High Unemployment: Slow job creation is just part of the problem

By most accounts, the nation has weathered the worst economic downtown since The Great Depression.  But mere survival just won't be good enough this time around to transform our workforce back to greatness.

It’s no secret that our recovery has been hampered by slow job growth.  Our economy thrives when we people have good jobs with good wages. These wages are used to buy more things which puts more people back to work. The more demand for products and services, the more jobs we create. The economy grows when we provide a world class education to the next generations of innovators and inventors, who then become entrepreneurs, artists, scientists and thinkers that create new jobs. The problem this time is that we haven’t created enough new jobs fast enough, at least jobs that are based in the U.S.

Slow job creation however is just part of the problem. A much more significant cause is a shift in the nature of work and type of jobs being created.  Even when jobs created in 2011 have the same title as those created in 1991, the skill requirements are drastically different.  According to consulting giant McKinsey & Co., nearly 85% of new jobs created between 1998 and 2006 involved complex "knowledge work" like problem-solving and sculpting corporate strategy. That scenario has scripted a dramatic gap in the workplace between candidates seeking jobs and their qualifications required to fill them.

To make my point, a friend of my wife recently lost her job.  She worked in banking and the mortgage business for nearly 30 years.  You couldn’t ask for a more conscientious, honest, hard-working person.  Her next employer would get an employee of the highest character, if that’s all the counted.  But Betty (not her real name) lacked the skills most employers require these days. Unfortunately Betty didn’t recognize the skill gap.  When I asked her to describe her computer skills, she proudly shared she was “really good with Quickbooks and email.” But when I asked her about her proficiency with Word and Excel, she responded, “I’m really just too old to learn that stuff. That’s for younger people.”

And that’s the problem.  Computer skills – which today accounts for so much more than checking email and typing letters – aren’t just skills you can pass off onto “young people.”  Every worker - regardless of age - needs them along with minimum levels of proficiency with software and Internet skills.  Employees also need the ability to adapt, collaborate, think critically, and even work virtually.  Unfortunately the labor pool is filled with a lot of job seekers named Betty.

To learn more about how this job restructuring is impacting our recovery and shaping the Future of Work,  let’s begin by describing a few terms associated with the nature of work:

Transformational: Jobs that involve the extraction of raw material and converting them into finished goods.  Examples of transformational jobs are mining coal, running heavy machinery, or production line workers.  Once the type of job that defined progress and a robust economy, only 15% of American workers took jobs in this category by the turn of the 21^st century.

Transactional: Jobs that involve routine interactions. Examples of transactional jobs would be cashiers, office and accounting clerks.  Most of these jobs have become commodities and if not already outsourced, they’ve become automated.

Tacit: Jobs that involve more complex interactions – knowledge jobs. Examples of jobs in this category would include Executive/Manager, Nurse, Salespeople, and Mediators.  Many experts would even include positions like customer service representatives. Today even the CSR requires a vast knowledge base and advanced skills to service a diverse population who present complex problems.

For many years, companies have followed the Alfred Sloan pyramid style of business: a limited amount of tacit type of workers at the top supported by a large base of transformational and transactional types of workers.  This organizational model just isn’t working anymore. A new global marketplace demands an increase in the tacit workforce. It demands a new way of thinking.  No one is going to pay workers anymore just to show up. 

Or as Edward Gordon, author of “Winning the Global Talent Showdown” explains it , “we only have 20% to 25% of the current workforce that fits into jobs that are in high demand right now…”  Gordon describes this as, “An abundance of labor, and poverty of talent.”  

In other words, despite high unemployment rates, the U.S. does not have enough people with the right skills to fill the jobs that are being created. We do however have an ample supply of people ready, willing, and able to fill jobs that are or should be obsolete. That gap between job openings and skilled workers will keep unemployment high even if job creation ramps up.

Comments

[excel classes]

High unemployment means that consumers have less income to spend. People are less willing to buy, resulting in less sales leading to less profit for a large business. :(

[Bob cheeRIOS]

Its a global economy, and as soon as India, and China's wages get higher then maybe the U.S. economy will get better. I'm out there networking all the time and most people I meet are consultants of some sort... Is that what we've become. Don't we make anything anymore? Don't we invent or create. And the kids that are growing up nowadays don't want to get their hands dirty, they major in business and want jobs that start out at 50k... Rubbish!

- Bob cheeRIOS

[Talent Acquisition Recruiter]

Hi Michael,

I'm so sorry for the tough times that you're currently experiencing but I have to agree with the post and Ira on the fact that the economy has been changing its human capital requirements and the labor pool has yet to react. It's not propaganda to try and convince the majority that outsourcing is necessary. Outsourcing IS necessary in a lot of different situations and frankly, the objective of a corporation's existence is to serve its shareholders by making profit. I see the gap between required skills and current skills every day in my work. We need to adjust!! My 2 cents.

Thanks

[Ira Wolfe]

Michael - thank you for your comments. Yes it's true that some employers have chosen outsourcing and skirting laws. But other employers are simply working smarter with less people. And still others are employable like you but can't relocate were the jobs are. I can't comment on your personal situation but if you do have the skills required and not 13 years of work experience, opportunities are opening up. Tacit knowledge which you seem to understand involves a lot more than just showing up for work day after day. Good luck with your search.

[Michael]

This is not entirely true. All these skills that you say Americans do not have in abundance - I possess them. I have been a technical communicator for 13 years. My job is all about tacit knowledge. I have been out of work now for 4 months. I have never been out of work that long. I don't believe I am alone in this. There are thousands of skilled workers like me who do not have work now. These statements are made by companies to justify outsourcing our work and skirting laws that are supposed to protect our people from foreign scabs.