Workers on the factory floor responsible for ensuring that the steel meets specifications must be able to calibrate sophisticated equipment, which requires math knowledge roughly equivalent to algebra. But too often, the company finds that its employees lack those skills.
"It’s in math problem-solving that we see a real gap," says John Anderson, senior vice president for North American operations at Whirlpool.
The company has established about 90 training programs to shore up the skills of its workforce. Although many of them prepare an employee for a Whirlpool-specific job, about 25 percent of the training focuses on remedial skills.
Generally, 30 percent to 40 percent of Whirlpool’s staff is involved in training at any given time. "It is a substantial cost to us," says Anderson, who would not reveal the total amount of money that Whirlpool spends on training.
Whirlpool’s frustration over workers who lack math and science basics is shared across a wide spectrum of companies, who warn that the dearth of technical skills in the U.S. workforce will undermine economic growth. A group sponsored by the Business Roundtable recently launched a Web site, www.tap2015.org, designed to highlight the math and science talent pipeline as a national priority.
The issue has moved much higher on the political agenda, with both parties hoping to gain an election-year advantage.
In his State of the Union address and a subsequent barnstorming tour across the country, President Bush has been promoting his American Competitiveness Initiative, a $136 billion, 10-year plan to increase federal R&D support, train thousands of science and math teachers and improve those skills in American children.
On Capitol Hill, two bills have been introduced in the Senate that are aimed at bolstering research investment and increasing the number of scientists and engineers. Democrats and Republicans in the House are touting their own innovation proposals.
High-end versus low-end skills
Microsoft came to Washington in late February to promote its efforts to address the so-called skills gap. Those efforts include an alliance with the Department of Labor to offer software for computer courses at federal training centers. "There is a large population that lacks very basic IT skills," says Pamela Passman, Microsoft vice president for global corporate affairs. "Every job now to a great extent involves some kind of computer technology."
While its latest initiative focuses on low-skill workers, the company asserts that it also is being hurt by a lack of scientists and engineers. "We continue to have challenges as a company in being able to hire enough people here in the United States," Passman says.
It’s the high end of the skills gap that is gaining the most attention. But some experts say that Washington’s push to produce more homegrown scientists and engineers may be misguided. The U.S. labor market is complex and layered, making it difficult to pinpoint shortages, says Ron Hira, assistant professor of public policy at the Rochester Institute of Technology in New York.
He argues that reports of skills shortages may be skewed because they often rely on the input of chief executives, who are inclined to call for more scientists and engineers. A more nuanced view of skills in demand might come from a survey of human resources professionals.
In addition, companies may be crying wolf about the shortage of engineers and scientists because they’re setting parameters that eliminate many high-tech applicants. For instance, they may demand experience in computer-aided design and manufacturing and a background in a specific kind of software.
"They’re looking for a very specialized set of skills," Hira says. "They’re willing to wait months to get just the right person. It’s not clear how the government could help deal with that market failure, if it is a market failure."
In fact, the bigger problem may be filling jobs that require skills that can be obtained through an associate’s degree or in courses at a community college.
"There is a large population that lacks very basic IT skills ... We continue to have challenges as a company in being able to hire enough people here in the United States."
--Pamela Passman, Microsoft
Workers with that kind of background are exactly who Erick Ajax is seeking. Vice president of E.J. Ajax & Sons, a small metal stamping company in Minneapolis, Ajax came to Washington recently to testify at a round table sponsored by the Senate Health, Education, Labor and Pension Committee. He highlighted a Minnesota program that offers two-year technical degrees and apprenticeships.
Ajax could use people who can handle trigonometry and communicate well--skills for which a bachelor’s degree is not needed. But it’s higher education that is highlighted in initiatives coming out of Washington.
"We tend to look down our noses at someone who doesn’t have a four-year degree," Ajax says. "We need to focus on the 70 percent of students who will not have a four-year degree."
The competency sought for many manufacturing operations--reading graphs and charts or performing high-school-level math--is fairly basic. "These are skills that people can absorb relatively easily," says Michael Handel, associate professor of sociology at Northeastern University in Boston.
It’s the lower-level workers, however, who have made economic gains over the last several years, according to the Economic Report of the President, issued annually to Congress. Since 2000, the real earnings of workers with a bachelor’s degree have fallen, while those of high school graduates have increased.
"Such results would suggest that, since 2000, the supply of college graduates (typically labeled ‘skilled workers’ in this debate) has grown faster than employers’ need for them and that the supply of high school graduates (‘less skilled workers’) has not kept up with demand," Lawrence Mishal and Jared Bernstein wrote in an Economic Policy Institute analysis. "Policymakers and ‘futurists’ predicting a shortage of skilled labor need to be aware of this reversal in the college premium, especially since it contradicts their explanation of evolving skill demands."
Addressing the needs of lower-skilled workers requires business and government to work together, according to Microsoft. At the annual meeting of the National Association of Workforce Boards in Washington last month, Passman announced that the company is launching a public-private alliance to create a comprehensive U.S. workforce development strategy. The workforce boards, composed of local business and political representatives, oversee federal training centers.
A major obstacle to business and government cooperation is a lack of communication. The National Association of Manufacturers’ "Skills Gap Report" indicates that 33 percent of the 800-plus companies surveyed had never heard of the government workforce system, while 26 percent had never been contacted by it.
"Not enough employers are aware of the federal programs that are available," says Richard Kleinert, a principal at Deloitte Consulting, which helped conduct the NAM survey. "There’s an awareness gap that needs to be bridged."
The Bush administration is trying to highlight workforce training. In November, the Department of Labor launched the $195 million Workforce Innovation in Regional Economic Development (WIRED). The program provides technical and financial assistance to areas in which business, academia and government are cooperating to upgrade the local economy.
Economic development organizations from throughout the country had to submit proposals by January 5, putting the 93 applicants into overdrive through the holidays. The 13 winners of three-year, $15 million grants were announced February 1, one day after President Bush unveiled the competitiveness initiative in his State of the Union address.
The funding is a boon to Kokomo, Indiana, whose manufacturing economy is based in large part on the faltering auto parts supplier Delphi Corp. If the company shuts down its operations, it could devastate the community.
As part of the North Central Indiana Transformation Network, Kokomo is set to benefit from WIRED funding that will support new industries, such as advanced manufacturing and materials, agribusiness and food processing.
Retooling autoworkers with new skills is a priority. "We can’t sit idly by and watch their standard of living decline," says Kokomo Mayor Matt McKillip. The federal workforce grant "is clearly something the governor (Mitch Daniels) and I can point to and say we’ve got $15 million to retrain workers so that they’ll be gainfully employed as the economy of Kokomo transforms."
Deborah Wince-Smith, president of the Council on Competitiveness, calls the WIRED initiative a breakthrough because of its emphasis on talent. "It’s treating job skill development as integral to economic development," she says. The council is a nonprofit organization that seeks to keep the issue of competitiveness on Washington’s policy agenda. It comprises industrial, university and labor leaders.
The private sector, too, needs to change its mind-set about training. "The strong emphasis on training seems to be specific skills for a specific job that you’re in today, as opposed to a larger workforce development focus," Deloitte’s Kleinert says.
That kind of just-in-time approach produces a poor return on the approximately $70 billion that the private sector spends annually to upgrade skills. "Employers need to take a more holistic view of training," says Richard Lamond, senior vice president and chief human resources officer at Spherion Corp. He urges companies to focus training on problem-solving skills that transcend any one particular job.
Ultimately, business and government need to stress that higher salaries come through better skills. Students "have a very vague idea of what the real world of work is," Mandel says. "It’s remarkable how little integration there is between schools and their customers--employers."
Workforce Management, March 13, 2006, pp. 46-49 -- Subscribe Now!