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.

Posted by Jim Newton on Jul 31 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.