New research says the skills gap is the product of low unemployment, but this new report may be missing the point.

Earlier this year a report from American Economic Association spurred articles by the Washington Post and Vox triumphantly proclaiming the ‘skills gap’ to be solved – since it never existed at all.

The response to these articles on Twitter was mixed, with one economisttweeting, “Every time you hear someone say ‘I can’t find the workers I need,’ add the phrase ‘at the wage I want to pay.’” At the same time,  many recruiters simply retweeted the stories for conversational fodder without committing to an affirmative or negative stance.

Economic analysis and predictions are esoteric practices, and the public doesn’t seem too surprised when pundits get it wrong, so the news of a labor crisis — given credence by the Obama administration and the US Chamber of Commerce — being totally discredited disappeared by the next day’s news cycle.

We couldn’t let it go. We reached out to SmartRecruiters followers in a casual Twitter poll, and 60 percent of respondents named ‘skills shortage’ as their top sourcing challenge. Granted, our sample size was certainly not large enough to make a claim, either way, but it did make us take a closer look at the American Economics Association study, and — as you may have guessed — there’s more to the skills gap than ‘true or false’.

It seems that when the US Chamber of Commerce and then-President Obama talk about the ‘skills gap’, they’re referring to the digital transformation making many laborers obsolete, but when American Economics Association talks about the ‘skills gap’, they’re talking about the degree and skill inflation within job ads.

The thesis of the research from Alicia Sasser Modestino, Daniel Shoag, and Joshua Ballance argues that when unemployment rises, employers can be choosier and require more skills from candidates. Thus the skills gap is a self-perpetuated, non-emergency resulting, in large part, from the financial crises of 2008.

Indeed, the analysis of over 36 million job ads from 2007 to 2012 does show a significant uptick in skill requirements. For example, jobs that previously required a high school education minimum began asking for candidates with four-year degrees. Employers acknowledged this phenomenon as a conscious decision in the report, saying, “the recession is a wonderful opportunity to acquire top talent.”

The question still remains, does this report show the skills gap is a lie? If we look at it from a digital transformation perspective, then no. This digital transformation skills gap, cited by the White House and the US Chamber of Commerce, is about a shortage of IT skills, a shortage which is still very real.

According to a 2018 Statista report, the largest deficits in tech are in Big Data/ Analytics, Technical Architecture, and Security/Resilience. And, it’s not just tech companies that need IT workers, as IT skills are necessary for any business to compete in today’s economy. Even the mom and pop store on the corner needs to consider web presence and data security.

So, if neither is wrong what does this report really tell us about today’s talent economy. We turned to Sarah Wilson, head of people at SmartRecruiters, for some practitioner insight into the conundrum.

Is there actually a skills gap?

It is accurate to say when the unemployment rate is higher and the candidate pool is more plentiful, companies become more choosy and require more experience and education. However, when people refer to a skills gap, they usually are talking about technical skills.

The skills gap in the tech space is ongoing, especially with emerging technologies like machine learning and artificial intelligence. In many areas, technology is advancing faster than the workforce.

I think as more and more new tech emerges, companies (especially large ones) will need to figure out how to upskill their existing workforce because allowing them to become obsolete isn’t a sustainable business model. I see a trend of accountability on the part of the business to provide opportunities for development.

Do recruiters have an exaggerated view of the skills gap?

The tools that we as recruiters traditionally used to engage talent aren’t delivering like they used to. Now that almost every company has a LinkedIn recruiter license, any quality candidate is inundated with in-mails and emails about new job opportunities.

Just as employers take advantage of high unemployment, candidates can be choosier when unemployment is low. Recruiters need to be creative with how they find and connect with talent pools that might even involve sharpening up their tech skills.

Information technology is the backbone of every business, utilizing computer hardware and software, as well as cloud-based applications. The multitude of technologies that encompass a company’s IT department need to run efficiently and without interruption at all times, and they need to be periodically updated when newer, more advanced versions become available. In addition, all business information and files need to be kept secure and have no risk of being compromised. As you can see, the importance of IT cannot be underestimated. Because of this, you need to hire a knowledgeable, capable and forward-thinking IT specialist.

Understand how Information Technology has Evolved

In years past, an IT department consisted of one individual who worked at a computer all day, and made sure everyone’s computers, software and email systems were working properly. Today, IT has become one of the most sophisticated and demanding fields in the business world. Information is more valuable, media channels have evolved, and companies of all sizes are relying on software and applications that can be accessed from desktop computers, laptops, tablets and smartphones. In short, IT specialists have more responsibilities than ever before, and they are often called upon after hours – and on weekends – to manage specific tasks and fix technology-related problems.

Define What you Need in an IT Specialist

Clearly define your company’s specific IT needs for today and what they will be in the near future. For example, you might be experiencing growth and need to add new employees or another office location. Or, you might be planning to launch a new website or a mobile version of your existing website. Each of these “big picture” business strategies is large in scope and requires expert IT knowledge, so you will want someone who has above-average experience in these areas. Of course, you will want your IT specialist to be well-versed in database management, information security, system administration, and programming languages, to name a few. An IT expert who has a full understanding of Unix, Linux, Java, C++, Perl, MySQL and XML will be a huge benefit for your company.

Look for Candidates in the Right Places

There are several jobs that fall under the IT umbrella, and some of them have tasks that overlap each other. Be specific in your job ads so candidates know exactly what is expected of them. You have access to many online employment sites and niche job boards, some of which specialize in the IT industry. You may also want to consult with your peers to get professional referrals. Use your social networks to share the job and test your hand at social recruiting.

The Bureau of Labor Statistics reported that Information Technology is one of the fastest-growing fields in the United States. The increasing number of computer technology and computer engineering graduates, means there is no shortage of employment prospects for your company. IT professionals are in high demand and command premium salaries nationwide.

Interviewing IT candidates

As you begin receiving resumes for your IT specialist position, set aside those that meet all of your requirements and schedule personal interviews with each. Along with education, training and experience, the ideal IT specialist has enthusiasm and good interpersonal communication skills. An IT professional works in their office throughout the day, but there will be times when they need to interact with you and your employees, as well as your computer hardware and software vendors. So, make a note of the candidates who are approachable and appear to have outgoing personalities.

Having a talented IT expert on staff will support your company’s myriad technologies, reduce the risk of sensitive information being compromised, and help you and your employees work more efficiently and effectively. Ultimately, the right IT employee can help take your company to the next level and enable you to look at new business initiatives.

This blog entry was written exclusively for SmartRecruiters by Balboa Capital, a leading independent provider of small business loan products and equipment leasing programs since 1988. Balboa Capital has a growing IT department and is often looking to add new employees to its team. You can see if there are any current openings in Balboa Capital’s IT department by visiting the company’s equipment financing careers page.

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