If government wants to help — try asking how
Jobs, jobs, jobs … everyone seems to agree the presidential election is all about jobs and how to provide more of them throughout the country. Here in Ohio — and even more so in central Ohio — jobs are being created at a more rapid pace than is true for the overall nation, but by any definition, virtually all areas (including Ohio and Columbus) are far from full employment.
Naturally, both Democrats and Republicans think they have answers as to how to “turn the economy around” and induce businesses to hire more workers. To those who are willing to listen to politicians give Twinkie-like solutions (which seem filling for a few minutes, but provide no long-term benefits), this may be adequate. But more and more, Americans are realizing that simplistic “solutions” (such as yet another tax credit) do precious little to expand employment opportunities. After all, the U.S. economy has now been recovering since June 2009, but the unemployment rate remains above 8 percent, and that figure does not include millions of discouraged workers or those wanting to work full time but can only find part-time jobs.
According to a recent survey conducted by The Wall Street Journal and Vistage International, nearly one-third of small businesses have job openings, but job applicants do not have the skills required to fill the positions. The skill shortage was worst among small manufacturers (over 40 percent of respondents), but with significant problems also faced by service companies (30 percent) and retailers (29 percent). Very likely such results would also be present within medium and large-sized businesses should similar research efforts be conducted. It is important to realize, however, that this issue is highly significant with regard to small businesses since they are responsible for most new job openings, as evidenced by the monthly data collected by ADP, as they attempt to estimate how many private-sector jobs are created each month.
So in all of the (Twinkie-like?) proposals by various politicians, have you ever heard any discussion of specifically how to address job-skill shortages identified by businesses? Or any discussion of precisely which job skills are lacking that businesses feel government may help alleviate in a viable fashion? My best guess would be the answer is no.
One major problem associated with this incredibly important issue is that no real effort has been undertaken to determine precisely what the skill shortages are and how they might be addressed in a tangible fashion. To be sure, some modest work is done at the federal, state and local levels to identify skill-shortages in general terms (such as by the Ohio Department of Jobs & Family Services), but concrete policies to address the shortages seem remarkably lacking.
How might the problem be addressed in a serious manner? First, let’s start with what not to do. Do not hold yet another economic/jobs summit where invited guests hear a politician speak (such as a president or a governor), followed by a panel discussion of how to change the environment. It may be great political theatre, but there is no reason to assume useful and actionable proposals will follow. The “invited guests” are not necessarily a good representation of business owners (small or otherwise) and the suggested solutions may be too general to change the hiring environment (such as forming yet another committee).
What is the answer? Very simply, begin with a random sample of businesses (for example, in Ohio) and ask them pertinent questions. Do you find skill shortages to be a problem? What are the specific skills that are lacking? Are there minimum skills levels that you can live with in the short-run if improved educational opportunities are available to address the inadequate skills in the longer term? Do present educational providers (high schools, joint vocational schools, community colleges, universities, etc.) have a curriculum-base that addresses these shortages and what changes are needed?
It is vital that a random sample is used to gather information, not a group of politically-connected, invited guests who may be thoroughly unrepresentative of Ohio’s business sector. Such research efforts can also be broken down by employment size (small, medium, large-scale businesses) and for various geographic regions within the state to establish where skill-deficits are most severe and where useful efforts are presently being utilized to rectify the problems.
So there it is and what a concept. Ask and listen. Government may not be very good at either, but nothing says they can’t change.
Dr. James Newton serves as chief economic advisor to Commerce National Bank and is an auxiliary faculty member in economics and statistics at OSU-Marion and OSU-Newark. Dr. Newton’s views do not necessarily reflect those of Commerce National Bank or OSU-Marion/Newark.