a major factor sending U.S. jobs abroad (though domestic costs for skilled labor are rapidly reaching parity with international markets due to the increasingly demanding skill sets necessary in high-tech manufacturing), skills also enter into the equation.
Countries like India and China investing heavily in addressing the skills gap through training and education initiatives. They’re also taking steps to retain skilled foreign talent through innovative incentives.
There are a variety of steps that domestic businesses can take to narrow the skills gap and position themselves for success in the coming years. To find out how, stay tuned for the third and final part of this series, What Your Company Can Do to Address the Skills Gap.
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