Dr. Jeffery Sachs, one of the recent attendees at the White House Jobs Summit, had his eyes opened. He was unaware that manufacturers are still having problems finding people with the necessary skills to fill jobs openings. Dr. Sachs, who has been described as "the leading economic advisor of his generation," was surprised that a number of summit attendees couldn’t find workers, such as welders who really know a trade. For the past 20 years, Sachs has been at the front lines of dealing with economic challenges. He observed that we "have a giant mismatch with millions of young people who do not have skills and who are looking for jobs that they are not qualified for." Fortunately, this message was delivered and it opened a lot of peoples eyes, in the end it was not heard as needing specific ongoing programs to address this need.
Read Dr. Sachs Interview on Manufacturing Jobs
Over the past three decades, Massachusetts has lost over 180,799 manufacturing jobs. As a result we have seen manufacturing’s share of the state’s workforce drop from 16 percent in 1997 to about 9 percent today. With this decline we have seen the almost complete deterioration of a technical education system that was providing the necessary skills for graduates to enter the world of work in manufacturing. Productivity growth and continuing competition in labor-intensive goods production industries from lower cost foreign manufactures will continue to persist, limiting total manufacturing employment growth for some years to come.
However, during this same time, while the Massachusetts manufacturing sector has been losing jobs, it has undergone a profound transformation to a highly skilled economy. The New England Council’s study, "Advanced Manufacturing in a Network World," found that 62% of all of the manufacturing jobs in Massachusetts were high skilled manufacturing jobs. While jobs in basic manufacturing are declining, the 171,000 advanced manufacturing jobs are continuing to increase as a percentage of the total manufacturing jobs. These skilled jobs also account for the bulk of the rapid increase in manufacturing productivity.
The overall decline of basic manufacturing jobs due to productivity growth and liberalized trade tends to be felt disproportionately by the lower skill trades. Conversely, this change has helped to develop more high skilled jobs to support the increases in productivity and newly opened export markets for advanced manufactured goods. A study developed by the Northeastern School of Public Policy illustrated the changes which occurred in technology employment in Massachusetts 1969 – 2000: basic manufacturing lost 50% of its manufacturing jobs in this period while high skilled jobs lost 12%.
There is little doubt that the US manufacturing workforce is shrinking, both in absolute and in relative terms. At the same time, however, the manufacturing workforce is undergoing a remarkable transformation to a highly skilled, productive industry which, incredibly, is not being supported to renew itself with personnel with sufficient skills. The fact that this has been going on for years is a shared failure of education, government, and most of all by the manufacturers who sit by and watch education and government work diligently to solve skill sector shortages in nursing, IT programming, etc. Just as the "lack of skills message" was lost in the recent jobs summit, it has been lost or ignored for years by all of the publics. This is why we have, as Prof. Sachs observed, this giant mismatch of "millions and millions of young people who don’t have skills."
STEM: Getting Back to the Technical Basics
Currently there is a concerted effort to improve technical training in our education system, called STEM. STEM stands for Science, Technical, Engineering, and Math. While this is certainly a welcome change, it needs to be recognized that the current emphasis is focused primarily on the Science and Math parts and there is little attention in the K to 12 education system that addresses the T (technical) and E (engineering) part of STEM. Without a correction that recognizes the necessity for teaching these skills as part of our education system, we will continue to contribute to the giant mismatch.
The educational pipeline situation is compounded by the current lack of accepted industry job skills standards. Such standards could provide job mobility for the millions of manufacturing employees who have been laid off during the past two years. There are record numbers of ex-manufacturing employees who lack formal education degrees or specific critical skills and who are not being trained for employment by an employment system that knows little about manufacturing, except to believe that it is a dying employment sector. Unfortunately, manufacturing, with less than 10% of the labor workforce and no dedicated statewide voice to speak for it’s educational needs, has very little leverage to change the current situation despite the sector’s value to our overall economy.
The Value of Manufacturing Extends Throughout the Economy
The most recent US Census study cites there are just over 275,000 employees of the manufacturing industry in Massachusetts. The total employee compensation in the industry is over $20.4 billion. In 2006, manufacturing made up 10.2% (or $33.5 billion) of Massachusetts’ share of the Gross Domestic Product.
The economic value of these jobs extends beyond the manufacturers themselves. Sale of goods by Massachusetts manufacturing firms requires purchases of intermediate goods and services from companies located in Massachusetts and elsewhere to support their output. The supplying companies, in turn, generate additional buys. In this way, dollar expenditures for final demand can be traced to all of the affected industries in the regional economy. The sum of these direct, indirect, and induced effects suggests that in the Massachusetts economy manufacturing is responsible for:
922,000 jobs
Total employee Compensation of over $53 billion plus proprietor income of over $4 billion
Total value-added of more than $84 billion
Total economic output of over $182 billion
The risk of the skills imbalance is described in the Deloitte/Manufacturing Institute’s and Oracle joint study, "People and Profitability – A Time for Change," [link to attached PDF] taken in May 2009, at the height of the recession. This study indicates that the skills gap still persists even during this period of significant economic challenge, especially for the most profitable companies. The study also notes that while manufacturers may have new aspirations in recognizing the importance of skills management, they are using old tactics to correct the situation.
The study concludes that we should not rely on waiting for lost messages to be found. Each manufacturer is encouraged today to carefully examine their own short and long term talent needs based on their own unique business needs.
The Massachusetts’s Manufacturing Partnership can assist any manufacturing enterprise interested in doing this, and understanding what skills and future capabilities they will need to grow their companies. Interested companies should contact Mike Prior at [email protected], for a free company "Skills Assessment."
