August 8, 2011
Wide gap in skills leaves many unemployed, many open jobs
Seattle Times business reporter
At age 46, with three grown kids and nearly three decades in sales behind him, Chris Mugler of Auburn is two places he thought he'd never be: unemployed and back in school.
Four days a week, Mugler is sweating through college math, one of the prerequisites for the computer-networking program he plans to start this fall. "The algebra class I'm taking right now is kicking my butt," he said, so he's asked a recent high-school grad to tutor him.
Mugler knows he needs a skills upgrade: His high-school diploma and sales experience, he says, are no longer enough to enable him to earn a middle-class income.
"Sales is real feast or famine," he said. "I needed something that was going to be a steady income stream, and that was going to be around for a while."
Like many people idled by the Great Recession and Not-so-Great Recovery, Mugler has run up against a hard fact: The skills employers want don't line up with the skills most unemployed people possess.
Most of the jobs eliminated statewide have been low- to moderate-skilled — clerical and construction workers, waiters and warehousemen — while new jobs overwhelmingly demand advanced technical skills or specialized training.
An International Monetary Fund (IMF) study estimated that between 2007 and 2010, the skill level of Washington's work force (measured mainly by years of education) got more out of whack with the available jobs than in any other state except Delaware.
That mismatch helps explain why thousands of jobs in Washington can go unfilled at the same time more than 322,000 state residents are out of work — though economists disagree on just how big a factor it is.
Unemployment is always fed by a combination of structural forces, such as skills mismatches, and by cyclical drop-offs in demand as the economy slows, said Thomas Root, a finance professor at Drake University in Des Moines, Iowa.
This time around, he said, the structural part "has been a bigger and more brutal piece than it used to be."
Through with sales
Just a few years ago, Mugler was making good money in sales. For eight years he sold windows for CertainTeed; after the housing crash collapsed much of that business, he was hired by Orkin to market its commercial pest-control services. In 2009, just before he was laid off, Mugler was earning about $60,000 a year.
Now, after 19 months with no full-time job, Mugler's through with sales. He's always had a hobbyist's interest in building and tinkering with computers, and he figured network administration and security would be a reasonably stable and well-paying field.
He's probably on the right track. The federal Bureau of Labor Statistics projects that "network systems and data communications analysts" will be the second-fastest-growing occupation over the next decade.
In June, more than 7,500 openings for advanced computer-related jobs in King, Snohomish, Pierce and Kitsap counties were listed on the state's WorkSource database — more than a quarter of all 27,000-plus metro-area openings.
But those jobs require years of training and, ideally, more years of experience. That leaves companies with jobs to fill now in something of a bind.
Take F5 Networks, a Seattle-based company that makes networking software and other technologies to manage and secure Internet traffic. F5 has dozens of well-paying jobs open: Salaries for entry-level software engineers can be $60,000 or more, while experienced software engineers and test engineers make well over $100,000, plus bonuses.
But F5 isn't being flooded with applicants for those jobs.
"Some of them literally stay open for three-plus months before we find someone with the right kind of background," said Rich James, F5's director of staffing. "We value people who have experience with Internet infrastructure technologies, and the supply of people with that experience is really limited."
F5 has tried to reorganize its work groups to make room for people with less experience, so they can learn on the job. It's also tripled the number of interns it hires, hoping that will give it an edge in hiring top computer-science grads.
But given the "cutthroat" competition locally for tech talent, James said, F5 also has stepped up its recruiting from outside the region: One of every five software engineers at the company's local operations is from someplace else.
The picture is similar at Isilon, a Seattle-based data-storage company that was bought last year by EMC. Vice President Gwen Weld said Isilon plans to boost its local work force from about 275 now to 500 by the end of the year, mostly by adding technical jobs.
But Isilon wants experienced people, so it's mainly recruiting among people who are already employed. The challenge, Weld said, is "finding people out there we can shake loose."
Even product support, a less-technical job, requires a four-year college degree and some experience, she said.
It's not just technology where high skills and experience requirements stymie many job-seekers. More than 1,300 local openings for registered nurses, for instance, were posted in June on the WorkSource site. But completing a college nursing program is just the first step to landing many of those spots.
"Even after getting the license, a nurse requires a lot of additional training in the hospital setting," said Dale Harper, director of employment for Franciscan Health System, a hospital group in the south Puget Sound area.
Skills don't transfer
Between August 2008 and February 2010, Washington lost 205,000 payroll jobs. It's regained just 59,200 since — one for every 3.5 lost jobs.
Some jobs are fairly obvious casualties of the housing bust: construction laborers, carpenters, loan officers. Others are tied to the general falloff in economic activity (freight handlers, cashiers, waiters) or are especially vulnerable to outsourcing or automation (office clerks, customer-service reps).
But what most have in common is that their skills aren't readily transferable to the technology, health care and other industries that are actively adding jobs.
The IMF study found that Washington's mismatch level soared after the financial collapse, as it did in most other states. But unlike most states, the skills mismatch here continued to rise even after the recession's formal end.
Skills mismatches have contributed to higher unemployment across the country. So has the sluggish housing market, which makes it harder for people to move to find work.
Again, though, the impact has been harder here. The IMF researchers said those two structural factors have raised Washington's "normal" rate of unemployment by 2.3 percentage points — the seventh-biggest increase among the 50 states.
Root, the Drake finance professor, noted that while unemployment has risen among all educational groups, it's risen the most among those with the least schooling. Nationally in July, unemployment ranged from 4.3 percent for people with a bachelor's degree or higher, to 15 percent for people without a high-school diploma.
"That raises the question of whether these lower-skilled groups have a way back into the work force," he said.
But Peter Diamond, a Nobel Prize-winning economist at MIT, doubts mismatches have much to do with the current jobs situation.
"Anytime we have an extended period of high unemployment, there will be people saying it's structural rather than the level of aggregate demand," Diamond said. "I remember hearing it back in the 1960s."
When unemployment is high and demand is slack, businesses can afford to wait for just the right applicant with just the right combination of skills and experience. Also, he said, extended jobless benefits may have made some people less aggressive in looking for work.
Diamond also noted that much hiring has been in the health and education sectors, which are dominated by universities, hospitals and other large institutions that typically take awhile to fill vacancies. Small businesses, which historically generate lots of new jobs and can fill them quickly, have found it difficult to get financing even when they've wanted to expand. And the heavy job losses in construction may be skewing the overall jobs picture.
The debate is more than academic. If the current high unemployment is mainly cyclical, policymakers could try to boost demand by cutting taxes, raising government spending or making money cheaper and easier to borrow, depending on one's preference.
But if structural shifts in the economy are keeping job seekers and employers apart, that implies that more investment in education and retraining is needed to bring them together again.
While economists and policymakers argue, Chris Mugler is hoping he'll be able to finish his associate degree before his unemployment benefits run out. (His two-year program at Highline Community College is being paid for through an Employment Security Department retraining program.)
He also worries that, just as he's starting the next phase of his career, he may already be behind the curve. The skills bar in technology, he knows, gets higher every year.
"That's the frustrating thing for me," he said. "This is a field I want to break into, but now I'm wondering if my AA degree is going to be enough to get me a good job."
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