Peter Cappelli (2014) has been writing about a business dilemma that has faced US businesses at least since this generation and it goes like this: ‘The educational system is simply not teaching students the skills they will need to be successful in their careers.’ This management dilemma gives rise to a business problem of significant magnitude: ‘How do US businesses attract and retain skilled workers who possess the requisite education to assure a successful execution of company roles and responsibilities?’
The implications of this business problem are far-reaching. If employers cannot acquire US skilled workers, they will need the government to expand the number of H1-B visas granted so that skills can be found within other countries. And the converse is this: for every person hired in the US from another country that is one less job available to be filled by an American. Further, whoever bears the greatest fault or responsibility for creating this problem that is where to examine the root cause that must be addressed and rectified. Is the root cause with employers, educators, the economy, rapid technological change or even perhaps all of these potentially exogenous variables, along with even more modifying variables?
First, Dr. Cappelli frames the problem, no easy task given all of the opinions and “conventional wisdom” surrounding this topic. The claim of a “skills gap,” for example, is different than the claim of a “skills shortage.” There is also the claim, a dynamic one, that at any given time the supply of “skills” differs markedly from the demand for certain “skills.” He moves through his research problem conceptually. Historically employers have taken it upon themselves to train workers who show up with largely generalized educations. But more recently, that model has apparently changed, according to the research. All of these concepts must find their way into constructs with carefully crafted definitions. Just what, exactly, is a “skills gap?” And is the alleged “gap” valid or it non-existent if perhaps more reasonable job requirements were specified?
Which is the best model to frame the problem? A supply-chain model would suit the economic construct that a given supply of labor at market-clearing wages would intersect a given demand for labor. Another quantitative model idea is to start with ‘job requirements’ as the exogenous variable. But what if modifying variables such as ‘inflated job requirements’ or ‘unrealistic and excessive posted requirements’ must be considered? If an honest (valid) set of job requirements could be posted and an employee matching those requirements could be found, then there is no problem.
Another possible variable that must be considered is the notion of ‘market-clearing wages.’ Economic theory would tell us that at the right price, the right worker could be found and hired. There is some empirical evidence that employers tend to increase wages in times of labor market shortages and to lower wages in environments of plentiful workers (Brenčič, 2012).
Dr. Cappelli’s research ultimately led him down a quantitative and a qualitative path. His mixed methods approach cited numerous government studies. One example is the Carnegie-funded National Center on Education and the Economy, America’s Choice: High Skills or Low Wages? (1990). Dr. Cappelli examined objective government reports, education reports, consulting studies, and reports from business associations, from which he built a formidably strong inductive and persuasive collection of evidence in support of the conclusion that the fault lies primarily at the doorstep of employers. Employers have significantly reduced training, according to the evidence. Employers are not providing market-clearing wages in many cases, the data suggests. Employers are seeking an inflated set of skills that are not necessarily correlated to success on the job. Indeed Dr. Cappelli concluded that applicants, if anything, are more educated, skilled and prepared than they have been historically.
The nature of the research fits into the category of “explanatory.” The work summarizes a daunting treasure trove of data, attempts to describe what the data says to the reader, then goes on to explain why these things are so and how they work this way. The theories that are built from the constructs meld ontology, particularly, with axiology. The dynamics of the business problem introduce another variable to be contended with; for example, companies used to train a lot more in the past than they do today. Another dynamic is wages have been suppressed since the beginning of the so-called “Great Depression” in 2008. These dynamics are ‘confounding’ variables in a quantitative, longitudinal study since apparently discrete model changes have been introduced over time.
Dr. Cappelli does not argue ‘cause and effect,’ neither has he developed a model purported to be predictive. But he does make a strong case, based upon the evidence, that the conventional wisdom, the paradigm that says education is to blame, is simply unsupportable. His conclusions are persuasive and compelling, that employers need to re-examine and buttress their training programs, re-tool their compensation levels to get closer to market, and re-think the skills they must have for the applicant to have a high probability of success on the job.
Brenčič, V. (2012). Wage posting: evidence from job ads. Canadian Journal of Economics/Revue canadienne d’économique, 45(4), 1529-1559.
Cappelli, P. (2014). Skill gaps, skill shortages and skill mismatches: evidence for the US (No. W20382). National Bureau of Economic Research.
Cooper, D. (2013). Business Research Methods [VitalSouce bookshelf version]. Retrieved from http://online.vitalsource.com/books/0073521507/id/P3-464
National Center on Education and the Economy. 1990. “America’s Choice: High Skills or Low Wages! The Report of the Commission on the Skills of the American Workforce.” Rochester, NY.