Viewing offline content

Limited functionality available

Dismiss
United States
  • Services

    What's New

    • The Ripple Effect

      Real-world client stories of purpose and impact

    • Register for Dbriefs webcasts

    • We Are Deloitte

      Reimagining how we support our people

    • Tax

      • Mobility and Payroll
      • Reward, Employment Tax, and Equity Compensation Plans
      • Workforce, Technology, and Analytics
      • Tax Services
    • Consulting

      • Core Business Operations
      • Customer & Marketing
      • Enterprise Technology & Performance
      • Human Capital
      • Strategy & Analytics
    • Audit & Assurance

      • Audit Innovation
      • Accounting Standards
      • Accounting Events & Transactions
    • Deloitte Private

    • Mergers & Acquisitions

      • Total M&A Solution
      • Post-merger Integration
      • Divestiture & Separation
    • Risk & Financial Advisory

      • Accounting & Internal Controls
      • Cyber & Strategic Risk
      • Regulatory & Legal
      • Transactions and M&A
    • AI & Analytics

    • Cloud

    • Diversity, Equity & Inclusion

  • Industries

    What's New

    • The Ripple Effect

      Real-world client stories of purpose and impact

    • Register for Dbriefs webcasts

    • Industry Outlooks

      Key opportunities, trends, and challenges

    • Consumer

      • Automotive
      • Consumer Products
      • Retail, Wholesale & Distribution
      • Transportation, Hospitality & Services
    • Energy, Resources & Industrials

      • Industrial Products & Construction
      • Mining & Metals
      • Oil, Gas & Chemicals
      • Power, Utilities & Renewables
    • Financial Services

      • Banking & Capital Markets
      • Insurance
      • Investment Management
      • Real Estate
    • Government & Public Services

      • Defense, Security & Justice
      • Federal health
      • Civil
      • State & Local
      • Higher Education
    • Life Sciences & Health Care

      • Health Care
      • Life Sciences
    • Technology, Media & Telecommunications

      • Technology
      • Telecommunications, Media & Entertainment
  • Insights

    Deloitte Insights

    What's New

    • Deloitte Insights Magazine

      Explore the latest issue now

    • Deloitte Insights app

      Go straight to smart with daily updates on your mobile device

    • Weekly economic update

      See what's happening this week and the impact on your business

    • Strategy

      • Business Strategy & Growth
      • Digital Transformation
      • Governance & Board
      • Innovation
      • Marketing & Sales
      • Private Enterprise
    • Economy & Society

      • Economy
      • Environmental, Social, & Governance
      • Health Equity
      • Trust
      • Mobility
    • Organization

      • Operations
      • Finance & Tax
      • Risk & Regulation
      • Supply Chain
      • Smart Manufacturing
    • People

      • Leadership
      • Talent & Work
      • Diversity, Equity, & Inclusion
    • Technology

      • Data & Analytics
      • Emerging Technologies
      • Technology Management
    • Industries

      • Consumer
      • Energy, Resources, & Industrials
      • Financial Services
      • Government & Public Services
      • Life Sciences & Health Care
      • Technology, Media, & Telecommunications
    • Spotlight

      • Deloitte Insights Magazine
      • Press Room Podcasts
      • Weekly Economic Update
      • COVID-19
      • Resilience
  • Careers

    What's New

    • Our Purpose

      Exceptional organizations are led by a purpose. At Deloitte, our purpose is to make an impact that matters by creating trust and confidence in a more equitable society.

    • We Are Deloitte

      Reimagining how we support our people

    • The Deloitte University Experience

      Explore Deloitte University like never before through a cinematic movie trailer and films of popular locations throughout Deloitte University.

    • Careers

      • Audit & Assurance
      • Consulting
      • Risk & Financial Advisory
      • Tax
      • Internal Services
      • US Delivery Center
    • Students

      • Undergraduate
      • Advanced Degree
      • Internships
    • Experienced Professionals

      • Additional Opportunities
      • Veterans
      • Industries
      • Executives
    • Job Search

      • Entry Level Jobs
      • Experienced Professional Jobs
      • Recruiting Tips
      • Explore Your Fit
      • Labor Condition Applications
    • Life at Deloitte

      • Life at Deloitte Blog
      • Meet Our People
      • Diversity, Equity, & Inclusion
      • Corporate Citizenship
      • Leadership Development
      • Empowered Well-Being
      • Deloitte University
    • Alumni Relations

      • Update Your Information
      • Events
      • Career Development Support
      • Marketplace Jobs Dashboard
      • Alumni Resources
  • US-EN Location: United States-English  
  • Contact us
  • US-EN Location: United States-English  
  • Contact us
    • Dashboard
    • Saved items
    • Content feed
    • Subscriptions
    • Profile/Interests
    • Account settings

Welcome back

Still not a member? Join My Deloitte

A growing skills mismatch? Not necessarily

by Patricia Buckley, Dr. Rumki Majumdar
  • Save for later
  • Share
    • Share on Facebook
    • Share on Twitter
    • Share on Linkedin
    • Share by email
Deloitte Insights
  • Strategy
    Strategy
    Strategy
    • Business Strategy & Growth
    • Digital Transformation
    • Governance & Board
    • Innovation
    • Marketing & Sales
    • Private Enterprise
  • Economy & Society
    Economy & Society
    Economy & Society
    • Economy
    • Environmental, Social, & Governance
    • Health Equity
    • Trust
    • Mobility
  • Organization
    Organization
    Organization
    • Operations
    • Finance & Tax
    • Risk & Regulation
    • Supply Chain
    • Smart Manufacturing
  • People
    People
    People
    • Leadership
    • Talent & Work
    • Diversity, Equity, & Inclusion
  • Technology
    Technology
    Technology
    • Data & Analytics
    • Emerging Technologies
    • Technology Management
  • Industries
    Industries
    Industries
    • Consumer
    • Energy, Resources, & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Tech, Media, & Telecom
  • Spotlight
    Spotlight
    Spotlight
    • Deloitte Insights Magazine
    • Press Room Podcasts
    • Weekly Economic Update
    • COVID-19
    • Resilience
    • US-EN Location: United States-English  
    • Contact us
      • Dashboard
      • Saved items
      • Content feed
      • Subscriptions
      • Profile/Interests
      • Account settings
    15 April 2015

    A growing skills mismatch? Not necessarily

    16 April 2015
    • Patricia Buckley United States
    • Dr. Rumki Majumdar India
    • Save for later
    • Share
      • Share on Facebook
      • Share on Twitter
      • Share on Linkedin
      • Share by email

    Job vacancy announcements are rising much faster than hires, even as unemployment remains high. Although there is some evidence of the skills mismatch rising after 2008, other evidence is more equivocal.

    Explore

    View the Behind the Numbers collection, a monthly series from Deloitte’s economists.

    One piece of economic news getting some attention lately is that job vacancy announcements are rising much faster than hires, even as unemployment remains high and a substantial number of potential workers remain on the sideline. One explanation is that companies are finding it increasingly difficult to find people with the skills they need. Although there is some evidence of the skills mismatch rising after the global financial crisis of 2008 (henceforth referred as the crisis period), other evidence is more equivocal. In particular, industry-level analysis points to a skills mismatch situation during the current economic expansion (post June 2009), which is at par with the situation during the last expansion post the 2001 crisis (2003–07). This is actually not all that surprising since employers were expressing concern that they could not find workers with the skills they needed even in the years leading up to the last recession.

    Hiring lagging job openings

    The Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) program produces data on job openings, hires, and separations. In figure 1, movement in the job openings rate, a measure of demand for labor, is compared with that of the hiring rate, a measure of worker flow in jobs. Both the job openings and hiring rates began to rise after the recession ended. However, the pace of recovery differed. While the current job openings rate has already crossed its precrisis levels, the hiring rate is still lagging behind.

    Figure 1

    One reason for hires to lag openings could be that businesses find it difficult to find workers with the skills they need. For example, a recent Deloitte survey of manufacturing executives identified the shortage of quality and availability of talent as a reason for unfilled positions.1 The average estimate among the 84 percent of polled manufacturing executives who thought there was a talent shortage was that 6 out of 10 open skilled production positions remain vacant due to talent shortage.

    Harder to find workers?

    Three labor market indicators do seem to prove there is a rising skills mismatch. The first is a Beveridge curve, which plots the relationship between the unemployment rate and job openings rate over the course of a business cycle. The normally downward sloping curve shows that higher unemployment rates are associated with a lower rate of job openings. An outward shift in the Beveridge curve suggests a deterioration in the matching and hiring process in the labor market—that is, for any given level of openings, the unemployment rate is higher.2 The higher the shift, the greater the degree of skills mismatch in the labor market.

    As shown in figure 2, the US Beveridge curve remained stable from 2001 until October 2009, when the United States recorded a historically high unemployment rate of 10 percent. However, after October 2009, the Beveridge curve shifted up and outward. Prior to October 2009, a 2.5 percent job openings rate was associated with a 6.5 percent unemployment rate. Currently, the same job openings rate is now associated with a 9 percent unemployment rate.

    Figure 2

    The other two indicators of a growing skills mismatch come from hiring indicators published by Dice Holdings Incorporation. These indicators offer labor market insights to help employers, professionals, and decision makers deepen their understanding of current workforce trends. Statistics such as vacancy-to-unemployment ratios and average vacancy duration measure the tightness of labor market conditions.

    Dice’s vacancy-to-unemployment ratio indicates that despite higher unemployment, the number of vacancies per unemployed person steadily increased in the post-crisis period. This ratio was high before the crisis as well, but unemployment was lower then. Post crisis, a higher number of vacancies was associated with abundant unemployed workers.

    The Dice-DFH vacancy duration statistic measures the average time required to fill open positions.3 Currently, it is at a 14-year high, which implies that new job positions have been open for longer in recent years (figure 3). Both these indicators point to the inability of employers to match a suitable candidate from existing job seekers to a vacant position.

    Figure 3

    . . . Or maybe not so hard

    If the interpretation of the Beveridge curve and the two Dice indicators discussed above is correct, one might conclude that employers are finding it harder to fill vacancies with required skill sets in the more recent period than in the precrisis period. However, the Dice recruiting intensity index points to just the opposite.

    The Dice-DFH recruiting intensity index quantifies the effective intensity of recruiting efforts per vacancy by US employers with vacant job positions. As shown in figure 4, the recruiting index was high before the crisis, indicating that employers were finding it tough to fill vacant positions with limited available workers. It fell during the 2008 recession, as expected, because there were lower job vacancies and a higher number of unemployed workers looking for jobs. However, the index continued to remain low well after the recession was over, even though the job openings rate kept increasing steadily. It has been only since mid-2014 that the index has begun to rise more rapidly, although it remains well below prerecession levels.

    Figure 4

    The final piece of evidence we examine is an industry-level analysis for two relatively strong growth periods, one before and the other after the recession. The period 2004–06 represents the middle of the high economic expansion prior to the crisis, and the period 2012–14 represents years with steady improvement in the economic performance post crisis. Figures 5a and 5b compare the average monthly share of job openings and the share of annual employment gain by industries for the two periods.4 Making the simplifying assumption that each sector requires specific skills that would make it difficult for unemployed workers from one industry to freely move to another, these charts compare relative openings with relative employment gains. Thus if some industries show a higher job openings share while employment gains are concentrated in other industries, it might indicate a skills mismatch. However, with a few exceptions during 2004–06 (such as in the manufacturing and information industries), the parity between new positions created and employment gains in industries were very similar in both periods. Therefore, while this analysis cannot speak to the size or even existence of a skills mismatch, it does seem that a bad problem has not become worse.

    Figure 5 a

    Figure 5b

    In addition to the skills mismatch explanation, there are several reasons why employers may be keeping positions vacant for longer periods despite workers being available. Employers might be skeptical about the long-term outlook of the economy and so are hesitant to hire even though they have posted vacancies. The number of qualified candidates applying for a position may be high, making it difficult for employers to choose the “best candidate.” Also, the reduced mobility of workers (especially homeowners with negative home equity) may make them less likely to apply for and accept positions in places away from where they currently reside. While all of these factors are likely playing a role in vacancies rising faster than hires, it will take more time before we know if any one explanation currently dominates or will dominate in the years to come.

    Credits

    Written by: Patricia Buckley, Dr. Rumki Majumdar

    Endnotes
      1.  Craig Giffi et al., “Help wanted: American manufacturing competitiveness and the looming skills gap,” Deloitte Review issue 16, 2015, http://dupress.com/articles/manufacturing-skills-gap-america/. View in article
      2. Peter A. Diamond and Ayşegül Şahin, Shift in the Beveridge curve, Federal Reserve Bank of New York staff report no. 687, August 2014, http://www.ny.frb.org/research/staff_reports/sr687.pdf. View in article
      3. The vacancy duration and recruiting intensity index statistics are constructed using data from the monthly JOLTS following methods developed by Steven J. Davis, Jason Faberman, and John Haltiwanger in “The establishment-level behavior of vacancies and hiring,” Quarterly Journal of Economics, May 2013. These are published by Dice Holdings Inc. Thus indicators have a prefix Dice-DFH. View in article
      4. This analysis builds on the single-period analysis in Maria E. Canon and Mingyu Chen, "The mismatch between job openings and job seekers," Federal Reserve Bank of St Louis, July 2011, https://www.stlouisfed.org/publications/regional-economist/july-2011/the-mismatch-between-job-openings-and-job-seekers. The share of job openings of an industry is the number of openings in that industry divided by the total number of job openings in the United States. The share of annual employment gain of an industry is the number of jobs gained annually in that industry divided by the total number of jobs lost in the United States. View in article
    Show moreShow less

    Topics in this article

    Behind the Numbers , United States (U.S.) , Economics

    Deloitte Consulting

    Learn more
    Download Subscribe

    Related

    img Trending

    Interactive 3 days ago

    Patricia Buckley

    Patricia Buckley

    Director | Deloitte Services LP

    Patricia, Deloitte Services LP, is the managing director for Economics with responsibility for contributing to Deloitte’s Eminence Practice with a focus on economic policy. She regularly briefs members of Deloitte’s executive leadership team on changes to the US economic outlook and is responsible for the US chapter of Deloitte’s quarterly Global Economic Outlook and produces “Issues by the Numbers,” a data-driven examination of important economic policy issues.

    • pabuckley@deloitte.com
    • +1 703 254 3958
    Dr. Rumki Majumdar

    Dr. Rumki Majumdar

    Director | Deloitte India

    Dr. Rumki Majumdar is a Director and economist with Deloitte India. She writes on several contemporary economic and sector-specific issues related to India with a focus on policy implications on industries such as consumer, financial services, energy and resources, technology, and public services. She has also written on numerous economic issues about the United States and several emerging economies for Deloitte Insights in the past. She currently heads the Client and Insights research team and regularly advises Deloitte India’s executive leadership on Indian economic outlook.

    • rumajumdar@deloitte.com
    • +91 80 6188 5684

    Share article highlights

    See something interesting? Simply select text and choose how to share it:

    Email a customized link that shows your highlighted text.
    Copy a customized link that shows your highlighted text.
    Copy your highlighted text.

    A growing skills mismatch? Not necessarily has been saved

    A growing skills mismatch? Not necessarily has been removed

    An Article Titled A growing skills mismatch? Not necessarily already exists in Saved items

    Invalid special characters found 
    Forgot password

    To stay logged in, change your functional cookie settings.

    OR

    Social login not available on Microsoft Edge browser at this time.

    Connect Accounts

    Connect your social accounts

    This is the first time you have logged in with a social network.

    You have previously logged in with a different account. To link your accounts, please re-authenticate.

    Log in with an existing social network:

    To connect with your existing account, please enter your password:

    OR

    Log in with an existing site account:

    To connect with your existing account, please enter your password:

    Forgot password

    Subscribe

    to receive more business insights, analysis, and perspectives from Deloitte Insights
    ✓ Link copied to clipboard
    • Contact us
    • Search jobs
    • Submit RFP
    • Subscribe to Deloitte Insights
    Follow Deloitte Insights:
    Global office directory US office locations
    US-EN Location: United States-English  
    About Deloitte
    • About Deloitte
    • Client stories
    • My Deloitte
    • Deloitte Insights
    • Email subscriptions
    • Press releases
    • Submit RFP
    • US office locations
    • Alumni
    • Global office directory
    • Newsroom
    • Dbriefs webcasts
    • Contact us
    Services
    • Tax
    • Consulting
    • Audit & Assurance
    • Deloitte Private
    • Mergers & Acquisitions
    • Risk & Financial Advisory
    • AI & Analytics
    • Cloud
    • Diversity, Equity & Inclusion
    Industries
    • Consumer
    • Energy, Resources & Industrials
    • Financial Services
    • Government & Public Services
    • Life Sciences & Health Care
    • Technology, Media & Telecommunications
    Careers
    • Careers
    • Students
    • Experienced Professionals
    • Job Search
    • Life at Deloitte
    • Alumni Relations
    • About Deloitte
    • Terms of Use
    • Privacy
    • Privacy Shield
    • Cookies
    • Cookie Settings
    • Legal Information for Job Seekers
    • Labor Condition Applications
    • Do Not Sell My Personal Information

    © 2022. See Terms of Use for more information.

    Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

    Learn more about Deloitte's work for the US Olympic Committee