Winning the Global Talent Showdown

How Businesses and Communities Can Partner to Rebuild the Jobs Pipeline

Edward E. Gordon

• Publisher: Berrett-Koehler Publishers
• Year: 2009
• ISBN:
  9781609944469
• Edition: 1
• Topic: Commerce
• Subtopic: Gestion des ressources humaines

In the next few years the world will be facing a huge talent shortage. Demographic trends in America, Europe, Russia, and Japan are reducing the pool of new workers. As the need for talent grows, China's and India's educational systems won't be able to produce enough qualified graduates for themselves, let alone the rest of the world. But the heart of the problem is that the education-to-employment system worldwide is badly outmoded. We're not producing graduates with the kinds of technical, communications, and thinking skills needed in the 21st century.In Winning the Global Talent Showdown, Ed Gordon surveys the sorry state of the world talent pipeline, with separate chapters on the Americas, Asia, and Europe. Each region faces its own challenges, yet the result is the same: a dramatic shortage of workers who can function in what Gordon calls our "cyber-mental" age.But this is fundamentally a book about solutions. Gordon argues that we need to completely reinvent our talent-creation system—and some pioneering efforts are already underway. He describes dozens of "gateways to the future, " innovative partnerships in which local governments, schools, businesses, labor unions, parents, training organizations, community activists, and others are collaborating to develop completely new approaches to education. Based on personal experience, Gordon outlines how concerned citizens can establish these partnerships in their own communities. And he looks down the road to 2020, explaining how we can build on the best of these new ideas so that the jobs pipeline flows freely again.

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PART 1
MAKING SENSE OF THE TALENT SHORTAGE AROUND THE WORLD

After our review of the three principal issues driving the global talent showdown, we are ready to embark on a talent exploration around the world—first across the Americas, then to Asia and Europe. We seek to discover how business and society will address shortfalls in their current and future local and national talent pool.

What criteria can we use to select specific nations for our itinerary? In each region, we will focus on the current most successful players in the new game of global talent. These twenty-five countries have a great deal at stake if they are to maintain their economic momentum through the next decade.

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We will examine succinctly the current business climate, the talent pool, and the outlook for the future, then look at how the three major forces—demographics, globalization, and the education-to-employment system—are affecting skill demands in the region. Where is the country’s talent coming from? How effective is a nation’s current talent system at satisfying current and future talent requirements? These are a few of the pertinent questions that we will need to answer while on our tour.

Be prepared for some unexpected bumps along our talent road. The ways in which culture and talent blend in each nation can at times offer business many unique challenges.

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CHAPTER 1
THE AMERICAS

Latin America faces a critical choice. It is a choice between the past and the future… a commitment to sustainable human development.

— Felipe Calderón, President of Mexico

We will begin our world tour with the Western Hemisphere as we examine how the global talent showdown is affecting North, Central, and South America. The United States will be our first stop. In late 2007 the World Economic Forum, a Swiss-based think tank, gave the United States the top spot in its annual report on global competitiveness. It praised the United States’ market efficiency and ability to innovate. This ranking may not last, however, because the U.S. talent pool is drying up. An obsolete twentieth-century education-to-employment system can no longer cope with the realities of a twenty-first-century global labor market.

Until 2010 overall growth in the U.S. workforce will be sustained by importing foreign workers and by members of the echo-boom generation (the children of the baby boomers, sometimes16 called Generation Y or the Millennial Generation) who have reached working age. However, in 2008 labor-force growth began dropping to near zero and is predicted to remain there until 2030. Labor shortages have begun to grow across the country in a broad range of employment sectors, leading to wage inflation as employers compete for fewer and fewer talented people to fill vacant critical positions across the entire economy even as many are left unemployed.

To the north, Canada’s economy is booming, but over the next decade (2010 to 2020) the Canadian labor market is expected to experience a serious talent shortage of up to 1 million workers. Already, the Canadian Federation of Independent Business reports that 60 percent of its Alberta membership has been experiencing “the highest level ever” in unfilled jobs. Until now, Canada has depended on skilled immigrants from China and India, but the expanding economies and opportunities in those countries are luring their workers back home.¹

The Canadian talent squeeze will also be driven by education and generational career issues. More than 40 percent of all workers in both Canada and the United States have basic workforce education skill deficiencies that contribute to decreased personal on-the-job performance, productivity, innovations, and quality.

After Canada, we will travel to Latin America to look closely at how the global talent shortage is affecting the economies of four countries: Brazil, Chile, Mexico, and Costa Rica. Economic stability and a new middle class have brought new prosperity to the region. Regional poverty has been reduced to 35 percent of the people, and unemployment in 2007 fell by 8 percent. Child labor has plummeted, and more children are being educated. But is all of this good enough?

Though Latin America’s recent economic progress has been encouraging, its rate of growth has been far less than that achieved by many Asian nations, where we will continue our journey in chapter 2. For now, we will examine the workforce challenges confronting the United States.

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THE UNITED STATES

The forces of globalization and technology have raised most Americans’ standard of living, increased worker productivity, and boosted business profits, and they continue to drive the future’s job picture. However, most Americans do not yet accept the “price” of this growth. Twenty-first-century technology requires even larger cohorts of American workers who are both well educated and possess specialized technical career knowledge. Regrettably, only about 25 percent of America’s current eligible workers comfortably meet these criteria.

Since the 1950s, unskilled jobs have been disappearing from the U.S. economy. Even before globalization and the outsourcing of these jobs had picked up steam, unskilled jobs began a steady decline (from about 60 percent to slightly more than 20 percent of all jobs). Simultaneously, skilled occupations requiring specific technical knowledge have steadily increased (from about 28 percent to 68 percent by 2000).

This trend will only accelerate during the next decade. Seventy-five percent of U.S. jobs will begin to require the minimum of both a good liberal-arts-based general education plus postsecondary technical training (for example, four- or two-year degrees, two- or one-year certificates, or apprenticeships).

Workforce Demographics

The massive retirement of the baby-boomer cohort and an end to the rise in the employment rate of women will combine to produce a dramatic drop in long-term U.S. workforce growth beginning in 2008 and extending to 2020 and beyond. The influx of immigrants will have only a limited impact on these trends. The United States does not attract nearly enough high-skill foreign talent to keep pace with the demands of both new job growth and the massive number of replacement workers needed for the departing boomers. The showdown for talent will reach across every state in America.

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The U.S. Department of Labor’s occupational employment projections help explain what is happening. Between 2006 and 2016, 50.8 million job openings are expected across the economy. But new jobs will number only 17.4 million, whereas replacement jobs will be nearly twice as many at 33.4 million. This means that retirements will account for 66 percent of the jobs to be filled.

Many occupations face a steep job replacement curve. In 2007, 52 percent of U.S. engineers and scientists were over age fifty. About half of all government workers were also approaching the same age. This was also the case for skilled machinists and metal workers.²

Globalization

If all this is true, skeptics might ask, how does the United States remain the world’s leading high-tech economy? The answer is foreign-born students. The annual survey of the National Opinion Research Center at the University of Chicago found that foreign students constituted 44 percent of received science and engineering doctorates in 2006. U.S. citizens earned only 32 percent of engineering degrees and 47 percent in the physical sciences. It would seem that U.S. culture is not into science anymore.³ There are broad economic ramifications to this cultural decision.

Whether it is cell phones, computers, automobiles, CDs, DVDs, medicine, or aerospace, advanced manufacturing applies cutting edge concepts in electronics, computers, software, and automation performed by highly educated technicians. A 2007 Manpower Survey, the National Association of Manufacturers, and the Manufacturing Institute all report that STEM jobs are the hardest to fill. Wages are rapidly rising. More dollars will chase less talent over the next decade.

Joel Leonard, a technical jobs expert, explains that “Many complain that our society’s view of the mechanic of yesterday hasn’t caught up with the realities of today, and as a result, business growth is stalled.” We are caught in a technological dead-end scenario, “since19 thus far automated machines don’t repair themselves,” Leonard reminds us.⁴

For some, this forthcoming “labor shortage can be a blessing, not a curse,” says Michael Lind, Whitehead senior fellow at the New America Foundation. “Where labor is scarce and expensive, businesses have an incentive to invest in labor-saving technology which boosts productivity growth by enabling fewer workers to produce more.” This is the current Japanese business model, found in a government white paper, “A Strategy for Growth.” Japan’s aim is to become the world leader in developing sophisticated new products that have big price tags by having manufacturers focus on high-value production, in contrast to their low-cost Chinese rivals.⁵

U.S. high-tech manufacturers want to follow the same strategy. Yet they fail to recognize a fundamental difference between Japan and the United States. For decades Japan’s business community has heavily invested in continuous workforce training. Also, Japan’s schools may be largely rote-learning machines, but every high school senior studies calculus. High-value production using the latest advanced labor-saving technology requires a highly skilled workforce. Japan has attained one; the United States has not.

The Education-to-Employment System

More than 90 million U.S. workers currently lack the reading, writing, and math skills to do their jobs properly. Finding competent people is very difficult. Both U.S. and international studies have repeatedly confirmed that the Achilles heel of America’s economy is its undereducated workforce.

National Adult Literacy Assessments were conducted by the U.S. government in 1992 and in 2003. They showed little, if any, literacy improvements between those years, and even some declines at the highest levels of literacy. About 95 million adults are reading at or below the eighth-grade level of reading comprehension, disqualifying them for most well-paying jobs. Even more disturbing is the20 finding that among recent college graduates, prose proficiency (advanced reading comprehension) dropped from 91 percent in 1992 to 72 percent in 2003.⁶ This means that their critical competencies (critical thinking skills) are weak.

The Organisation for Economic Co-operation and Development (OECD) has conducted the Programme for International Student Assessment (PISA), testing fifteen-year-olds from OECD nations and others every three years. In 2003 American students ranked twenty-fourth out of twenty-nine developed nations in math literacy and problem solving.⁷

Aligned to these dismal results is the gradual decline of SAT and ACT college entrance exam scores since the 1970s. Though 64 percent of high school graduating seniors enter some form of postsecondary education, only 25 percent of those beginning postsecondary education eventually graduate with a college degree. This is the lowest “survival rate” in any of the major developed countries.⁸

Forty years ago the United States was the undisputed leader in educating its population. Even though America’s technological progress increased the demand for talented people, the U.S. education system increased the supply of them even faster. But over the last few decades the education-to-employment system has begun to fray. Technology has increased its pace, whereas educational advancement and talent creation have slowed down.⁹

If U.S. competitiveness is to continue growing, more business profits need to be placed back into raising worker productivity through investing in a renewed education-to-employment system.¹⁰ Many of the jobs going begging require considerable education or specialized technical training, certification, or apprenticeship.¹¹

Even the U.S. Pentagon is increasingly importing software and hardware from non-U.S. companies. The so-called Berry Amendment requires the Pentagon to purchase specialty metals from U.S. sources. For national security reasons, national defense contractors must also employ U.S. citizens to build aerospace and military hardware.21 With an increasing shortage of qualified U.S. tech workers, many Pentagon staffers and defense contractors would like Congress to jettison these restrictions. U.S. defense and aerospace are one of the few bright spots left in U.S. foreign exports. Unless steps are taken, this U.S. industrial base is running the risk of being seriously eroded.¹²

By 2020 the United States needs to accomplish a serious overhaul of its entire education-to-employment system. If it stays on its present course, the alternate scenario might divide the United States into two classes—the first, college-educated managers, professionals, and technicians; the second, the poorly educated, dropouts, immigrants, and others without special career skills who will be trapped in low-wage service jobs. As we shall see, we could write the same message for other developed nations around the world.¹³

But none of this grim scenario has been fixed in the stars. A positive future economic course is already being plotted in many communities in the United States and other nations.

About 15 percent, or 2,000, of U.S. high schools produce about 50 percent of its dropouts. Researchers at the University of Pennsylvania and the Philadelphia Education Fund termed them “...