What manufacturing skills gap?: Industry Trends & Analysis

Many reasons are given, including the bad image of manufacturing, lack of training in high schools and competition from other economic sectors. All of these reasons seem plausible.

But now comes a study by The Boston Consulting Group, a management consulting firm, that seems to throw cold water on the idea of a serious skills gap. According to the authors, the skills gap in U.S. manufacturing is more limited than many believe. The study is part of BCG’s ongoing “Made in America, Again” study, which examines the changing economics of manufacturing.

BCG estimates that the shortage of highly skilled manufacturing workers in the U.S. ranges from 80,000 to 100,000, which is less than 8 percent of the 1.4 million highly skilled U.S. manufacturing workers. BCG claims that only seven states, including six in the bottom quartile of state manufacturing output, show a significant or severe skills gap. The shortages are local—not national—in nature, according to the report.

BCG arrived at its conclusions using wage data and manufacturing-job vacancy rates, identifying areas where companies have had to bid up labor rates to find workers. (For more information on the study and its methodology, visit www.bcg.com.)

A “genuine” skills gap would have pushed average annual wage growth 3 percentage points above the inflation rate over the past 5 years, but manufacturing wages instead have grown roughly in line with a below-3 percent inflation rate. In other words, because manufacturing is growing, companies are producing more with fewer workers. While companies could use more skilled workers, they don’t really need them and won’t bust their budgets to get them.