2 out of 3 states have too few skilled workers, too little demand or both, OECD finds

Fewer than 1 in 3 states – California among them – has a strong enough supply of skilled workers to match intense demand for their services, according to a new report about the growing skills gap.

Only 14 states enjoy what researchers from the Paris-based Organisation for Economic Co-operation and Development call a high skills equilibrium.

Those labor markets feature a balance between the percentage of working-age people with a post-secondary education, the ratio of medium- and high-skilled occupations available locally and the average wage per job.

Such areas are better equipped to create quality jobs that contribute to wealth creation and a productive economy, according to Sylvain Giguere, head of the OECD’s Local Economic and Employment Development division.

The majority of California’s 58 counties fit the mold – including Los Angeles and every coastal county except Del Norte and Imperial and most of the counties bordering other states.

Demand for skills in the state is highest in Santa Clara County, home to Silicon Valley, ranking 39th out of more than 3,000 counties nationwide. Marin County in the Bay Area has the highest level of skills supply in California and the 11th highest in the U.S.

But 14 counties in the state – including Imperial, San Bernardino and Kern – are dealing with a skills deficit. One, Mariposa, has a skills surplus.

Only Tulare suffers from what’s known as a low skills equilibrium, where the workforce is relatively low-skilled and employers aren’t looking to fill jobs that require advanced qualifications.

Like Tulare, 19 states have a low supply of skills matched by low demand for skills. There, Giguere explains, the lack of better-paying jobs makes workers disinclined to upgrade their skills.

And in a chicken-and-egg problem, firms aren’t incentivized to innovate because they feel the workforce isn’t capable of handling such advancements.

Between 2006 and 2012, some areas have made great strides – specifically Alabama and Washington, D.C., in the supply of skilled workers and Alaska and Montana in the demand for such employees.

But OECD researchers said many barriers remain to encouraging businesses and workers to seek higher skills and connecting them when they do.

Even in California, the skills gap is threatening economic growth. More than half of companies surveyed by the Society for Human Resource Management said they have struggled to recruit candidates for open positions, particularly for higher-wage jobs. 

Industries are increasingly interconnected by technology and data, which encourages rapid changes and new opportunities.

Employment policies in government and companies can’t be one-size-fits-all and instead must be tailored to local job markets, according to the OECD report. Workers must be more adaptable to change and willing to continue updating their skills for life.

Instead of freezing out vulnerable groups of workers – young, uneducated job seekers or aging employees – employers should offer flexible working schedules and on-site training.

Net job creation is often driven by a small cadre of fast-growing firms. Researchers suggest developing business accelerators near such clusters and encouraging new entrepreneurs.