To: Road Walker who wrote (119752 ) 9/3/2012 12:51:21 PM From: tejek Respond to of 149317 Riveting debate: 'Skills' vs. 'pay' gap Businesses, economists at odds on dearth of qualified workers, ramifications on the economy By Adam Belz, Minneapolis Star Tribune August 20, 2012 To judge from the job listings, welders are in high demand. Manufacturers across the Upper Midwest will tell anyone who listens that they have jobs to offer — more than 2,000 welding positions in Minnesota alone — but not enough solid applicants. They point to a "skills gap" between the jobs available and the people looking for work. Textbook economics says this should be good news for anyone who can strap on a helmet and make the sparks fly. If good welders truly are hard to find, employers should pay more to get them. Yet that isn't happening, leading some economists to question whether the skills gap is the issue. "If there is a shortage of something, you would expect the price of that something to increase over time," said Steve Hine, director of labor market information for Minnesota. "It doesn't matter if that's skilled welders or the market for beer." Instead, the average hourly wage for a welder in Minnesota grew $1 from 2005 to 2011, to $17 per hour, according to Minnesota Department of Employment and Economic Development data. Take inflation into account, and that's a pay cut. And welders in Minnesota make more, on average, than they do in Wisconsin, Illinois and Iowa, where firms complain about a skills gap. Average inflation-adjusted pay for machinists has risen 9 cents per hour in the past seven years in Minnesota. Hourly wages for factory assemblers and fabricators have risen 10 cents, and pay for computer-controlled machine operators has fallen $1.61 per hour. Still, many employers say the skills gap is real and is holding back the economic recovery. In May, Iowa issued a report arguing that there aren't enough people to fill jobs that require more than a high school diploma but not a four-year college degree. "The vast majority of folks think there is a skills gap," said Mike Ralston, president of the Iowa Association of Business and Industry. While Minnesota manufacturers have added 11,600 jobs since the beginning of February, the people who run these companies say hiring is a struggle. A January survey by Enterprise Minnesota showed 26 percent believe a shortage of qualified workers will affect their bottom line. And 58 percent said attracting qualified candidates had become somewhat or very difficult. Wisconsin shipbuilder Marinette Marine said this summer that it held open 40 spots for entry-level workers and reached out to local schools but could fill only seven. Why hasn't this driven up average wages? In part, the new manufacturing economy doesn't evenly spread rewards. A worker who can read blueprints, program a machine or fix it will be paid more in this environment, said George Gmach, director of compensation and benefits at Trusight, an employers association in Plymouth, Minn. Wages will languish for one whose skills haven't evolved. Trusight has supportive data. A worker in Minnesota being paid $45,000 has seen wages rise 7 percent the past two years, a 2012 survey of manufacturers showed. Workers paid $25,000 have seen wages rise 5 percent in the same period, an inflation-adjusted pay freeze. "The lower the skill, probably the lower the movement," Gmach said. "Over time, what you're seeing is greater differentiation between lower- and higher-paid workers." Structural shifts in manufacturing aren't the only thing preventing workers from earning more. Sometimes higher-paying jobs are available if a worker will travel. Finally, what some might call a skills gap in some cases turns out to be simply a pay gap. Companies want to pay a certain wage but can't find good candidates willing to work for that wage. Shops say they can't raise wages without raising prices, which would cost them business. "Companies can only pay what they can pay, because we can't get increases through our supply chain, " said Paul Huot, owner of Huot Manufacturing in St. Paul, Minn. "It's very difficult for us to push through increases to our customers."