Skills Mismatch

Skills Mismatch as a Social Problem

In the 1970s, observers believed that U.S. workers were overeducated relative to the number of jobs that could use their high levels of education. This partly reflected the rapid rise in college attendance during the 1960s, some of which was a temporary effect of college student deferments for the military draft during the Vietnam War. The rapid increase in the supply of college graduates depressed the size of their earnings advantage relative to high school graduates. In addition, various social science theories, such as signaling theory, credentialism, class reproduction theory, and deskilling theory argued that educational attainment tended to rise faster than the technical demands of jobs, because of either inflated hiring standards or reductions in the skill content of jobs. Analysts expressed concern that job challenges were [Page 856]not keeping up with rising education levels, contributing to declining job satisfaction.

With the exception of cultural capital theory, scholarly and policy thinking shifted in the opposite direction in the 1980s and 1990s, sometimes dramatically. More people believed that occupational, industrial, and technological shifts were transforming the United States into a postindustrial or information economy, resulting in a large group of undereducated workers. Poverty researchers argued that these structural changes limited opportunities for upward mobility among the urban underclass by widening the gap between the growing cognitive demands of available jobs and the relatively low skills of poor minority job seekers. The geographic redistribution of jobs to areas outside of central cities and the barriers to residential mobility among the poor further inhibited the ability of less-educated workers to find jobs that matched their qualifications. Most labor economists argued that the sharp rebound in the college-high school wage differential in the 1980s was evidence that the unprecedented rise in earnings inequality during this period was due to the growth in skill demand outrunning the growth in supply. Deepening concern with the state of U.S. education, which began with the economic competitiveness crisis in the early 1980s and continues today, also rests on the belief that the labor force does not have the skills required for the new economy. Economists, policymakers, and, increasingly, other social scientists share the view that inadequate skills and education are the main causes of rising earnings inequality and other labor market problems.

...