Is the U.S. Suffering a Skills Shortage?
Is there a skills shortage in the U.S.? Businesses complain that they cannot find workers with the skills they need (and recruiters are in great demand), but workers and their advocates respond that employers simply are not willing to pay enough. A new report tries to get to the bottom of this by combining insights from five sources of data, including ones that employers like to cite and ones that workers use to make their case. Its conclusion: Yes, there are skill shortages, but not everywhere. While skill shortages are “most dire” in health care, there are no national shortages at all in several other sectors, including leisure and hospitality.
The study is by Third Way, a think tank that identifies itself as centrist. Its author, Rachael Stephens, wrote the report while working as an economics fellow at Third Way. The middle-of-the-road conclusion on the existence of skills shortages grew out of Stephens’ decision to consult multiple, sometimes conflicting data sources. “While any one type of data might have a shortcoming, when we look at the data sets holistically, we see patterns emerging,” she said in a recent interview.
In health care and social assistance, for example, the job-filling rate is low, which seems to indicate that employers cannot find the nurses, aides, and other workers they need. On the other hand, wage growth has been modest, which seems to indicate the opposite—that employers are getting the people they need without resorting to big pay raises.
To resolve the contradiction between job-filling data and pay data in health care, the report looks at three other indicators. The first indicator is the supply of people in the U.S. who have the education or credentials that the sector requires and points to a “moderate gap or shortage.” Two other measures—employer surveys and analyses by state governments—point to a “significant gap or shortage.”
Putting all five measures together, the report rates the skills shortage in health care as dire (and likely to get worse as society ages). Still, what about the fact that pay growth has been so modest? Not a reliable indicator in this case, Stephens decided. “Wages in the health care sector are largely controlled by public health care funding and insurance markets,” the report notes. “Thus, we can’t necessarily expect wages to behave the same way we would in most labor markets.”
The indicators are flipped in the sector with the second-worst skill shortages, professional and business services. There, the job-fill rate is not too bad, but wage growth has been exceptionally strong, Stephens found. Tech seems to be the most problematic corner of the professional and business services sector. State-level analyses helped her reach that conclusion. “In their 2016 reports to the U.S. Department of Labor, seven of the nine states with high-quality data (California, Colorado, Missouri, New York, Rhode Island, Washington, and Connecticut) all reported serious concern about filling tech jobs over the next few years,” she wrote. In education, which has the third-worst problem, it is STEM (science, technology, engineering, and mathematics) where qualifications tend to be lacking, the study finds.
The Third Way report sorts out three terms that tend to get used interchangeably. Skill gaps exist when the training or education for a job is inadequate to the job’s demands. A skills shortage “is more commonly what we’re really talking about,” the report says; it is when training and education are adequate, but there simply are not enough people who have it. And a skills mismatch is when workers are skilled but in the wrong things. Some sectors have an oversupply of skilled labor, while others suffer a deficit. Will these careful distinctions catch on? Hard to say—the Third Way report itself sometimes uses “gap” and “shortage” interchangeably.
Citations
- https://bloom.bg/2sOXxQ5 Bloomberg
- http://bit.ly/2tqC66J – Third Way
Legendary Guitar Maker Fender Looks to Online Learning for Growth
Fender Musical Instruments Corp, whose electric guitars have powered music from Jimi Hendrix to Nirvana, is getting into the software business with an app for guitar lessons. The Scottsdale, Arizona company is launching “Fender Play,” an online system for learning guitar that Chief Executive Officer Andy Mooney, a veteran of Nike and Disney, hopes will cut down on the number of would-be guitarists who give up. He said 45% of the company’s guitars sell to first-time players, but 90% abandon the instrument within a year and never become repeat customers.
“The 10% who make it through the first year own an average of seven guitars,” Mooney said in an interview. “When we gathered the data and looked at the facts, we said, ‘Oh my God, if we just reduced the abandonment rate by even 10%, we could perhaps double the size of the industry.’”
The musical instrument industry grew 9% to $7.1 billion in retail sales over the past five years but remains well below its 2005 peak of $7.7 billion, according to data from The Music Trades magazine. Moreover, the electric guitar was virtually absent from the Top 20 music charts in the past five years. The guitar industry hoped video games like “Guitar Hero” would ignite interest among teenagers. Instead, electric guitar sales fell from 1.2 million units in 2011 to just over 1 million in 2016, according to The Music Trades. The overall guitar market held steady at around 2.5 million units per year during that period, thanks to growth from acoustic instruments.
Fender Play is just the latest extension of Fender’s digital strategy. In recent years, the company has launched a popular guitar tuning app for smartphones and the Mustang GT series of Wi-Fi and Bluetooth-enabled amplifiers. The Fender Play service aims to address some key trends, Mooney said. About half of first-time buyers are women, according to Fender’s research, and they are buying acoustic guitars online and going to sites like YouTube for lessons. For those new players, he said, traditional music stores can be intimidating.
In addition to teaching songs and riffs, the service includes videos on things like strumming technique, scales, and understanding guitar tone effects like reverb and distortion. Fender Play provides a starting point for beginners, to whom the site is primarily geared. “We’ve catered to the needs of the accomplished player for seven decades, says Mooney. “We’ve built guitars for Eric Clapton, Stevie Ray Vaughn and Jimi Hendrix. We never really concentrated on those players who buy a guitar for the first time every year.”
The tutorials themselves are shot in 4K-quality video from multiple camera angles, so viewers can clearly see how chords are formed and the guitar strings are strummed or struck. This is a common shortcoming of YouTube lessons. “There’s tons of free content out there, but it’s a labyrinth to navigate through it at your own pace and get a consistent quality level,” says Mooney. “We felt there was a real opportunity to upgrade the quality and help guide students through the first year of learning.”
After a free introduction, Fender Play costs $19.99 a month and consists of a series of video lessons that assume no prior knowledge. Mooney said his model was Lynda.com, the online learning platform acquired by LinkedIn for $1.5 billion that defied expectations it could not compete with free videos on the internet. Next year, Fender will make an instructor edition available to dealers so they can use it to manage their guitar students. Fender will compete with other fee-based sites like JamPlay, but is the first guitar maker to dive into the online learning market.
Citations
- http://for.tn/2tVU95x – Fortune
- http://bit.ly/2uzHzXk – Fast Company
The Good News Is . . .
- The U.S. job market improved last month, with a better-than-expected 222,000 new positions created in June while the unemployment rate held at 4.4%, according to a government report Friday. Hourly earnings rose 2.5% on an annualized basis, and the average work week edged higher, rising 0.1 hours to 34.5. Employment gains have averaged 180,000 per month in 2017, a shade below the 187,000 in 2016. Health care was the biggest contributor, with 37,000 new positions, with professional and business services adding 35,000. Social assistance added 23,000, Wall Street-related jobs grew by 17,000 and mining saw 8,000 new positions.
- Herman Miller Inc., a leading office furniture manufacturer, reported earnings of $0.64 per share, an increase of 14.3% over year-earlier earnings of $0.56 per share. The firm’s earnings topped the consensus estimate of analysts by $0.09. The company reported revenues of $577.2 million. Management attributed the results to increased net sales and order acceleration within its consumer business segment, as well improved gross margins.
- Liberty Interactive, which owns QVC, said on Thursday that it would combine with its longtime rival, the Home Shopping Network (HSN), in a $2.1 billion deal. The deal will put together the two home-shopping television networks at a time of upheaval in the retail world. Amazon’s dominance in selling online has grown seemingly nonstop, while Walmart has made e-commerce a big priority with the purchases of start-ups like Jet and the clothing brand Bonobos. Combining QVC and HSN, which also have substantial e-commerce operations, is meant to help them gain scale, combine resources and cut costs. QVC and HSN would remain stand-alone brands under a new QVC Group structure after the merger. Under the terms of the transaction, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own. That would value HSN at $40.36.
Citations
- http://reut.rs/2sNHdPO – Reuters
- http://cnb.cx/2lwnm3s – CNBC
- http://bit.ly/2sWnLvz – Herman Miller, Inc..
- http://nyti.ms/2uA0aCG – NY Times Dealbook
Planning Tips
Guide to Your Summer Personal Finance and Investment Reading
If you want to achieve financial success, become wealthy, and retire early, one of the most important things you can do right now is crack open a book. Below are some books on personal finance and investing that can help you achieve your financial goals and ambitions. It is a good idea to consult your financial advisor before implementing any investment strategy to determine if it is appropriate for your situation.
How to Make You Money Last: The Indispensable Retirement Guide – This book, by Jane Bryant Quinn, will teach you how to turn your retirement savings into a steady paycheck that will last for life. One of people’s biggest fears is running out of money in their older age. Ms. Quinn suggests tricks for squeezing higher payments from your assets. These moves will not only raise the amount you have to spend, they will also stretch out your money over many more years. At a time when people are living longer, yet retiring with a smaller pot of savings than they had hoped for, this book will become the essential guide.
The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later – This book, by New York Times bestselling author and legendary investment guru Ric Edelman reveals his forward-thinking guide on how technology and science will reshape the way we save, invest, and plan for the future. The traditional paradigms of how we live, learn, and invest are shifting under our feet. Edelman explains how smart investors can adapt and thrive in today’s changing marketplace and offers sound, practical investment advice through the lens of recent scientific and technological advancements. He illustrates how discoveries in robotics, nanotechnology, 3D printing, solar energy, biotechnology, and medicine will redefine our life expectancies, careers, and retirements. As we live and work longer, Edelman provides clear advice on how to recalibrate the way we save for college, invest during our careers, and plan for retirement. The Truth About Your Future, featuring Edelman’s proven advice is a timely, must-have guide for anyone serious about successfully adapting to the ever-evolving financial landscape.
The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich – This classic by David Bach is one of the most popular financial books of our time. It has sold over 1.5 million copies and been translated around the world in over a dozen languages. This updated edition includes updated information on taxes, investments, technologies and apps to automate your financial life as well as Bach’s latest systems for making the entire process even easier. He also provides websites and apps, so you can put the secret to becoming an Automatic Millionaire in place from the comfort of your own home. This powerful little book has the potential to secure your financial future.
Money Master the Game: 7 Simple Steps to Financial Freedom – Based on extensive research and one-on-one interviews with more than 50 of the most legendary financial experts in the world—from Carl Icahn and Warren Buffett, to Ray Dalio and Steve Forbes—Tony Robbins has created a simple 7-step blueprint that anyone can use for financial freedom. Robbins uses an engaging style of metaphor and story to illustrate even the most complex financial concepts—making them simple and actionable. With expert advice on our most important financial decisions, Robbins is an advocate for the reader, dispelling the myths that often rob people of their financial dreams. Tony Robbins walks readers of every income level through the steps to become financially free by creating a lifetime income plan. This book delivers invaluable information and essential practices for getting your financial house in order.
Worth It: Your Life, Your Money, Your Terms – From the founder and CEO of DailyWorth.com—the go-to financial site for women with more than one million subscribers—comes a fresh book that redefines the relationship between women, self-worth, and money. Worth It shows women how to view money as a source of personal power and freedom—and live life on their terms. The book outlines the essential financial information women need—and everything that institutions and advisors often do not spell out. Steinberg gets to the bottom of why women are stressed and anxious when it comes to their finances and teaches them to stay away from strict budgeting and other harsh austerity practices. Instead, she makes money relatable, while sharing strategies she uses herself to build confidence and ease in her own financial life. Through her first-hand experiences and stories from other women, Steinberg’s powerful and encouraging advice can help women of any age and income view money as a source of freedom and independence—and create bright financial futures.
Citations
- http://read.bi/2uTJ0zk – Business Insider
- http://cnb.cx/2sW9Aq4 – CNBC
- http://read.bi/2uTJ0zk – Forbes
- http://bit.ly/2tRT9j6 – Seeking Alpha
- http://bit.ly/2u1qf0m – InvestorTrip.com
