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American manufacturers seeing skilled worker shortfall December 6, 2006

Posted by Tom in Education, Human Resources, Workforce.

This USA Today article, published today, correlates almost exactly with my research during the planning phase of the Northeast Indiana Strategic Skills Initiative. :

Much has been made of the loss of millions of manufacturing jobs in the USA in recent years.

But manufacturers, regardless of size, specialty or location, across the USA are reporting a dire shortage of skilled workers: people such as welders, electricians or machinists with a craft that goes beyond pushing buttons or stacking boxes but does not require a degree.

In a survey of 800 manufacturers conducted by the National Association of Manufacturers (NAM) last year, more than 80% said they were experiencing a shortage of skilled workers. In October, manufacturers surveyed by the Federal Reserve Bank of Philadelphia said “finding qualified workers” was their biggest business problem.

There were 10.2 million manufacturing production workers in the USA in October, down 19% from 10 years ago and 28% fewer than 40 years ago.

The percentage of all workers in the USA employed in manufacturing has been declining for 50 years. In October, 10% of the U.S. workforce was employed in the manufacturing sector, an all-time low. In 1946, one out of every three workers had jobs in manufacturing.

But the loss of jobs doesn’t mean that manufacturing is disappearing from the USA. U.S. manufacturing production last year totaled $1.5 trillion, or 12% of gross domestic product, the broadest measure of economic activity within U.S. borders.

The sector has become more specialized, with a greater focus on technology. With a boom in productivity in manufacturing, firms are able to produce more with fewer workers.

Innovation in the manufacturing sector means that the jobs require greater skills than ever before. According to an analysis by economists Richard Deitz and James Orr at the Federal Reserve Bank of New York, employment in high-skilled manufacturing jobs rose 37%, or by 1.2 million jobs, from 1983 to 2002. At the same time, low-skilled factory jobs dropped 25%, or by approximately 2 million workers. [Emphasis added]

It’s a very good article, adding a human perspective to the stats that I excerpted. The National Association of Manufacturers report is linked here (PDF). The Federal Reserve Bank of Philadelphia’s report is here (PDF). The Federal Reserve Bank of New York’s research is linked here.

Side note: The additional link inserted on the USA Today article page to the story about Wyoming’s efforts to recruit Michigan’s downsized workforce is fascinating and, for this Midwesterner, somewhat sad. Michigan’s fortunes (and, to a lesser degree, the rest of the Great Lakes states) rise and fall with the domestic auto industry…and right now it’s not doing well. If it’s true that the Big 3’s legacy costs like pensions and health insurance are weighing them down, it makes one wonder if Walter Reuther was on to something.



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