Skills gap highlights the need for workforce development
For the first time since the federal government began tracking the data in 2000, in March and April 2018, the number of job openings exceeded the number of job seekers. Although this statistic illustrates the strength of the U.S. economy, it also presents challenges to employers, including lumber dealers, in finding job candidates with the right qualifications to fill available positions. Simply put, there is a growing “skills gap” between the skills eligible employees have and the skills that employers need.
As the housing industry gains momentum and demand for workers increases, labor shortages are quickly rising on the list of the top impediments to continued growth in residential construction. Economists at the National Association of Home Builders (NAHB) expect the construction sector net hiring to continue in 2018 as the residential construction market expands. Builders are using automation more to help address the challenge, but there is still a need to address the labor deficit through training and development programs.
The employment outlook provides an interesting public policy challenge for lawmakers. Labor force participation is near a record low and the unemployment rate stands at 4.0%. Moreover, as the retirement of baby boomers continues, it is likely that the skills gap will get worse before it gets better as many skilled workers reach retirement age. The prospect of a long-term skills gap is a headwind for the economy and threatens the nation’s economic future.
As the gap between the number of jobs posted and the number of people hired grows, policymakers must examine ways to help individuals gain the knowledge and skills needed to compete for in-demand jobs. In recent years, Congress has enacted reforms to improve K-12 education and modernize the nation’s workforce development system.
Last year, the House of Representatives approved the Strengthening Career and Technical Education for the 21st Century Act (H.R. 2353) by a voice vote. It reauthorizes the Carl D. Perkins Career and Technical Education Act, which since 1984 has provided federal support to state and local career and technical education, or CTE, programs.
The bipartisan legislation would help more Americans—especially young Americans—enter the workforce with the knowledge and skills they need to compete for goodpaying, in-demand jobs in industries critical to the nation’s economy.
After a lack of progress on workforce development legislation, the Senate has finally started to move its own version. On June 26, the Senate Committee on Health, Education, Labor, and Pensions (HELP) approved its own workforce development bill.
The full Senate still needs to vote on the bill. Assuming the Senate does approve a bill reauthorizing the Perkins Act; it would still need to be reconciled with the House version passed last year.
CTE programs help prepare high school and community college students with the knowledge and hands-on experience necessary for jobs in a broad range of industries. However, the law supporting these efforts has not been updated in more than a decade, and it no longer reflects the realities and challenges facing students and workers.
The House and Senate bills aim to strengthen CTE programs in several ways. First, it empowers state and community leaders by simplifying the application process for states and localities seeking funding for CTE programs. Second, it seeks to build better community partnerships encouraging stronger engagement with employers. Third, it increases transparency and accountability by streamlining performance measurements for CTE programs. And fourth, it limits federal intervention in the operation of CTE programs.
Even with increased federal support for CTE programs, solutions must be tailored to meet the needs of specific industries. For example, construction and retail are two sectors most affected by the skills gap and may need more robust plans to address labor shortages. Businesses should keep in mind that workforce development programs that work in one industry may not work well in another industry.
Companies can address the skills gap in part by evaluating their employee retention policies as well as their recruitment practices. That can help mitigate some of the challenges posed by the current labor shortage.
NLBMDA supports federal investment and support of CTE programs to help close the skills gap, and has joined a multi-industry effort pushing for passage of workforce development legislation. Reauthorizing the Perkins Act would not only provide additional postsecondary pathways to individuals just entering the workforce, but also give experienced workers new skills needed to meet the needs of employers.