Wells Fargo on the Labor Force Skills Disconnect

Wells Fargo’s Chief Economist is out with a look at the skills mismatch between what manufacturers need versus what the labor force in America can actually do.  John Silvia notes that this mismatch is nothing new even as it seems more and more pronounced.

Further, his research finds that, like most things, the disconnect is a regional thing – certain parts of the country have fared better than others…

Regions That Successfully Countered The Trend
The decline in manufacturing employment however has not been even across regions of country. In fact, the West and South both have seen very strong manufacturing job growth over the past decade (middle graph). In the West, producers of technology products have added jobs while the South has benefited primarily from the relocation of facilities from higher-cost producing states in the Midwest to the lower-cost South as well as strong foreign direct investment in industries such as the auto industry. This trend however, is beginning to shift as the cost differentials between the U.S. and other nations such as China are eroding pushing non-durable manufacturing overseas while keeping many specialized, quality focused durable manufacturing in the region. However, the firms staying in the region continue to adopt more technology to stay competitive and thus today’s manufacturing workers need to continue to improve skill levels.

One of the big surprises in this endless balance sheet recession is that we haven’t seen a lot more migration a la the Depression where people went to where the work (or the charity) was.  Especially given the disparity in regional economic strength this go-round.