The other factor that may be starting to contribute to more job cuts, according to Challenger, is the widening gap between the skills workers have and the skills needed by today's employers.
"Forget about labor shortages caused by the retiring generation of Baby Boomers. The real problem over the next 10 to 20 years is going to be that those in the labor pool lack the technical skills that will be most critical to succeed in the workplace," said Challenger.
"Some of the job cuts we see now may very well be workers who do not have the right skills. Instead of retraining them, companies are simply letting them go and hiring someone with the required skills. However, employers may find that this strategy will become increasingly difficult," said Challenger.
Challenger warned that we may soon see a repeat of the situation Siemens Diesel Systems Technology faced in 2000, when it opened a new factory in South Carolina and had 500 manufacturing jobs to fill. The company received 1,000 applicants, according to reports from area news sources, but after screening and reviewing resumes, just 35 applicants had the skills necessary to perform the job.
This scenario could begin playing out again and again for companies across the country, particularly when one considers the following statistics from the Department of Education's Adult Literacy Survey:
· 52% of high school graduates lack the basic skills required to do their jobs adequately. · 50% of the U.S. population aged 16-65 is functionally illiterate. · Only 25% of high school graduates are considered to have excellent basic skills.