The Market that Needs a Market Maker

Do you wonder why there were an average of 8 million jobs posted online in the U.S. every month of last year, while 13 million people continued to search for work during the exact same months? The reason is that the U.S. — along with just about every other country — is suffering from a talent mismatch: employers cannot find individuals with the skills and capabilities they need, where and when they need them. The problem is not just one of location and timing, however. There is no mechanism that reliably signals which skills employers need so that individuals and schools can develop those skills. In other words, the relationship between supply and demand is tenuous at best. The job market simply doesn’t function the way a market should.

Experts have examined the problem from every angle and concluded that, if left unresolved, the skills mismatch will continue to eat away at U.S. competiveness. Research by the McKinsey Global Institute predictsthat by 2020, the U.S. will need to create 21 million new jobs to return to full employment but, should present trends continue, there will be 1.5 million too few college graduates to meet demand and that 5.9 million people will not have the education employers require and will therefore be unemployable. That’s why at ManpowerGroup we believe that investment ought to focus on youth, who are now entering the market and who most need training. Building their skills will help unleash their potential and start to close the widening gap. Still, while I cannot overstate the importance of training, it alone will not solve the labor market’s structural dysfunction.


Tammy Johns

http://blogs.hbr.org
TAMMY JOHNS
Tammy Johns is a senior vice president at ManpowerGroup, in charge of the company’s innovation and workforce solutions.

Do you wonder why there were an average of 8 million jobs posted online in the U.S. every month of last year, while 13 million people continued to search for work during the exact same months? The reason is that the U.S. — along with just about every other country — is suffering from a talent mismatch: employers cannot find individuals with the skills and capabilities they need, where and when they need them. The problem is not just one of location and timing, however. There is no mechanism that reliably signals which skills employers need so that individuals and schools can develop those skills. In other words, the relationship between supply and demand is tenuous at best. The job market simply doesn’t function the way a market should.

Experts have examined the problem from every angle and concluded that, if left unresolved, the skills mismatch will continue to eat away at U.S. competiveness. Research by the McKinsey Global Institute predictsthat by 2020, the U.S. will need to create 21 million new jobs to return to full employment but, should present trends continue, there will be 1.5 million too few college graduates to meet demand and that 5.9 million people will not have the education employers require and will therefore be unemployable. That’s why at ManpowerGroup we believe that investment ought to focus on youth, who are now entering the market and who most need training. Building their skills will help unleash their potential and start to close the widening gap. Still, while I cannot overstate the importance of training, it alone will not solve the labor market’s structural dysfunction.

How can the U.S. labor market become more efficient?

I propose that we take a cue from other types of markets and create a Labor Market Maker — a team that proactively manages supply and demand. The Labor Market Maker would be responsible for identifying the skills employers need — now and in the future — and signaling that information to individuals, so they can plan their careers, and schools, so they can plan their curricula.

The Labor Market Maker could tap into the established labor ecosystem — government labor reports, private-sector hiring reports, education and industry data, and so forth — to deeply analyze both evolving employer needs and the talent pipeline at the local, regional, and national levels. It would use this ongoing analysis to identify risks to fluidity and alert the market’s stakeholders — employers, schools, governments and individuals — so that they could adjust quickly. When the supply of people with a needed skill promises to tighten in one area of the country, the Labor Market Maker would direct employers to pockets of people with those skills in other areas and could even recommend alternative work models and technologies to get the work done. The Labor Market Maker would also alert schools that operate in the region where skills are in short supply so that they could adjust their class mix and direct students accordingly. Governments would incentivize schools, individuals, and employers as needed to keep the market in balance.

The Labor Market Maker would work most effectively if it were built as a public-private partnership — the kind of collaboration that prompted so much conversation at January’s World Economic Forum. The dysfunctional labor market is too big a problem for any one sector to address alone. It’s time to put some industrial strength and rigor around it.

To ensure rigor, we’d also need certain tools and processes: accurate supply and demand models, standards for describing and credentialing work, a mechanism for updating those credentials as work changes, rules of governance to assure quality and transparency, and regulations that make it easier for individuals to carry their benefits from job to job. Ultimately, we’ll need to look at ways of restructuring work to enable it to be accomplished in ways that fit evolving education and behaviors.

Here’s where we need to be imaginative: Why can’t multiple employers with differing production schedules share a workforce? Why can’t we break down work in new ways so that more employers can get access to individuals with specialized skills no matter where they’re located (think Talent Guilds or online communities like Top Coder and InnoCentive)? Really — why not?

This post is part of the HBR Insight Center on American Competitiveness.

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