Current Events

The Skills Gap is Part of Inequality, Paul Krugman

Written by Grovo

In his op-ed this Monday, New York Times columnist Paul Krugman made the case for why the U.S. skills gap was not only not real, but an artifice constructed by political/social/economic elites to obscure the real causes of economic inequality: themselves. In a meandering argument, Krugman touched on a few points nominally relating to the skills gap, but which have much more to do with inequality stemming from seismic technological change. In doing so, he mistook for an elitist boogeyman what we at Grovo believe is a real problem, and a symptom itself of the inequality that Krugman would like to fix.

Krugman believes that education, or lack thereof, is not holding back poor Americans and their wages nearly as much as a pernicious (and recent) tendency of corporations to hoard profits and not use them to hire workers. In his rendering, elites sense that deficit hawkishness is “on the wane” and need to fabricate new “issue-dodging” red herrings to draw our attention away from real structural issues (which they unilaterally perpetuate) and toward false explanations for today’s highly uneven distribution of wealth in the United States. The skills gap is one of those, in Krugman’s mind, presumably because it is often held up by businesses as a reason why more Americans are not getting hired. He seems to extrapolate that line too far, though, and accuses those of us who talk about the skills gap as using it to explain away economic inequality.

If you’re unsure how asserting that a skills gap exists is tantamount to blaming its victims for their own marginalization, you’re in good company. We at Grovo have a lot of practice talking about the skills gap, specifically as it pertains to digital literacy and digital skills, and we have never positioned it as the reason why wealth is distributed unevenly. Nor have we seen others do so. The two sources Krugman cites that supposedly use the skills gap as a way to ‘blame the poor’ do no such thing. Both of them—JP Morgan’s announcement of a skills-training campaign and a Brookings “framing paper” on technology and labor—merely acknowledge that the threshold of skills needed to access middle-class jobs is much higher today than it has ever been before. And that our educational systems haven’t been up to the task of teaching them.

Paul Krugman has no problem arguing for more and better American education when it’s in the context of conservatives depriving it of public dollars. “Almost every other nation is becoming more educated, but we’re not,” he lamented in 2012. But one wonders what exactly he thinks the purpose of education is (or where the danger of under-educating lies) if not to provide skills that the labor force can take to market. The concept of the skills gap merely acknowledges that this under-education exists. It’s less politically loaded than Krugman seems to find exciting, but it’s true.

Krugman’s left has long alleged that the skills gap itself is a myth. Big business states that U.S. hiring is anemic—while job openings and job candidates both remain plentiful—because employers can’t find anyone skilled enough to fill them. Business Roundtable reported recently that “more than 95 percent of surveyed… member CEOs indicated that their companies suffer from skills shortages.” That, they claim, is the source of persistent unemployment.

Nonsense, say many economists. If that were the case then wages would rise to attract skilled candidates, and they have not. Instead, hiring is down because those companies can squeeze more productivity out of their existing employees—often without wage increases—while waiting to fill job vacancies until a “perfect” candidate comes along.

We at Grovo don’t take a side here. The skills gap that we discuss is one of digital literacy, which in a nation that has among the highest costs of broadband connection and among the lowest rates of Internet access in the developed world, is truly an issue, regardless of hiring. The skills gap that Grovo solves is one that plagues everyone, particularly current employees and their organizations, by sapping 21% of productivity from their daily work. Over the past twenty years, digital tools have evolved faster than employees can learn and faster than most offices can train, which today stunts productivity to the tune of $1.3 trillion per year in the U.S. On that claim, we have an ally in Paul Krugman, who in Monday’s column raised our favorite talking point, that “productivity growth, which surged briefly after 1995, seems to have slowed sharply.” What does the good professor think is causing that? Personal technology has exploded in usage and complexity along nearly that same timeline; that alone makes a technological skills gap a much more plausible culprit.

In any event, none of this correlates with inequality in the way that Krugman’s piece purports. Yes, the skills gap is arguably something that may or may not hold back hiring. To the extent that the digital skills gap is a social issue, though, it is a symptom of inequality. The digital skills gap and the digital divide exacerbate and crystallize inequality. If anything, it’s an ideal place to start for people like Krugman who want to empower the economically disadvantaged.

The Financial Times recently analyzed the latest Census Bureau data and found a distinct yet unsurprising correlation between poverty and a lack of digital connectivity. “U.S. cities that have become synonymous with urban decay, such as Detroit and Flint in Michigan and Macon in Georgia, have household broadband subscription rates of less than 50 per cent.” Meanwhile, digital access and literacy abound in “prosperous growing towns… which have broadband subscription rates of 95 per cent” and median incomes upwards of $100,000. Inequality is a source and progenitor of the digital skills gap—aided by a rickety educational system that fails to make up the difference.

The social reality of the much-discussed skills gap is a marked disparity in crucial, market-required skills that, like health care and crime, correlate strongly to economic inequality. Policy experts like Krugman should seek to redress the skills gap the same way they would any epidemic disproportionately attendant to impoverished populations. Attacking it as a red herring constructed by elites only serves to distract from the need for a reimagined approach to continuing education across the corporate sphere, in schools, and in American culture at large.

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