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SUMMARY

Employer reports of job vacancies left unfilled due to a lack of adequately skilled applicants have spanned U.S. industries for decades, and have often raised concerns among some Members of Congress about the broader economic implications of a potential mismatch between skills possessed by workers and those sought by employers. Some concerns center on the notion that certain skills—often higher-level or mid-level skills—that are sought by employers are not possessed by enough workers, impeding employers’ ability to find the capacities they need to operate, innovate, expand, and compete, and this ultimately slows economic growth. Other concerns relate to the plight of workers and the notion that mismatches between workers’ skills and the current or future demands of work may be a primary driver of unemployment and may render the skillsets possessed by groups of workers obsolete.

Disagreement exists about the pervasiveness of skills misalignments, and about their scale and how concentrated they are. This is called into question by suggestions that other factors—such as wage levels and working conditions—may be partially or largely responsible for unfilled positions, unemployment, or other outcomes that are sometimes attributed to skills gaps and cited as evidence of their existence.

Nonetheless, there is little doubt that work demands regularly evolve throughout many occupations and industries creating, at least on some scale, mismatches between what jobs require and the readiness of workers to perform those tasks. Large structural changes accompanying new technologies have had a substantial effect on the types of jobs available and on the work performed in industries across the economy during certain periods. Current conversations around automation, artificial intelligence, and technological change more generally indicate that such structural changes—and the potential for large-scale skills gaps—may be on the horizon in the coming years.

Central to skills gap debates are what have become perennial questions surrounding (1) the mix of education and training needed to equip workers with the skills and knowledge required for work, and (2) who should provide it, finance it, and determine its content and help workers navigate what is needed. These issues are not new—worker skills have always mattered to production, and U.S. workers and employers have long had to adapt to the changing demands of work. But identifying the mix of general and specific skills and knowledge needed in the workforce, and the appropriate roles for government, employers, and workers in developing them, can be complex.

Several separate laws authorize federal policies and programs aiming to improve the preparedness of the U.S. workforce, employing many different strategies. Some place emphasis on the development of a foundation of transferrable knowledge and skills. Others provide support for postsecondary educational pursuits and lifelong learning, allowing existing or prospective workers to select the particular types of education or training in which to invest. Other federal policies support specific types of training in areas where a shortage of skilled workers exists (e.g., cybersecurity, nursing). Still others promote skill development by encouraging employer-provided training. Relatedly, there are many federal policies that are not focused on skill development, which can also affect whether sufficient numbers of workers holding skills that meet the needs of employers are available (e.g., policies that address factors that may inhibit labor force participation among skilled workers such as availability of child care, and policies in areas such as immigration that affect the size and composition of the labor force).

This report is a response to congressional requests for the Congressional Research Service (CRS) to identify, synthesize, and explain the core components of the skills gap discourse and, to the extent possible, explore and clarify evidence on the existence of skills gaps. The report acknowledges that the skills gap label is often applied to several different circumstances and conditions, and it offers a discussion of the varied meanings associated with the term. The report attempts to shed light on the nature and existence of various types of skills misalignments and explores their potential policy implications.

The report presents a limited review of indicators that are commonly cited as evidence of the existence of skill misalignments. These include broad indicators examining job openings and hires, employer wage responses to unfilled jobs, educational credentials possessed in relation to those required, and the adequacy of measurable foundational skills among current (and future) workers. The report notes that these indicators, which measure trends of relevance to the skills gap debate, do not clearly suggest that widespread misalignments exist. At the same time, this review cannot rule out misalignments as a possibility.

The report notes as well that available existing broad indicators have limitations. For instance, not everything of interest can currently be measured. Notably lacking are accepted measures that examine the adequacy of the supply of in-demand capacities such as soft skills. Further, some indicators may be imprecise. As an example, some rely on educational credentials as a proxy measure for skills possessed by workers or required for work, and there is debate about whether this may be an imperfect proxy for skill levels possessed and actually required. Additionally, some indicators are generated through imperfect research. Some, for example, come from employer and industry surveys, which are seemingly well positioned to shed light on imbalances between supply and demand for skills, but these surveys often do not meet standards for quality research, and they may lack impartiality.

With regard to a more narrow examination of skill shortages affecting particular occupations or fields in which there is an undersupply of credentialed workers, or in which work demands may be changing rapidly, the report notes there is more agreement about the existence of some misalignments. The report highlights illustrative examples of fields in which evidence points to shortages. Also discussed is the complexity associated with isolating the causes when occupations, employers, and regions face difficulty in filling positions. That is, it is difficult to attribute hiring challenges to a skills shortage when there are often many other plausible explanations for hiring challenges.

Throughout the report, there is discussion of enduring challenges that complicate policymaking in this arena. One is that the skills gap label encompasses a series of somewhat separate (but interrelated) issues, and it is not clear that there is a common problem definition or consensus about what may need to be addressed. Further, it can be hard to reach agreement about respective responsibilities of workers, employers, and government in ensuring the acquisition of skills. While there are numerous federal investments promoting a skilled workforce, there is no clear agreement about whether, or the extent to which, the different skills-related challenges being addressed by federal policies need to be thought of as a continuum and addressed in an interconnected manner.

https://crsreports.congress.gov/product/pdf/R/R47059 (47 pages)

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