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Issues 2016: Are Skilled Trades Doomed to Decline?

issue brief

Issues 2016: Are Skilled Trades Doomed to Decline?

October 20, 2016
Energy & EnvironmentTechnology / Infrastructure
EconomicsEmployment

Abstract

Global forces and technology trends are creating opportunities as well as challenges for American workers. There are an estimated one-half million more jobs available than workers with relevant skills in trades from construction and manufacturing to aviation, a gap forecast to rise to 2 million within a decade. Such jobs are accessible with a two-year degree or apprenticeship and pay well above average, often at salaries higher than associated with many college degrees.

Surveys reveal that a majority of manufacturers report a “skills gap” and expect it to get worse. The contention that the gap was either created by or will be filled by software and robots isn’t supported by recent trends in automation. On the contrary, manufacturers report a rising need for “trade skills” because of increasing technological sophistication in every industry.

Key Findings

America's industrial economy and the associated demand for workers in the skilled trades continues to grow.

  • U.S. manufacturing output is 30% greater now than it was 15 years ago; output has returned to the peak level seen just before the Great Recession.
  • Growth is forecast in 22 out of 23 manufacturing sectors as well as in infrastructures for transportation, energy, and housing, where skilled trades are essential.
  • Six of the 10 fastest-growing industries require skilled trades—all these industries make products for which the global demand is rapidly growing.

A skills gap has created an unprecedented number of unfilled high-paying jobs in a sector otherwise experiencing job losses. The gap is expected to expand.

  • An estimated half-million more jobs are available than people trained to fill them, with 88% of manufacturers reporting trouble finding skilled workers.
  • Skilled trades vacancies have been the hardest to fill for six consecutive years. Some 60% of unfilled manufacturing jobs are due to a shortage of applicants with requisite skills.
  • A disproportionate share of skilled trade workers are approaching retirement: the share of workers over age 45 in skilled trades is about 25% higher than the labor-force average.

Recent trends don’t support the idea that software and automation have eliminated demand for skilled jobs. Most manufacturers worry about an insufficient supply of skilled workers.

  • Manufacturing investment in software has been flat since 2008, and up only 30% since 2000—after nearly doubling from 1988 to 2000.
  • Overall industrial automation progress has been slow: the degree of automation in six of eight machine-centric industrial sectors ranges from 18% to 32%.
  • Manufacturers report that workforce training is the number one impediment to accelerating investment in automation, which is key to the virtuous circle of raising productivity to increase wealth and employment.

READ FULL REPORT

Return to the Manhattan Institute's Issues 2016 series

______________________

Mark P. Mills is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

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