The Myth of a Talent Shortage

We have been bombarded for a decade with news reports, articles, stories, and books about the looming talent shortage about to overwhelm our industries, businesses, and economies.

Taken at face value and looking at traditional work styles and jobs, there is some validity to these stories. Human resources people, recruiters, and some business people will affirm the shortage anecdotally. But it’s hard to find real examples and real numbers.

Certainly, anyone trying to hire a surgeon in North Dakota, a Starbucks barista in Oklahoma, or a stock broker in Alaska may have to look long and hard. But if you are looking for these folks in urban areas or places with significant populations, the number of qualified applicants increases substantially.

After all, it has never been easy to attract skilled professionals to rural areas, and it has become even more difficult as people leave the country for large cities. Rural parts of the world are emptying into cities — especially those located in coastal areas or those with significant educational and cultural activities.

Richard Florida’s books on the Creative Class point out in stark numbers and colorful graphs and charts the shifts in population away from some less desirable (and often semi-rural) cities and toward others that offer the lifestyle and engaging employment desired by the emerging creative class.

Sure, thousands of baby boomers are poised to retire over the next decade or two and, yes, there are somewhat fewer young folks behind them; but is that really going to be a problem? And will the number of boomers who choose to retire reach the predicted numbers?

Studies I have seen indicate that boomers will most likely defer retirement for some time because they have not saved enough to make retirement possible or because they remain healthy and want to continue working.

We will most likely also need fewer people to reach the same productivity levels of today.

The nature of work has changed dramatically. Today only about 2% of Americans grow food or work on farms. This is truly amazing considering the amount of food produced and exported. Farms have grown much larger and are more automated. Completely automated, GPS-guided tractors cultivate fields that used to take a dozen men and several dozen horses to plow.

I was recently at a copper mine in Chile where GPS-guided ore trucks will soon obsolete the need for drivers. The widespread adoption of the Internet and its associated applications has simplified many work processes and will continue to reduce the number of people needed in many areas of the economy.

Manufacturing, too, has moved to automation or outsourcing. It was the 20th century’s economic backbone and required a huge supply of raw manpower. For the most part, workers needed to be equipped with little more than a high school education and a willingness to do hard physical labor.

But today only about 11% of workers remain employed in manufacturing and those workers are more skilled and experienced than at any other time in our history. Automation and outsourcing have replaced thousands of semiskilled jobs and the need for raw manpower has reached very close to zero.

So it is unlikely that there is any broad-based shortage of traditional talent or any need for drastic measures. Any shortages that may exist can be attributed to geographical location, the nature of the work, and the pay scale.

I am a believer that when the time is right, the solution appears. If organizations were really feeling the pain of shortages, they would have started training programs, raised wages, and lobbied educational institutions to change curricula. None of those things have happened on a wide scale.

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And many of the solutions are expensive and socially or politically inconvenient. For example, as it becomes more and more difficult to find people willing to work for relatively low wages, retail stores are reducing the number of sales associates. They have installed systems that let customers do their own check out. And, without much additional trouble, they could install scanners that would use bar codes to bring up information about a product and answer customer’s questions. I think it is likely that we will see a “black box” retail establishment at some point, but no one would accept it today.

There are hundreds of other areas where automation could reduce the need for or replace humans if the costs were justifiable and it was socially acceptable.

Business has a responsibility to ensure its supply chain of talent and has gradually been putting programs into place to do this. Over the past decade there has been increased interest in internal leadership development programs, internships, and similar development activities. Companies are investing in diversity programs, training, college recruiting, and retention activities to ensure the supply chain.

The challenge for government is to find ways to partner with business to retrain and re-skill thousands of people who are no longer needed in traditional occupations. Educational systems from high school to university are not meeting the needs of our economy and make false promises to students by implying that they will be employable after graduation.

Recruiters know that neither a high school diploma nor a college degree is enough to ensure a job offer. Most occupations require extensive training and take years to master, but we have not built bridges between education and work.

For most people, figuring out how to get a job with no experience is the most significant challenge they face. This should force organizations to build bridges, which could be internships, short-term work assignments, part-time work, apprenticeships, and so forth. This means we need to lobby for changes in human resource policies and for changes in employment laws that limit their ability to build these bridges.

Our current employment system is based on the assumptions that workers need protection, are victims, are not able to work or make decisions for themselves. We need to wake up to the fact that the workers we need and want to hire are making choices every day about who to work for and why. They are opting for employers that provide training, ongoing development, personal growth opportunities, and flexibility.

The concept of a talent shortage is based on projections that assume tomorrow will look like today. It is also largely based on a mindset that arose out the manufacturing era when masses of unskilled, compliant labor was needed.

We now need fewer, but highly skilled, creative and independent people to propel us forward. This is the real talent shortage we face.

Kevin Wheeler is a globally known speaker, author, futurist, and consultant in talent management, human capital acquisition and learning & development. He has founded a number of organizations including the Future of Talent Institute, Global Learning Resources, Inc. and the Australasian Talent Conference, Ltd. He hosts Future of Talent Retreats in the U.S., Europe, and Australia. He writes frequently on LinkedIn, is a columnist for ERE.net, keynotes, and speaks at conferences and events globally, and advises firms on talent strategy. He has authored two books and hundreds of articles and white papers. He has a new book on recruiting that will be out in late summer of 2016. Prior to his current work, he had a 20+year corporate career in several San Francisco area tech and financial service firms. He has also been on the faculty of San Francisco State University and the University of San Francisco. He can be reached at kwheeler@futureoftalent.org.

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14 Comments on “The Myth of a Talent Shortage

  1. Kevin,

    Normally I enjoy and get a lot of value out of your writing. This one frustrates me because – even if your last sentence clears up the mess – it propogates an unbelievably common abuse of the English language.

    Grrr….. Again, the confusion of Talent with Skills.

    According to Princeton:

    Talent = a person who possesses unusual innate ability in some field or activity

    Skill = ability to produce solutions in some problem domain

    We have always had a Talent shortage because “people who possess unusual innate ability” are by definition rare. Once they are not rare, it is no longer Talent….

    Skills shortages come and ago. We all know that technology marches relentlessly forward and the highly sought Cobol programmer of 1980 has little employ today. Your article goes to great length to state the obvious.

    Best Regards,

    Edward Caulfield

  2. Great article, obvious or not.

    I do wonder a bit about the urban/rural issue. I can’t cite statistics, but it seems like I’ve heard some of the fastest growing and most popular areas are smaller cities that didn’t even used to really qualify to be called cities. Prime examples being some college towns, like Austin, TX; Chapel Hill, NC; or my home town of Bloomington, IN.

    These new cities offer attractive lifestyles for professionals and serve large rural populations.

    Much of the allure of the biggest cities is what I call the “Chinese menu” illusion. A Chinese restaurant with 150 items on the menu may seem better than one with 15, though the 15 are the only ones most non-Asians will eat.

    So a city with 10,000 restaurants, bars, etc. seems better than one with 1,000, though nobody eats at 10,000 restaurants or drinks at 10,000 bars (right?).

    Some people like to be assured they have overwhelming numbers of choices rather than be assured the quality of the choices is good, if the quantity is less.

    In recruiting for these less popular areas, it would seem important to learn as much as possible about the benefits of living there and be able to sell it effectively.

    Find out what people value most in big-city amenities and be able to pitch the local equivalents. E.g., “so the opera’s not the Met; there is a local opera theater company with x productions a year, plus y traveling productions.”

    George’s Employment Blawg
    http://www.employmentblawg.com

  3. Good Comments. In recessions or econ downturns, there are more people seeking employment because of layoffs. That doesn’t mean there isn’t a talent shortage. In recessions people are very hesitant to change, move or take perceived risks in employment. You don’t refer to any stats – however, it is the stats that are behind the shortage. Simply, there are not enough Gen XYZ to replace the # retiring. Additionally, there are fewer Gen XYZ entering fields of innovation. Don’t forget that early entry talent is getting priced out of big cities due to cost of living and besides Gen XYZ is looking for higher quality of life. Take a good look at the numbers – you may not be feeling the freeze yet, but it is clearly on the radar!

  4. Your article doesn’t address the shortage of engineers available to aerospace and defense work. Here the shortage is real. The cleared space will feel the talent/skills shortage!

  5. Bingo Kevin! BINGO!

    Finally someone is putting it out there with facts and a little opinion.

    You said:
    “I am a believer that when the time is right, the solution appears. If organizations were really feeling the pain of shortages, they would have started training programs, raised wages, and lobbied educational institutions to change curricula. None of those things have happened on a wide scale.”

    I couldn’t agree with you more on this.

    However….

    The shortage of jobs will create a change in students choices for degrees. This in turn could create a good thing. Less folks trained in an area – say IT, could spawn more need for folks that know IT.

  6. KEVIN: I used to admire your writing, but you have become so far out the mainstream workforce mindset of the typical-hands-dirty, get the job employment scene, that you are no longer relevant. Sullivant has been irrelevant for his whole life, and has never had a real job dispite his academic credentials, and ERE is doing itself a dis-service to it’s membership, to continue to “worship” you bloviating clowns.

    I’m a classic baby-boomer, potential retiree–should I plan on working until I’m 75-85, according to the projections in your latest article? Did you pass basic gradeschool math?

  7. You tell ‘im Chris. Just when I think I might find meaningful discussion in a comment section, it reverts back to pointless flaming (slamming not one, but two authors).

    How about it, Chris — what specifically about Kevin’s article is out of touch and why do you think so? What facts support your opinion?

  8. Kevin: While your arguments about the talent shortage being a myth is plausible, it also leaves out many factors faced by corporate and agency recruiters (and, in fact, also corporate HR) today. While I might buy the argument of geography and that baby boomer retirement is a bit premature (based on their financial situations), both are weak supporting points. IMHO, the talent shortage has less to do with geography and boomers and more to do with the lack of skilled talent across many industries. In fact, last week’s The Detroit News article – “Baby boomers stay on the job longer than other generations” – turned the boomer retirement = talent shortage on its head.

    In the Manpower global survey on the talent shortage, it was determined that the top 10 most difficult jobs to fulfill are skilled manual trades, sales representatives, technicians (primarily production/operations, engineering or maintenance), engineers, management/executives, laborers, office support staff, drivers, account & finance and IT staff (primarily programmers/developers). More than half require specialized knowledge and training. Within our own Sendouts open job database, the majority of open jobs are in the medical profession, IT, engineers, or accounting/finance. The point is that other factors such as a shortage of experienced talent are available – either they don’t have the practical experience or they are taking another path. Case and point, I know a number of people who have graduated from med school. Some have even completed their residency and passed the boards. Instead of working in the medical field, they are working for a top 3 financial services firm or a pharma company. Why? They are seriously in debt from student loans; it’s too expensive to actually practice medicine with today’s medical liability; and, quite frankly, they can easily have a six-figure without a lot less stress.

    The point being that the talent shortage – myth or not – needs more detailed research, trending data and a whole lot more analysis. While I’m a fan of Kevin’s articles, he tackled a topic that would take a Herculean effort to explore and explain.

  9. When you use the phrase “labor shortage” or “talent shortage” you’re speaking in a sentence fragment. What you actually have to say is: “There is a labor shortage at the salary level I’m willing to pay.” That statement is the correct phrase; the complete sentence, the intellectually honest statement.

    If you start raising your wages and improving working conditions –and continue to do so– eventually you’ll have people lining up around the block to work for you even if you need to have huge piles of steaming manure hand-scooped on a blazing summer afternoon.

    One more thing…
    With the majority of retirement accounts down 50% or more, people entering retirement age are being forced to work well into their sunset years. So, you won’t be getting a worker shortage anytime soon due to retirees exiting the workforce. You’ll have all the workers you need if you start raising wages, increasing benefits and better working conditions!

  10. Thank you, Kevin.

    A couple of points (one of which has already been addressed):

    1) IMHO, there will be severe shortages in areas where you see the compensation of those performing the work and those looking for the performers quickly and seriously increasing. (I haven’t seen that since the Dot.com Era.)

    2) When someone uses jargony words like “talent” for “people” or “war” for “same-old, same-old”, or “associate” for “wage-slave” or “opportunity” for “no-pay”, there is a reasonable likelihood that someone in a $1,500 suit and an $80 haircut is going to try and sell you or get you to do something very costly. We should remember that much of employment practices today are based on the “GAFI Principles”:
    Greed, Arrogance, Fear, and Ignorance.
    So, watch out for the hype and watch your wallet!

    Cheers,

    Keith

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