New Study Highlights Economic Impact of Closing the Skills Gap in Washington State

Washington State can create and fill 160,000 new jobs and reduce its unemployment rate by up to two percentage points over the next five years by closing the gap between the skills employers need and the skills possessed by potential employees. Doing so would also generate $720 million in additional state tax revenues and $80 million more in local tax revenues annually; and save $350 million in state unemployment costs.

That’s the conclusion reached in “Great Jobs Within Our Reach: Solving the Problem of Washington State’s Growing Jobs Skills Gap,” an important new study conducted by Boston Consulting Group in conjunction with the Washington Roundtable

A great deal of attention, both locally and nationally, has been paid to this skills gap since the start of the recession – so much, in fact, that we sometimes risk losing sight of the magnitude of the opportunity and challenge we face. 

The BCG/Roundtable study was designed to prevent that from happening by bringing new clarity to the job skills gap challenge facing the state and recommending public policy steps to help make Washington an even better place to live and work. Based on both qualitative and quantitative analysis, the study concludes that there currently are 25,000 unfilled jobs in Washington as a result of the job skills gap, 80 percent of which are in highly skilled STEM – science, technology, engineering, math – and high-demand health care roles. It also projects this gap growing to 50,000 unfilled jobs by 2017, with 90 percent of them in the STEM and health care fields.

In addition to quantifying the size and scope of the skills gap problem, the study notes that employers facing difficulty finding qualified employees are often forced into two other approaches to get the talent they need:  they move additional jobs out of state or fill them with under-qualified employees. Both of these actions hurt productivity, constrain growth and represent a drain on economic opportunity here in Washington.

The study makes clear that both the causes and the potential solutions to the jobs skills gap touch a variety of institutions and systems in our state, so it will take a collective effort to eliminate the gap in Washington and create new opportunities for our citizens. The prescription: a series of key actions to:

1. Increase capacity and throughput of key degree programs in higher education;

2. Enhance student interest and performance in STEM subjects in the K-12 school system;

3. Align two-year degree and certification programs with employer needs;

4. Recruit skilled workers from other geographies – in the U.S. and internationally – as a bridge to keep jobs here in Washington.

The plan recommended for Washington in the BCG study is consistent with the national talent strategy proposed by Microsoft last year. Both recognize that future economic health – for Washington State and for the nation – depends on fostering a vibrant and growing technology sector and equipping workers with the right skills for 21st century jobs.

For instance, a recent study by University of Washington Economics professor Theo Eicher estimates that every job in Washington State at Microsoft creates another five jobs elsewhere in the state economy. Professor Eicher’s study estimates that in 2011, Microsoft’s operations in Washington State generated a total of $34.3 billion in economic activity in Washington, or approximately 9.8 percent of Washington’s gross state product. The study concludes that since 1990, Microsoft has been the single largest contributor to economic growth of Washington State, accounting – directly or indirectly – for 31 percent of the total gain in state employment. 

Our goal as a company is to continue growing here in Washington State, but the skills gap makes that more difficult to do. Fortunately, the BCG/Roundtable report provides a blue-print for closing that gap and providing additional opportunities for the citizens of the state.

About the Author

General Counsel & Executive Vice President, Legal and Corporate Affairs, Microsoft

Brad Smith is Microsoft's General Counsel and Executive Vice President of Legal and Corporate Affairs. He leads the company's Department of Legal and Corporate Affairs (LCA), which has approximately 1,100 employees located in 55 countries. Mr. Smith is responsible for the company's legal work, its intellectual property portfolio and patent licensing business as well as its government affairs and philanthropic work. He also serves as Microsoft's corporate secretary and its chief compliance officer. Mr. Smith currently co-chairs the board of directors of Kids in Need of Defense (KIND) and is the chair-elect of the Leadership Council on Legal Diversity. In Washington state, Mr. Smith has served as chair of the Washington Roundtable, a leading Washington state-based business organization, and he has advanced several statewide education initiatives.