Blaming the Unemployed: The Skills Gap

Blaming unemployed workers for their situation is the great American political-economic pastime. This was seen most recently in the debate over the extension of unemployment benefits (an issue covered in a previous blog posting). Another way to blame the unemployed is to argue that joblessness is due to a “skills gap”. This suggests that if workers just had the right skill set they would find a job. Like the argument that unemployment benefits are keeping people unemployed, this argument is also bogus.

Conservative arguments tend to focus primarily on the "supply-side" of the labor market. That is, outcomes for workers (in this case unemployment) are the result of the individual characteristics (skills) or personal decisions (collecting benefits rather than getting a job) of those that would "supply" labor to the market. The "demand-side" -- the behavior and decisions of employers (not hiring because aggregate demand is depressed) -- is often ignored.

Heidi Shierholz of the Economic Policy Institute has a nice piece with some interesting data debunking the skills gap thesis. As she notes:

Despite the clear consensus among researchers that the unambiguous problem is a shortfall of aggregate demand, there is a strong public narrative that today’s jobs recovery is weak because workers don’t have the right skills. Why? One reason may be psychological – it’s easier to blame workers for lack of skills rather than face the fact that millions cannot find work no matter what they do because the jobs simply are not there. That in turn makes it easy for stories and anecdotes about employers who cannot find workers with the skills they need to circulate unscrutinized.

Another reason is political, since the cause of high unemployment is vitally important for policy. If high unemployment is due to workers not having the right skills, then the correct policy prescription is to focus on education and training, and macroeconomic policy to boost aggregate demand will not reduce unemployment. Policymakers and commentators who are against fiscal stimulus have a strong incentive to accept and propagate the myth that today’s high unemployment is because workers lack the right skills.


One of the several types of evidence presented is the table below showing unemplyment rates across all occupational categories: