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Does The Marketplace Have A Skills Gap?

Somen Mondal

April 2, 2019

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Has the idea of a skills gap been brought up in your organization?

Does a skills gap exist? And what should you do about it?

The idea of a “skills gap” has gotten considerable attention in the past year or so. The basic argument is very logical: Technology is evolving rapidly, and that’s created “gaps” where employers need specific skills, but it’s increasingly hard to find them. Considering the Internet itself is only 30 years old and many professions today have Internet skills/capabilities tied to them, it makes perfect sense that the “skills gap” must exist.

Or does it not?

There are arguments to the contrary on the skills gap

Recently there have been a number of discussions on the idea that the skills gap never really existed, notably here and here.

The basic argument on this side of the equation is that the skills gap is a consequence of high unemployment, not the cause of it. Some of the discussion emanates from an early 2019 paper entitled “Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful?” from researchers at Northeastern, Harvard, and the Federal Reserve of Boston. The paper has a number of complex economic graphs, as you might expect from a presented academic paper, but ultimately comes to this conclusion:

“… a 1 percentage point increase in the state unemployment rate is associated with a 0.6 percentage point increase in the fraction of employers requiring a Bachelor’s degree and a 0.8 percentage point increase in the fraction of employers requiring 4+ years of experience.”

This is what seems to happen in good job markets, then: Rather than investing in training workers, which might seem logical, employers demand lots of experience and educational credentials. The perception of there being a “skills gap” can rise.

The other elephant in this room…

… would be salary. Oftentimes, employers — with a focus on keeping costs down to keep profits up — do not want to pay market value for a specific role, even if it contains unique skill sets. This situation is exaggerated in tight job markets, especially for tech roles. If you need someone with a specific skill set, the chances are that they’re already employed somewhere else. (This is common in tight labor markets.) As such, you need to “poach” them from their current employer, which is typically going to involve raising their salary. (Very few people change jobs for a smaller salary.) As a result, bidding wars can drive salaries up to a level that employers are uncomfortable paying. When that happens, oftentimes the idea of “a skills gap” can mean “We cannot find someone with these skills willing to accept this salary,” not “We cannot find someone with these skills.”

Where does this leave you as an employer?

You obviously want the best people you can locate and afford to work on business-critical projects for you. That should be the desired ecosystem. How are you going to achieve that?


  • First: determine what you actually need. If you’re going to spend money on salary, spend it on roles that will actually matter to the business.
  • Second: understand the market rate for those people. You can look at data locally or use a tool like LinkedIn to understand salary by role title.
  • Third: begin searching. This is where you need to be smart and strategic, although many organizations are not and just opt for “post and pray.” Smart and strategic means a screening process driven by advanced technology, because that helps bring you the right candidates and frees up your recruiters’ time in the process too. It means smarter uses of automation, and it means human-to-human contact with the highly-skilled applicants to get context on what they’re looking for. In order to prioritize those skills you truly need and communicate more directly with those candidates, you can scale the idea of overall candidate communication by using chatbots. And then, as you’re doing all this, you can go back into your ATS — typically a “dumb technology” — and mine it for old gold, i.e. previously-qualified candidates, using a process called rediscovery. Tech is supposed to make you more efficient, faster, and more strategic. Use it the right way and it will. And while your compensation bands could need a little bit of work, you’ll start chipping away at that “skills gap” and finding the proverbial needles in haystacks if you do this right.

We’d love to know your answer. Do you think there’s a skills gap?