People Love to Talk About the Skills Gap. But What About the “Productivity-Pay Gap”?
A couple of stories caught our eye last week.
First, there’s this piece in the Wall Street Journal on how employers “feel the pinch” because of an “increasingly tight labor market.” There were 650,000 available jobs in the United States in July, the highest level on records back to 2000, according to the article.
The story mirrors what we often hear about the “skills gap” in manufacturing, the idea that there are many advanced manufacturing jobs out there but not enough workers with the know-how to fill them.
Remember that — we’ll come back to it.
We also came across this devastating story in the New York Times on Wednesday about how so many of the jobs out there — especially for workers without a college degree — simply do not pay enough to live on. Here’s an excerpt:
“In recent decades, the nation’s tremendous economic growth has not led to broad social uplift. Economists call it the ‘productivity-pay gap’ — the fact that over the last 40 years, the economy has expanded and corporate profits have risen, but real wages have remained flat… American workers are being shut out of the profits they are helping to generate.”
That NYT piece profiles Vanessa Solivan, a mother-of-three who, when times are good, makes about $1,200 a month as a home health aide. The 33-year-old spent almost three years as part of the “working homeless,” holding down a job but not making enough money to afford a place to live.
Vanessa finally secured a spot in public housing in May. But she still struggles to find the money for basic necessities like food; the federal government estimates she needs to bring in at least $29,420 a year to take care of her family (she earned $10,446 in 2017). Matthew Desmond writes:
“We might think that the existence of millions of working poor Americans like Vanessa would cause us to question the notion that indolence and poverty go hand in hand. But no. While other inequality-justifying myths have withered under the force of collective rebuke, we cling to this devastatingly effective formula. … [R]ather than hold itself accountable, America reverses roles by blaming the poor for their own miseries.”
Oof. That’s heavy stuff.
Let’s break things down a bit. There are solutions at hand, including increasing opportunities in manufacturing. Which brings us back to that first story and the skills gap.
It’s time to shift the narrative. We need to go deeper than stats about how many job openings there are and examine exactly why companies are having such a hard time filling positions. We must stop allowing companies (and policymakers) to pin the blame on the poor and working class when companies can’t find people for those jobs.
More needs to be done to bring poor and working class Americans into good-paying, middle-skill jobs, which often require education beyond high school but not always a four-year degree.
There are people out there who want these jobs. But as Vanessa’s story shows, many of those same people are struggling to get by. They don’t have the ability to seek out job training programs, figure out how to pay for them, and then actually take the time to finish them. They’re just trying to make sure their kids are fed.
It’s up to policymakers and the private sector to put systems into place to create better opportunities for people like Vanessa.
The National Skills Coalition recently took on this problem, recommending that the United States provide more pre-employment training opportunities to prepare workers for apprenticeships that offer a pipeline to good-paying, middle-skill jobs.
But the coalition also pointed out that for those programs to be successful, more must be done to provide affordable childcare for participants.
Many of the potential participants for these training programs have kids. But since childcare costs are typically more than they can afford, they are often forced to bow out.
Instead of gaining the skills they need to move into a good-paying career path, they continue to scrape by, working in jobs that don’t pay enough to live on.
The good news is that once people make it through these sorts of training programs and are hired, they often have a pathway to the middle class.
Take manufacturing. Factory jobs still pay a wage premium compared to jobs in similar private-sector fields, especially for those workers without a college degree. Manufacturing workers also enjoy an advantage in benefits like health insurance and retirement.
ArcelorMittal’s Steelworker for the Future program, for example, trains participants for advanced manufacturing jobs that can see them making $90,000 a year by their third year of employment.
There are other reasons for the pay gap that go beyond the skills gap, of course. As the NYT notes, the decline of labor unions is a big driver of growing inequality, as it emboldened corporate interests and disempowered rank-and-file workers, creating the imbalanced economy we’re dealing with today. Wages are growing too slowly, if at all.
It’s going to take a whole lot of work on a whole lot of different fronts to turn the tide.
But one way to start is to stop blaming poor and working class Americans for jobs that are unfilled. Instead, it’s time that policymakers and the private sector do more to ensure that people like Vanessa are provided with achievable pathways to begin to close these gaps.
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Reposted from AAM
