Skill and Hiring in American Manufacturing

Awarded Scholars:
Paul Osterman, Massachusetts Institute of Technology
Project Date:
Aug 2012
Award Amount:
Project Programs:
Future of Work

Is there a major workforce and skill shortage problem facing American manufacturing firms? Manufacturers claim that they are unable to hire workers with appropriate skills, but this claim is belied by the failure of manufacturing wages to rise, as we would expect if there was a shortage of skilled workers. Nor have manufacturing firms engaged in extensive training of the large number of unemployed Americans available for work.

One of the possible explanations suggested by Paul Osterman is that manufacturers may no longer be willing to provide training because of poaching concerns and time pressure due to intense competition. In recent interviews Osterman conducted, the firms claimed that they are under such pressure from customers for rapid response that they cannot take anyone off the line to provide training to new hires. Moreover, increasing globalization and competition mean that margins are sufficiently tight that training expenditures are difficult to justify, and some firms are unable to raise wages to attract skilled labor from outside because of the intense competitive pressures they face. In addition to these obstacles, worker job tenure has decreased, which further reduces the return to company-provided training, and constantly changing technology is eroding the value of existing investments in training capabilities.

Osterman also suggests that companies may no longer have the greatest level of expertise about new and emerging technologies. External actors such as colleges and universities may now have a relative advantage in providing industry-related training. There is a growing interest in the role of community colleges in preparing people for work, particularly low income and first generation college attenders. However, the absence of recruitment efforts and support services to get these potential students into the classroom remains an obstacle. Understanding the relationship between educational institutions and local manufacturers should be of significant use for improving the performance of these schools and creating a pool of skilled workers.

Having completed extensive field work, interviewing well over fifty firms, Osterman now intends to undertake a representative survey of manufacturing establishments to identify their skill needs, the difficulties (if any) that they are experiencing in meeting these needs, their hiring strategies and skill requirements, and their relationship with local educational institutions. The survey will begin with general background questions on employment in the manufacturing establishment as well as on the markets in which it participates, and the technologies that the establishments utilize. Then, the survey will turn to four modules, which will cover hiring, promotion ladders, skills and technology, training, and relationships with educational and other training institutions. The survey will be executed by the University of Massachusetts Survey Research Center.


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