Why the skills gap matters for industry—and America
In part 2 of our 3-part series examining the skills gap, and how the education system can fix it, we look at how the skills gap is impacting industries, and what effect the skills gap is having on America.
Table of contents
Where are the skills the U.S. needs for industry?
We have a demand and supply mismatch in this country. Our education system has become misaligned with the skills vital industries need to keep America running.
There are on average only 8 qualified candidates available per job post in the U.S., which is the lowest ratio recorded in Randstad Sourceright's recent Global In-Demand Skills report.
Organizations spend billions trying to figure out how to train, attract and retain talent—and yet are still struggling with skills gaps. But what if they have this investment all wrong? Could they invest in talent at an early age, while young people are still in the education system, and help unlock potential skill sets hidden in neglected, impoverished communities?
In this post we’ll explore what impact the skills gap is having on businesses across the U.S., and what the effects of those skills gaps could be—revealing that businesses are missing an opportunity to help with early workforce education.
The impacts of the skills gap on America
Jobs change along with technology. The invention of search engines may have had an impact on the demand for library services and encyclopedia production, but it also created the need for search engine specialists, who can earn very high incomes (and we’re even seeing that search engines may come under threat from AI technologies such as ChatGPT).
Many believe we’ve entered the fourth industrial revolution, or industry 4.0. This version of industry is adopting many emerging technologies, such as artificial intelligence, digital twin, blockchain and autonomous machinery. In manufacturing, “smart factories” run with far fewer human employees.
This new digital world is making lots of traditional jobs obsolete—but it’s also creating new digital problems that need good old soft skills to solve.
Let’s use cybersecurity as an example.
America now relies on digital data. That data in the wrong hands could literally grind the country to a halt if critical infrastructure is hit—and it’s happened already. A lot. In October 2022, Little Rock School District settled with hackers to resolve a ransomware attack. In May 2021, major gas provider, Colonial Pipeline, was hit with a ransomware attack that resulted in a $4.4 million dollar payment (in Bitcoin).
The FBI reported there were 649 cyber attacks on critical infrastructure in 2021 in its annual Internet Crime Report. That report is based on crimes reported to the Internet Crime Complaint Center—many more go unreported as organizations may try to protect their reputation by not disclosing an attack, which prevents the FBI from knowing just how much of a problem this is. The cybersecurity threat in the US became so fraught since the beginning of the Coronavirus pandemic that President Biden released an Executive Order in 2021 to improve the nation’s cybersecurity resilience.
Cybersecurity is a constantly moving target. Not just because hackers are always trying new ways to launch attacks. It’s also because of the digital transformation of organizations and workflows, and the different types of software and tools that organizations now rely on.
But the job of a cybersecurity leader is not just to prevent cyber attacks. It involves anticipating problems ahead. Cybersecurity is now also one of the most collaborative departments in a large company because every department uses software. Hackers know this and look to exploit holes wherever they can find them: passwords being shared over text message; sensitive data sent over personal email; marketing uses contractors to launch a new website; the CEO accidentally shares a screenshot of sensitive data on LinkedIn.Speaking of cybersecurity, check out our cyber discovery program
Cybersecurity leaders have to not only know about security flaws, they, perhaps more importantly, have to be able to educate their company about cybersecurity.
When they want to purchase a new cyber tool, they have to justify the expense to business leaders and boards.
And, when something goes wrong, they have to explain what happened to the CEO and possibly the press, too.
These soft skills are more necessary than ever because change happens faster than ever before.
In fact, looking at Fortune 500 companies over the years (these are the top companies in the world), one study showed that only 12% of companies that were on that list in 1955 were still on the list in 2016. In half a century, success—and the skills needed to achieve it—became unrecognizable.
The nature of work is constantly changing. When organizations create new systems or adopt new technologies, they also need a new set of hard skills to keep these systems running—the technical know-how. We can see this in the way hospitals have moved away from paper filing systems to cloud storage systems—those “cloud” systems have dramatically changed the way companies can use software, but the cloud requires a different set of skills than a traditional IT department.
When public systems such as government services and infrastructure become dependent on new technology they also become dependent on new hard skills—national security is tied to the level of hard skills available in the population. But actually, it’s still the soft skills that ultimately influence the future direction of a country.
Useful soft skills in the workplace:
Adaptability (ability to change course when necessary)
Collaboration is a key soft skill—but entry-level employees don't always have it
Why we need soft skills to solve the greatest problems
When a person or organization invents something that causes enough change that it filters all the way up into wider society, that’s called creative destruction. Creative destruction is “out with the old and in with the new” (think railways, cars, landlines). It is innovation: thinking outside the box to move society forward in unexpected ways.
There are many problems facing the world today that at times feel impossible to solve based on how things are done now. Infrastructure is in need of an overhaul. The climate crisis continues to produce record-breaking weather events that put further pressure on that creaking infrastructure. At a time of heightened tension between nations, digital defence of our systems is a greater issue than at any other time.
A failure to cultivate the skills needed for creative destruction, those same skills needed to be a cybersecurity leader, such as problem solving, team work and communication could lead to the old fashioned kind of destruction.
Looked at this way, the way we teach the necessary skills in the education system, the way we supply the skills needed for critical industries, is directly tied to the future of our country.
We need to help more young people be the creative destructors of tomorrow—not just to create more Fortune 500 companies, but because there are huge problems in society that need solving.
Unfortunately, neither businesses nor the education system are set up to do encourage young people to learn these foundational mindset skills. But they could be.
National problems caused by soft skills gaps:
Slow to adopt new technologies
Less likely to innovate and find creative solutions
Less able to communicate effectively with the public
Lack of a problem-solving mindset when faced with major issues (such as the climate crisis)
Poor collaboration between different offices/fields (this was cited as a major factor in why intelligence failed for the 9/11 attack on New York City)
Some new technologies change the entire way society works through "creative destruction". Is America cultivating enough creative destructors?
Why businesses are creating barriers to young people
It’s a good time to be an employee—if you’re experienced, that is.
Many business leaders report that those applying for entry-level postions don’t have the basic soft skills, such as communication, creativity, collaboration, and critical thinking, to be considered competent in the workplace, let alone become the creative destructors of tomorrow. And yet, organizations are in desperate need of entry-level workers to fill their talent shortfalls.
Organizations that didn’t respond compassionately to their employees’ needs during the pandemic pushed them towards the exit in what became known as the “Great Resignation”. But this was the launch of an economic boomerang: for every action there is an equal and opposite reaction, even in business, and the reaction to the “Great Resignation” was the “War for Talent”.
Savvy organizations realized they could attract all these new employees flooding the candidate pool by offering them the things they were denied in their previous position: flexibility, work-life balance, more meaningful contributions. The chance to grow and develop. More money and benefits.
The “War for Talent” means that in many ways it’s never been a better time to be an employee. But what about those entering the workforce for the first time?
If companies are struggling to meet wage demands of experienced, skilled workers, they can turn to new people entering the workforce, whose wage demands will be lower. The problem is that those new employees have to be trained to reach a level where they are trusted to perform their job to an acceptable level. Fearing this, organizations often tie themselves in another bind: entry-level job posts will often demand years of experience.
Alongside years of experience, job requirements usually require a bachelor degree. This is often the case in cybersecurity—and yet, many cybersecurity leaders and employees insist that a computer science degree is not necessary as there are other qualifications and pathways that can qualify a candidate. There is also no guarantee that a computer science graduate will have the soft skills we’ve discussed, either.Read our piece on why student debt might not be worth the price of college admission
Employers of all levels of skilled work are asking for impossibly experienced employees to emerge from an education system that is not designed to meet the needs of industry. It won’t just happen.
Industry leaders need to do something different. They need to offer out a helping hand to the education system and play an active role in cultivating the skills they know they need.
Barriers remain, but it’s possible that by matching industry needs with the education system, cultivating both the right hard and soft skills, we can fix the U.S. skills gap and help break generational cycles of poverty by opening doors to more young people. The question is how?
We’ll find out in part 3.
Part 3 will conclude our series on the skills gap and suggest ways education and industry can work together to help close America's skills gap.