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| Source: Scotiabank |
People forget that corporate needs for skilled labor have changed materially since the start of the Great Recession. The demand for employees with technical and specialized skills has increased in the US as it did in other industrialized nations. Yet over the past couple of decades many US firms have systematically gutted training and apprenticeship programs and shifted a great deal of high tech production abroad. Companies were rewarded with higher share valuations for "offshoring" and cutting investment in training, whether or not it made sense.
As an example of lacking specialized skills, iPhones could not be built in the US today - even if labor costs were not an issue. That's because there simply aren't enough American engineers and technicians who can operate the high-tech/high-volume manufacturing facilities that Foxconn runs in China.
US firms (and the shareholders) are partially responsible for this skills shortage that is now plaguing them. The neglect from the federal government also contributed to the situation. Of course it doesn't help that US high school students rank significantly below the OECD average in math and science.
The US has the infrastructure, the energy resources, and the relatively low labor costs to grow high-tech manufacturing and "knowledge-intensive" services sectors. Yet the skills mismatch will continue to generate a drag on this growth in years to come.
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