News From Terre Haute, Indiana

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February 7, 2013

MARK BENNETT: Indiana’s ‘skills gap’

Issue of jobs going unfilled contrasts with state’s claim as ‘job creation’ leader

TERRE HAUTE — A problem lasting decades ceases to be a “problem.” By then, the situation becomes “part of the culture.”

In Indiana, the “skills gap” occupies a nearly equal niche in Hoosier culture as basketball, mushroom hunting and the Indy 500, with a less entertaining outcome.

Thirteen years ago, a study of 3,700 businesses in the state by the Indiana Fiscal Policy Institute concluded “there is a quantity and quality shortage of skilled workers in Indiana.” On Tuesday morning, noted Indiana business commentator Gerry Dick gave the same assessment of the current workforce situation. A human resources manager at a Fort Wayne manufacturing company — ready to hire — spotted 150 job applicants who appeared qualified, based on their resumes, Dick explained. Only one of those people passed the skills tests and drug screening.

“There are other companies that talk about similar things,” he said at the Terre Haute 2013 Groundhog Day Economic Forecast at Indiana State University. “A lot of it’s centered in manufacturing, but it’s across the board.”

That Fiscal Policy Institute study in 2000 found that 63 percent of Indiana employers needed more workers with two-year college degrees, and 71 percent of firms needed more employees with four-year degrees.

Today, likewise, nearly one-third of the Hoosier workforce — 930,000 people — lack basic skills to perform 21st-century jobs, according to the Indiana Chamber of Commerce. The predicament

has earned its own nickname, the

“skills gap.”

“Indiana: Home of the Skills Gap” probably wouldn’t get the Legislature’s OK as the latest specialty license-plate slogan. Yet, it’s got a history here. And a future, unless a remedy arrives.

From the corporate view, Indiana earns high marks for its “job creation” business climate, where taxes and median incomes rank among the nation’s lowest. (Workers’ viewpoints may, obviously, differ.)

Despite that biz-friendly environment, the state’s 8.2-percent unemployment rate remains higher than the U.S. rate of 7.8. How can that be?

Available jobs and the qualifications of available workers don’t match as often as they should. Two-thirds of Indiana manufacturers see a “moderate to severe shortage” of ready workers. Of those employers, 53 percent think the shortage will worsen in three years. Because Indiana relies on manufacturing for employment more so than any other state, comprising 25 percent of the gross state product, that’s kind of a big deal.

The word “crisis” has been used for lesser concerns.

Those statistics were cited in what was hailed as a “rare joint announcement” by Statehouse Republicans and Democrats on a proposed bill to form a 15-member workforce development panel called the Indiana Career Council. (Things must be serious if the two parties cooperate.) “We must make every effort to align our job training and educational efforts to available and prospective Hoosier jobs,” House Speaker Brian Bosma said in the news release.

The mismatch is not one-dimensional. ISU professor and Groundhog Day economic forecaster Bob Guell pointed out the high numbers of college graduates who can’t find work in their chosen fields and are saddled with mortgage-sized student-loan debt. “At the same time we have a skills gap, we have a disaster impending on these people we do graduate in their debt load,” he said.

The new Career Council faces a tall, important task. Not enough Hoosiers have earned technical training certificates, associate degrees or bachelor’s degrees. Many of those who have completed college and want to live in Indiana can’t put their degrees to use.

Ball State University has researched the problem and later this month will release a study, “Labor Markets After the Great Recession.” That historic downturn cemented a trend that emerged in the previous two recessions (1990-91 and 2001). In the old days, technology changed gradually enough that workers could remain in jobs, even as they became less productive, explained Michael Hicks, director of the Ball State Center for Business and Economic Research. The Great Recession obliterated that concept. The U.S. economy shed 8 million jobs in 18 months “in occupations that will never come back,” Hicks said.

Other states struggle, too. Indiana shoulders some distinct workforce dilemmas, though. A quarter of its productivity comes from manufacturing, where occupations are highly susceptible to dramatic technological changes, like those of the last recession, Hicks explained in a telephone interview Wednesday from Muncie. Employers may reject some applicants because of high-risk health behaviors, ranging from Hoosier’s high levels of habitual smoking and obesity to failing a drug screening, Hicks added.

Thousands simply did not complete high school with adequate skills to hold down a long-term career. Of the unemployed people included in Indiana’s 8.2-percent jobless rate, 2 percent have a “major skills mismatch” in the current market, the Ball State study found.

The problem doesn’t even end there, though.

“It’s not just, ‘What do you do with the incumbent labor force?’” Hicks said. “It’s, ‘What do you do to make your community look attractive to prospective businesses and workers?’” Quality-of-life amenities in Indiana also determine whether outside businesses actually locate here.

The Speedway, hoops and mushrooms are a plus.

Tribune-Star columnist Mark Bennett can be reached at 812-231-4377 or mark.bennett@tribstar.com.

 

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