Are skilled trades doomed to decline?

Mark Mills

According to conventional wisdom, future employment prospects are dismal for the 21 skilled trades — electricians, electronic and medical techs, mechanics, machinists, welders, pipe fitters, and other similar trades — and for those workers uninterested in or unmotivated by a college education. The challenges, the argument goes, emerge from a trifecta of forces: automation as robots invade the trades; deindustrialization as America becomes more service-sector-dominated; and globalization as industrial jobs move offshore.

While these forces are real, the dismal conclusion is neither inevitable nor supported by the facts.

Technology progress and automation improve productivity and thus, on average, increase the need for more skilled workers with rising salaries. Overall U.S. manufacturing productivity (output per labor hour) is up about 40 percent since 2002, and average wages are up 25 percent, too. The combination enhances U.S. competitiveness, since output is growing faster than costs.

While there are few bullish forecasts for America’s economy these days, the consensus nonetheless is that nearly every industrial sector is growing. Output in the automotive and computing-communications manufacturing sectors, for example, is now at all-time highs and expected to keep rising. Despite global competition and a still-dragging recovery, physical output is forecast to rise over the next five years in nearly every sector in the United States, including housing, industrial machinery, communications and medical equipment, chemicals and energy, fabricated metal parts, appliances and aerospace machinery, and in public works projects.

New technologies and tools are making production more efficient, but skilled trades are still needed to fabricate, maintain and operate virtually everything. An Accenture survey of manufacturers found a dramatic rise of more than 20 percentage points over the past five years in the number of companies reporting a shortage in skilled trades available, especially for operating and maintaining tech-centric equipment. Skilled trades vacancies have been the hardest to fill for six consecutive years. The shortage of skilled employees will either stifle growth or cause businesses to find solutions offshore.

The vast majority of Americans overall, and the majority of millennials, don’t have and won’t have a college degree. Many have several years of college and enormous debts and no degree to show for it. And others have degrees that earn them the right to marginal employment at low salaries.

Meanwhile the so-called skilled trades often pay more but cost far less in time and money to gain the requisite skills and certifications. There are far more high-paying jobs for welders, for example, than for college teachers, and more jobs for electricians and automotive technicians than for software developers. The unemployment rate for “two-year occupational” degrees is similar to that for the college-educated, and both are more than 50 percent below the rate associated with only a high school diploma.

There is not only a shortage of trained workers today; because of the confluence of the aging of the skilled workforce without a commensurate interest in trainees in the pipeline, the skills gap can only grow.

Economists are struggling to forecast the broad implications of the overall aging of America’s workforce, the so-called Silver Tsunami, with the wave of retirements expected in the boomer generation. But this wave is coming sooner for the skilled trades. The share of workers over 45 years old in the skilled trades is about 25 percent greater than for the overall workforce.

This “silvering” of the trades varies dramatically, depending on the region and specific occupations, with the asymmetry bigger in Houston and Boston than in New York and Seattle, for example. And a recent PwC survey of manufacturing executives found 37 percent saying that automation will lead to more hiring; only 17 percent see it reducing hiring (45 percent expect no change).

America needs more millennials to join the skilled workforce. But today, the number of people completing apprenticeships has changed little since 2008. Even though about 150,000 Americans start an apprenticeship each year, that total would be 1 million to 3 million a year if as many U.S. millennials signed up as they do per capita in France, Germany, England and Switzerland.

The future world will surely need more coders, engineers and managers. But it will also need a tidal wave of skilled technicians and trades that can build, operate and maintain our new technologies as well as our old essential ones.

Mark P. Mills is a senior fellow at the Manhattan Institute for Policy Research. He wrote this for InsideSources.com.