Want to add about $100 billion more annually to the US economy and lower the unemployment rate by more than a percentage point—all without spending a dime of taxpayer money?
Fill America’s more than 3.2 million open jobs.
That’s the hidden story of America’s lousy jobs picture. Though there are more than 14 million unemployed, there are also 3.2 million job openings in America
While still just one opening for more than every four people looking for work, it begs the question of why there are any job openings at all given the huge number of unemployed.
The answer is likely a combination of a few factors: long-term unemployment killing skills, a lousy housing market hurting labor mobility—and though it’s extremely unpopular to say, extended unemployment benefits likely having an impact on at least some folks’ choices in what jobs they’ll agree to take and when.
Housing and the benefits argument have their own debates. What’s more vexing is why America seems to be falling behind in matching skills to labor. Over the past few weeks a number of CEOs have appeared on CNBC and told the same story: they have job openings they can’t fill because they’re unable to find workers whose skills match the job.
Siemens’ Peter Solmssen says he has3,000 job openings in America he’s having trouble filling.
Cummins CEO Tim Solso told CNBC back in June that he can’t find skilled workers for his manufacturing plants.
When we askedAir Power Systems CEO Larry Mocha if he was having trouble finding skilled workers he responded “that’s the biggest problem we’ve got.”
Those complaints were echoed by a number of executives at a recent conference CNBC attended.
Matching talent to position is notoriously difficult in high-tech fields. Yet these execs aren’t talking tech. They’re talking about manufacturing workers, trades people and truck drivers. The latest government figures show that the number of job openings in manufacturing rose from last year and the number of open construction jobs as of July is up 267% from July of last year.
Job openings in trade, transportation and utilities went from 416,000 in July of 2010 to 778,000 this July. Listen to the radio and you can’t go an hour without hearing an ad for companies looking for truck drivers.
This phenomenon isn’t just relegated to this downturn either. Government data shows anywhere from 2.4 to 4 million open jobs nearly every month going back at least a decade.
With an average worker contributing about $45,000 per year to GDP, just filling one third of job openings each year would have a massive positive impact on the economy, not only through increased economic output but the added purchasing power of the newly employed would help create an upward spiral of added consumer demand.
As D.C. is learning, filling jobs is tough. And though the White House aggressively talked up job training as part of the stimulus plan, actually spending on training programs ended up as just a tiny percentage of the final $787 billion tally.
Government can’t or won’t get this done effectively. Corporate America must step up.
As the Siemens’ Solmssen said in our interview, he’s going to be pushing his own internal training programs. Other companies must follow this example. Instead of relying on government to do it, companies should spend more of the billions they have on the books to build for smart, efficient programs to help train and retrain the workers of tomorrow.
Larger companies could even help the smaller ones match talent to position by creating a kind of ‘training job bank,’ financed by partnerships among the largest consumer companies. Larger companies likely understand that the more people are working, the more money they’ll have to spend on their products and it’s in everyone’s best interest to get more people back to work even if those workers don’t work for them.
My colleague Herb Greenberg calls it simply “train, don’t complain.”
The other fix must come from the government: keep millions of teenagers from dropping out of high school. Each year more than 1 million kids drop out, effectively destroying their own economic prospects and resulting in a massive drag on America’s economy. Not only do dropouts generally lack the skills to compete for even the most basic job, they also tend to cost society in other ways over their lifetimes.
The Alliance for Excellent Education highlights the problem. It estimates that if the students who dropped out of the high school class of 2007 had graduated, it would add $329 billion to the U.S. economy over their lifetimes.
Multiplying that $300 billion by a million-plus dropouts per year over just a few years quickly gets us to that magic $1 trillion dollar figure added to American GDP. Even simply cutting the number of dropouts in half can add significantly to the economy and lower unemployment. The jobless rate for dropouts is more than 4% more than those with a high-school diploma.
Corporate America needs to spend to train the workers it needs.
Washington needs to make sure those workers have the basic educational building block to ensure they can be trained.
Everyone who wants a job should have one, and it’s past the time for business and the Beltway to stop battling and get serious about filling a few of those three million open jobs.