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Why High College Costs Are a Sign of the Skills Gap Apocalypse

There are only so many hours in the day, and when a full-time employee tries to enroll in classes, one of two things happen: they have to cut back on their hours at work, or they have to find a way to add a course load on top of a roughly 40-hour work week.
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Higher education in America has created a nearly insurmountable paradox: With just a high school diploma, it's almost impossible to get a job that pays a living wage, but given the costs of post-secondary education, few people without a high paying job can afford the tuition.

This has created a growing middle-skills jobs gap. Many employers don't need workers with a four-year degree. They do need employees with a rigorous high school education plus additional skills and vocational training; yet there aren't enough people earning those qualifications.

The skill gap is starting to wreak havoc on employers across the country. Sixty-nine percent of HR executives say their inability to attract and retain middle-skills talent frequently affects their firm's performance, according to a 2013 report, Bridge the Gap: Rebuilding America's Middle Skills.

A 2014 report from the Lumina Foundation found that while Pell Grants covered over 100 percent of the cost of a two-year public education in 1973, those same grants in 2013 covered only 60 percent. If the price of two-year degrees continues to rise, middle-skilled American workers may be a thing of the past.

The skills gap apocalypse is coming. Here are three scary problems the climbing costs of community colleges are causing and what they mean for the middle-skills gap:


#1: Workers ready to enter the job market can't afford to obtain the skills they need and desire.

When many young adults earn their high school diploma or a GED, it's difficult for them to determine the next step in their career. Without a clear idea of what they need to do to get the job they want, young adults are wary of the financial risk of enrolling in postsecondary education blindly.

If the cost of community colleges continues to rise, motivated students will be forced to abandon or forgo their education. According to the Pew Research Center, the average salary for someone with only a high school diploma is just $28,000. Without more training, these young people will have to take jobs that pay significantly less, which gets them caught in a cycle that's difficult to escape.

The aforementioned Lumina Foundation report revealed that, if an independent student makes around $30,000 a year, the cost of their public two-year education will take up 42 percent of that income.

So, even though there are young people out there who want to obtain more marketable and in-demand skills, they can't afford to do so, especially without career guidance, and employers continue to find middle-skills jobs persistently hard to fill.

#2: The time required to get an education leads to poor graduation rates.

We all know that time is money. Now consider the investment in time required for current employees to further their training.

There are only so many hours in the day, and when a full-time employee tries to enroll in classes, one of two things happen: they have to cut back on their hours at work, or they have to find a way to add a course load on top of a roughly 40-hour work week.

For most people, the former just isn't an option. Either their employer won't allow them to take time off for their education, or the employee cannot afford to cut their hours and take home a smaller paycheck with which to cover their tuition costs. So that leaves the second option, which leaves many feeling overwhelmed and exhausted.

Whether it's due to financial stress, the time-related costs, or other factors, part-time students also have the lowest graduation rates. A 2014 study by the National Student Clearinghouse Research Center found that 81 percent of students who enrolled in a two-year college as a part-time student failed to complete their degree within six years.

The cost of education, in time and money, is making it extremely difficult for your workforce to get the training you want them to have. They're not likely to start, and they're even less likely to graduate.

#3: Companies are forced to shoulder the burden of training.

It seems logical that, if employers can't count on outside sources to train their workforce, they'll have to do it themselves. Yet the 2015 Talent Shortage Survey by Manpower Group found that only one in five employers are taking measures to provide their employees with additional training.

One of the reasons employers aren't developing and implementing training programs is the associated cost. For companies already struggling due to a lack of trained employees, it's difficult to find the funds and resources to effectively train employees in-house. In other words, your classic chicken or egg scenario.

Unfortunately, although companies in the same industry are joining together to partner with community colleges that can provide training, it takes years of effort to see any results. Companies are able to share the risk and cost of training employees, but must also take on the complications of organizing and cooperating with outside groups. This leaves companies with a hard choice: shell out the cost to train employees in-house, or navigate the messy process of incorporating outside stakeholders.

A few rays of hope.

Even if President Obama's free community college initiative passes, the middle-skills jobs gap is not going to be fixed overnight. There are things employers can do right now to help fight the effects of higher education costs on the middle-skills jobs gap:

Define career paths for employees.

One of the things that worries workers about spending money on their education and training is the idea of never getting that money back. Show them that, if they invest in learning new skills now, it'll pay off if they follow a clear career path.

Outside groups and partnerships have already begun to show how career guidance can help close the middle-skills gap. The GED Testing Service, for instance, is working to empower students to engage in and complete post-secondary studies. Through a partnership with my career exploration startup, PathSource, they are providing every GED student with the tools and resources they need at no cost to create a focused and informed career path they can successfully follow.

But you as an employer need to do your part, as well. Map out ways different types of employees can be successful at your company. Seeing the steps laid out will focus and encourage current and future employees to perform at a higher level within their current role and follow through with enhancing their skill set for future roles.

Fund scholarships for potential employees.

Your company may not be able to afford training dozens or hundreds of employees, but it can support students with high potential through scholarships. Decide what qualities an ideal recipient would possess and how you would want them to use the skills they learn.

Once you find worthy students, provide them with the financial support to reach those goals. When they graduate, the relationship is already in place to turn them into quality employees.

Provide loan assistance for qualified job candidates.

Attract new graduates with the skills you need by offering to help pay off their student loans during some or all of their time at your company. This will draw in skilled talent that have taken on debt and help you attract the middle-skilled employees you need.

Offer flexible work hours or paid leave for current employees.

Balancing a job, financial issues, and a course load is incredibly difficult. Do what you can to help your current employees go back to school and learn middle-skills.

Flexible schedules allow employees to work and study successfully, and paid educational leave helps them feel financially secure while they're in school. You might not be able to give them full salary, but any assistance shows your employees that you support their decision to further their education and training.

The skills gap apocalypse is coming. On a macro level, it's a looming problem for the country and thoughtful, fast action is required by our policy-makers to address it. Fortunately, your business is going to be OK. The steps above can help you survive while your competitors are starved of the skilled labor pipeline they need.

What do you think? How else can employers help workers overcome the high costs of colleges in order to close the middle-skills gap?

Aaron Michel is the co-founder and CEO at PathSource, a career exploration solution helping students and job seekers make better career choices. To navigate your infinite career possibilities, connect with Aaron and the PathSource team on Twitter, Facebook, and LinkedIn.

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