The gap between what executives want and what employees are capable of (or care to give) is widening by the day. That may be the permanent state of things.
The current skills gap, as it were, is so big that nearly half (44%) of individual workers need to be upskilled to do their jobs effectively, according to the World Economic Forum’s 2023 Future of Jobs Report. Workers are well aware. More than a third (37%) of Gen Zers feel their education didn’t equip them with the tech skills they need to advance in their careers, according to a Dell Technologies survey. The evidence is clear: Companies need more specialized expertise than most workers can provide.
“The long-term trend is pretty undeniable that the demand for skills outpaces the supply of skills,” Dan Shapero, chief operating officer of LinkedIn, tells Coins2Day. He explains that both workers and bosses are going to struggle to keep up with the need for new skills. “Employers are having difficulty finding the people they need, even in the current labor market,” he says. “[That’s] because the long-term trend towards technical and collaborative skills is just undeniable, and we can’t keep up with it.”
A gap between the skills most vitally needed and the skills most people can offer has posed a problem since America deindustrialized. It was fueled by events like the 1994 formation of the North American Free Trade Agreement (NAFTA), which created a free trade bloc and resulted in some 700,000 jobs (mostly in manufacturing) moving to Mexico. It also formalized a threat that workers have been struggling with ever since: Accept lower pay and worse benefits, or the job will be offshored. A similar impact resulted following China’s 2001 entrance into the World Trade Organization (WTO). The U.S. Has maintained a massive trade deficit with China ever since, and that deficit has grown by over $150 million since the Great Recession, according to the Economic Policy Institute. It’s gutted the number of U.S. Manufacturing jobs since the pandemic and has cost America “millions of jobs throughout the economy” over the past two decades.
Now, depending on whom you ask, the A.I. Revolution—with its uncanny ability to do human work—threatens to decimate white-collar jobs the way China’s WTO entrance decimated blue-collar positions. In other words, the skills needed to remain competitive in the job market are shifting faster than most workers can keep up with. There are things A.I. Can’t replicate—such as the evergreen soft skills like creative thinking, high motivation, and a passion for lifelong learning that the WEF finds businesses prioritize—which should give workers some respite from the “A.I. Is taking your jobs” fearmongering. But some experts predict it’s going to create a ceaseless game of catch-up. As Shapero puts it, “The long-term trend is pretty clear.”
Labor remains short as people seek out greener pastures
It’s not just a need for upskilling that’s hamstringing the workforce. Bosses are also grappling with a labor shortage three years in the making. Early on in the pandemic, workers were faced with millions of furloughs, closures, and layoffs. But that all shifted in the summer of 2021 as the general population lined up for vaccines and a return to office started to materialize for the first time.
Remote work had been a reckoning for millions of workers, prompting them to reassess what they wanted out of life and their expectations from companies. If employers didn’t deliver, they were quick to join the Great Resignation for a company they felt valued them or for no job at all. It resulted in a record-breaking labor shortage, spurred by early retirements, fewer legal immigrants, and a loss of workers to prolonged COVID illnesses and deaths. Employers found themselves competing for a tinier pool of workers and rushing to increase their hourly wages as a way of retaining existing employees.
While the Great Resignation has mostly waned, the labor shortage seems to be a permanent state of affairs—or at least a fact of the economy for the next decade. The year 2022 ushered in the tightest labor market Shapero has seen in his 15 years at LinkedIn, he says. While this year is a little more balanced as workers rush to familiarize themselves with new technology, Shapero says, “it’s still tight.”
It could get worse, though. “It is a fundamental error to think that as COVID-19 recedes, hiring difficulties will evaporate,” Svenja Gudell, chief economist at Indeed, told the Society for Human Resource Management. She predicts a persistent gap between employer demand for new hires and the supply of candidates—which certainly isn’t helping close the skills gap.
Could A.I. Propose a solution?
An unlikely solution could be materializing in front of us. Though A.I. Poses a substantial threat that can’t be overlooked—over a third of experts said its unmitigated and unregulated growth could lead to “nuclear-level catastrophe”—where labor runs short, A.I. Could be a silver bullet that fills in the gaps. Implemented correctly, “entire industries will reorient around it. Businesses will distinguish themselves by how well they use it,” Bill Gates recently wrote, adding that he hopes his own firm Microsoft takes the lead. A.I., he wrote, is “every bit as important as the PC, as the internet.”
Small-business owners, too, have quickly found that generative A.I., like ChatGPT, “is already really well equipped to assist them with the tasks they find most difficult to tackle, either because they don’t have the time or require skills outside their wheelhouse,” Gourav Pani, GoDaddy president of U.S. Independents, said last week.
Former Google CEO and executive chairman Eric Schmidt has said that the declining birth rate in the U.S. Has all but guaranteed A.I.’s continued rise to prominence in the workforce. “In aggregate, all the demographics say there’s going to be a shortage of humans for jobs,” Schmidt noted at the Wall Street Journal’ s CEO Council Summit in London . “Literally too many jobs and not enough people for at least the next 30 years.”
Schmidt’s words show just how much the skills gap resembles the labor shortage: Both are persistent problems plaguing the workforce in which supply and demand don’t match up. But with thoughtful, responsible integration, many executives insist A.I. Can fix any number of ongoing workforce pressures like filling roles and skills we need, plus eliminating busywork for employees to make them more productive. That’s a good thing because in any case, ChatGPT and its ilk aren’t going anywhere anytime soon.
