OECD

American workers are way behind: Blame U.S. employers

October 25, 2013: 10:36 AM ET

The latest disappointing data about America's skill shortage underline the need for more American companies to provide on-the-job training and education.

By Elizabeth G. Olson

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FORTUNE -- To listen to some companies, American workers fall glaringly short of sophisticated computer and other necessary skills in today's workplace.

They have a point, at least according to a recent international survey of workers in two dozen developed countries, which found that workers in the U.S. trailed many of their foreign peers in literacy, math, and problem-solving skills.

The survey, by the Organization for Economic Cooperation and Development, of 166,000 workers between the ages of 16 and 65, is the most detailed comparison so far of abilities in the workforces of various countries, giving it credibility in the ongoing debate over America's place in the world economy.

Historically, the quality of worker skills has fueled the American economy's strong rate of growth. And strengthening U.S. workforce skills could increase average wages significantly, economists argue.

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According to the OECD's Survey of Adult Skills, Japanese workers rank first, followed closely by Finland, then a trio of European countries, the Netherlands, Sweden and Norway. That contrasts with the U.S., which ranked in the middle for literacy and near the bottom of the 23 countries for math and technological skills.

The U.S. did come out ahead of some countries on account of a stark "digital divide" where millions do not even know how to use a computer mouse, one of the simplest computer skills.

While it can be difficult to compare a large population country like the U.S. against a small, homogenous nation such as Finland, workplace experts say the country-to-country comparisons of such abilities underline the need for more American companies to step up to the plate.

The sharp lack of skills among workers shows that "employers need to do more for continuing worker education," an area, says Peter Cappelli, professor of management at the University of Pennsylvania's Wharton School of Business. Investment in employee education has been neglected in recent years as companies have been less willing to train up candidates for fear of losing them to competitors. As a result, programs like apprenticeships, which are more common in Europe, are nearly defunct in the U.S., and new hires are expected to be fully prepared to take over their new duties.

"And companies don't want to spend the money," Cappelli adds. Nor do they want to pay higher wages to recruit people with the needed skills, he says.

The only area where companies are investing is in executive education to equip the highest-level employees for their jobs, he notes.

"Employers complain a huge amount," agrees Harry Holzer, professor of public policy at Georgetown University, "and choose not to invest, but it's hard for an individual employer to build the infrastructure needed.

"Instead of blaming others, we need a broader workforce training like feeder schools for occupational vocations," he says. "And students need to be exposed to the workplace to see the relevance of such skills."

Holzer also targeted student financial aid, saying that "it needs to be reformed so it's directed at remediation so people get the skills they need," as opposed to just relegating it to formal higher education.

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James Sherk, labor economics analyst at the conservative Heritage Foundation, also argues that online worker training should serve as a condition for extended unemployment benefits and as an alternative to traditional government job training programs. "Technology has rapidly reduced the cost of higher education so that now anyone can learn online from some of the best professors in America for free," he concludes in an examination of unemployed workers.

More education, whether online or in the workplace, dovetails with OECD recommendations that countries with large shares of low-skilled adults, such as Canada, England, Ireland, Ireland, Italy, Spain, and the U.S., "will need to do more to make adult learning more accessible, especially in the workplace."

The study also highlighted the skills gap between older and younger workers. Workers 55 and older scored well enough to raise the overall U.S. ranking, offsetting the poor showing of 16 to 25-year-old Americans. Young Americans scored the lowest among their counterparts across all of the countries surveyed.

While the generation entering the American workplace is hobbled by its skills deficit, the vast chasm in skills attainment "reflects the way we do our work," Cappelli says.

For example, he said the nation's widespread use of mass production assembly relied in part on relatively unskilled workers and highly skilled workers like engineers, which helped foster a divide in skills achievement among workers documented in the OECD and other studies.

The OECD based its rankings on tests given in 2011 and 2012 to workers. According to the results, almost one in three adults in Italy (31.7%), Spain (30.6%), and the U.S. (28.7%) perform at or below the most basic level of numeracy -- understanding and using numbers -- compared to around one in 10 in Japan (8.2%) as well as Finland and the Czech Republic (both at 12.8%).

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A country's skill pool poses huge economic ramifications, according to Endangering Prosperity, a new book by Erik A. Hanushek, an education specialist at Stanford University's Hoover Institution, Paul E. Peterson, a professor of government at Harvard University, and Ludger Woessmann, an economics professor at the University of Munich.

They concluded that even bringing American worker skills to the same level as neighboring Canada "would yield increases in average wages that amount to 20% for every year during the remainder of the century."

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