Skills Gap Misery Index: Background Information

Current Skills Gap Misery Index

See the current SGMI and past data.

See SGMI Data

The Skills Gap Misery Index

The Skills Gap Misery Index traces its origin to a well known economic barometer known as the “Misery Index”. Created in the mid-1970’s during a period of high inflation and high unemployment in the United States by Dr. Arthur Okun, a Yale economics professor who served on President Lyndon B. Johnson’s Council of Economic Advisors, the “Misery Index” was based on an elegantly simple formula: the sum of the unemployment rate and the inflation rate. An increase in the index reflected a worsening economic situation, and hence more pain felt by a nation’s population. A decrease in the index suggested stronger future economic trends.

Origin of the Skills Gap Misery Index

The “skills gap” is contentious topic. Notable economists like Nobel Laureate Dr. Paul Krugman have labeled the skills gap a “Zombie Issue that needs to be killed”. And the esteemed editorial board of The New York Times says the skills gap is “mostly corporate fiction” created by the business sector which refuses to raise worker salaries, are too selective in hiring practices and are reluctant to offer comprehensive training and development programs for employees.

Scores of research conducted by respected groups like The Business Roundtable, PricewatershouseCoopers and the Corporate Executive Board offer a different opinion claiming potential employees responding to job postings do not have the skills needed in a 21st century workforce. The back-and-forth arguments aired in the media by both sides of the argument did little to define the “skills gap”, measure it, or solve it.

Frustrated that a term with the word “gap” in it had no means of measurement, I looked for a way to do it. For several years I have closely followed the “Job Opening Labor Turnover” report released monthly by the U.S. Bureau of Labor Statistics. Widely referred to as “JOLT”, this data set reports how many “open” jobs are listed across the United States.

Then in early 2014, after reading an article about Dr. Okun’s “Misery Index”, I had my epiphany moment to create the “Skills Gap Misery Index” by adding the monthly JOLT number (measured in millions of “open” jobs) to the Department of Labor’s U6 unemployment number (measured in millions of people). I chose the U6 unemployment number because it reflects a more complete description of unemployment and unemployment in the United States.

The Skills Gap Misery Index is benchmarked to data in December 2000. Any reading above 100 claims the “misery” caused by jobs not being filled or unemployment/underemployment is increasing. A Skills Gap Misery Index of 140, for instance, claims our nation’s skills gap misery is 40 percent greater than it was in December 2000.

Gary Beach
Publisher emeritus of CIO magazine