The Federal Reserve Bank of San Francisco (FRBSF) has been examining how the current jobs recovery is affected by a perceived mismatch between jobseekers’ skills and the needs of employers. For Federal Reserve policymakers, skill mismatches affect how quickly the labor market can recover from a recession as well as the rate of unemployment the economy can sustain.

FRBSF - Economic Letter

In November of 2011, the FRBSF held a conference, “Creating and Employing a Skilled Work Force: Challenges and Opportunities”, to discuss the relationship between the skills unemployed workers offer and current job openings. Summarized for the public on April 30th, the findings suggest that good jobs are still available in growing sectors for workers of all skill levels.

This concern was reportedly taken up due to the fact that since 2010, job openings have risen faster than unemployment has fallen.

Academics and workforce development professionals were invited to weigh in on the subject. According to the authors of the FRBSF’s Economic Letter summary, skill sets are always dynamic. Any current skill mismatch “has been limited and is likely to dissipate.” More importantly, attending experts asserted that sectors experiencing growth would likely create good jobs for workers whom our educational system can help equip with relevant skills. Hence, what we are experiencing is part of the normal adjustments required by shrinking and growing economic sectors.

The four papers presented addressed a wide range of challenges faced by the job recovery: skill mismatches versus geographical mismatches related to a depressed housing market that has restricted workers’ ability to relocate; the growing scarcity of high-paying jobs that do not require advanced skills and the increased importance of ‘soft’ job skills, such as the ability to communicate affectively; the rise of the modern retailer and the jobs being created in the retail sector that offer high wages to supervisors and managers willing to acquire additional skills; and the role community colleges can play in counseling students about earning prospects while also expanding programs in high-return fields.

Workforce recovery experts participated in a roundtable discussion. Again, the consensus was that no new sources of skill mismatch have emerged but that low-skilled urban workers could benefit from access to specifically designed training programs. They noted the crucial relationship between community colleges and local business communities as well as the importance of placing low-skilled workers in stable jobs in specific industries opposed to simply seeking job openings across the labor market.

The overall conclusion published in the conference summary indicated that the “Great Recession” has not accelerated any labor market changes. Minimal skill mismatches that have developed in recent years are limited and will be corrected in the short term. While community colleges and targeted training programs can help integrate low-skilled workers, concerns of a greater systemic problem may have been overblown.

The Federal Reserve Bank of San Francisco (FRBSF) has been working to better understand how the current pace of the jobs recovery is affected by the mismatch between jobseekers’ skills and the needs of the employer. For Federal Reserve policymakers, skill mismatches will affect how quickly the labor market can recover from a recession, the rate of unemployment that the economy can sustain.1

To read the full report on Workers Skills and the Job Quality please visit Federal Reserve Bank of San Francisco (FRBSF).