Charleston Skills Gap: How Bad Is It And Where Do We Go From Here
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Charleston Skills Gap: How Bad Is It And Where Do We Go From Here

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At the heart of recent headlines swirling around the potential merger of the College of Charleston and MUSC has been an underlying discussion of the skills gap in South Carolina and Charleston in particular. The debate is centered on how to best fill that gap in order to satisfy the business needs of the Charleston area and drive more businesses here. Proponents of the merger argue that a more comprehensive university would be able to fill those needs and be the backbone that drives an innovative economy. They cite areas like Austin TX and Raleigh NC as models for Charleston to follow. These two issues, the skills gap and the merger, are inherently linked, but discussing them together is too large for one post, so I am going to break this into sections. I am going to start with discussing the skills gap in this post, since it is an integral part of the merger talks, and then work on the arguments for and against the merger in a second post.

One of the most vocal proponents of the merger has been the Charleston Metro Chamber of Commerce (of which I am a member). A major theme of their recent 2014 Economic Outlook Conference was the skills gap in the Charleston area. The report from which can be found here.

The data in the economic forecast by the Chamber is quite compelling.  It projects that job growth in the Charleston area in the next 5 years is expected to be 25,000 jobs, or seven times the growth of the past 5 years.  Computer and software jobs are expected to increase by 20%, science and engineering jobs by 16%, sales and marketing jobs by 14% and medical jobs by 13%.  They go on to show that last year general assembly and fabrication post-secondary certifications produced 12 degrees for 200 new jobs.  Industrial Engineering Bachelor programs produced 15 degrees for 76 jobs.  Computer programming and developer programs produced 15 degrees for 75 jobs.  Graduates of the latter program boasted 5 job offers, on average, upon graduation.

The report also references a STEM (science, technology, engineering and math) study performed the the Brookings Metropolitan Policy Program.  They took the top 100 metropolitan areas in the country and looked at the percentage of STEM jobs in each economic area, the pay difference for those jobs, and the economic benefits of having more STEM jobs on a percentage basis.

What they found in the Charleston area is that 21.3% of all jobs were STEM jobs and that 44.7% of these required at least a Bachelors degree.  These jobs tend to pay $13-20,000 more per year than non-STEM jobs which require the same level of education.  Furthermore, the study finds that areas with higher percentage STEM jobs also have higher levels of job growth, employment rates, wages, and exports.

To boost the argument for the need of a more comprehensive local education system, the Economic Outlook Report refers to several major announcements from businesses that have decided to call Charleston home.  Benefit Focus recently announced that they plan on creating 1,200 new jobs when they expand their campus.  Google announced that they plan on investing an additional $600 million in the expansion of their campus.  In addition, Boeing has announced an addition $1 billion (yes, with a ‘B’) to purchase land around their current facility.

It is important, however, to keep in mind that while Boeing will increase employment as it finishes its ramp up to full capacity, they have not announced (and will deny any current plans to) expand their operations past current capacity.  The purchase is to merely secure control over land in the area so that they have the option to expand at a later date, if necessary.  They do plan on opening an IT Center for Excellence and an Engineering Design and Propulsion Center.

Now, let us take a look at all of this a little more closely.  The details outlined above are certainly eye opening, but they are not the whole story.  First, there is no reason to doubt the growth projections in light of some of the investment and job announcements, but they also are not in line with recent historical norm.  The Economic Outlook Report states that recent job gains have been lead by the construction industry, transportation and utility industry, and government.  None of the jobs are in the major projected growth areas of the forecast.  This can be somewhat accounted for in that these industries, especially construction, are where one would expect to see major growth at the beginning of an economic rebound since these industries are generally the hardest hit during a recession.

Next, the education gap certainly is not a local phenomenon.  It may very well be one of the largest problems facing the future of the American economy today.  The Organization for Economic Cooperation and Development (OECD) released their Skills Outlook for 2013 back in October.  This study included 33 countries consisting mostly of already industrialized nations and excludes most economies that would be considered ‘emerging’ (but does include Brazil and China).  The study found that less than 12% of Americans surveyed scored in the top two rungs (of six) on the literacy test.  Only 34% of adult Americans scored in the top three rungs in Math, 12% percentage points under the international average.  In addition, the problem seems to be getting worse.  Test takers at age 30 scored worse in 2012 then they did in 1994 and math and reading scores for teenagers has not improved over the last 10 years.

How has this gap between skills developed in the labor market and a domestic economy that still values innovation been bridged?  Where suitable talent has not been available domestically, it has been imported from abroad.  While importing talent, in and of itself, is not a bad thing, doing so out of necessity because we have not developed the domestic labor pool is inefficient and leads to a larger drain on the economy.

This logic can be applied on a micro-economic level as well.  Importing talent into the Lowcountry is not necessarily a bad thing, but not training our youth to fill the local jobs created by growth is, if the goal is to grow a sustainable local economy.  Adding degree programs in to a local university may not solve this problem if there are not enough students coming out of high-schools equipped to enter and thrive in these programs; or if the university is unable to focus on local students to fill its classes because of financial necessity.

According to the National Education Association, South Carolina comes in 34th in per capita expenditures for K-12 education, 36th in per student expenditures for public K – 12 at 86.6% of the national average and 36th in average salary for classroom teachers.  Even if you want to take into account that this is a state with lower wages and property values than many other states resulting in a lower tax base for school districts and state funding, South Carolina ranks 28th in student expenditures on a per personal income basis (reported as dollars spent per $1000 of personal income of state residents).  As such, South Carolina ranks 39th in mathematics, 43rd in reading and 37th in Science for our 8th grade students according to data from the National Center for Education Statistics.

As state budgets have dwindled, funding for higher education has as well.  If our goal is to create local jobs for a local economy, having the funding and classroom space for local students is a must.  Currently, according to the NEA data referenced above, South Carolina ranks 35th in per capita expenditures for higher education.  In addition, according to the American Council on Education, South Carolina has decreased funding for higher education, on a personal income basis, by 66.8% from 1980 to 2011.  This has forced institutions of higher education to become more reliant on non-resident students in order to fill the void in income.  Where is a local comprehensive university going to go to get the funding for expanded degree programs?  Probably not the State House in Columbia where the university would have to compete for a very limited pool of resources with other in-state schools.

It is fairly clear that we are suffering from a gap between skilled labor and an economy which is becoming more reliant on innovation based industries.  This gap is occurring across the nation as well as locally.  If we added a research university here in Charleston to help bridge that gap for local businesses, that university would have to compete with other universities across the country for a small group of qualified students that have interest in those areas.  The place to start, therefore, may be to build the structure and support in order to foster skills and interest in our middle and high-schools.  Perhaps then we could transition those students in to local training and degree programs and finally in to a vibrant local workforce.

This is going to require a collaborative effort, however.  Government (both state and local), education systems, and businesses are going to have to work together to fund out-reach programs and schools. There is not going to be one easy solution to bridging this gap.  It going to require leadership, innovation, and cooperation by our entire community.

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