Every week brings another pair of seemingly contradictory headlines: major tech companies announce sweeping layoffs while other employers say they can’t find enough qualified workers. Can both be true at the same time?
The answer is the U.S. is dealing with two very different labor markets — but only one of them is in deep trouble.
Many of the workers caught in tech layoffs share a crucial advantage: They are highly trainable. They typically hold college degrees, technical certificates or apprenticeships, and they bring years of experience to the table.
With targeted upskilling in areas such as artificial intelligence, data science or cybersecurity, most should be able to transition into new jobs. Indeed, it would be cost-effective for companies to create a win-win by offering training in these areas to this group of workers since companies will need a workforce with these skills.
The second labor market tells quite a different story. Across industries that keep the nation functioning — manufacturing, aviation maintenance, logistics, healthcare, accounting — millions of jobs remain unfilled.
Skilled manufacturing alone has more than 500,000 vacancies, a number that could reach 1.9 million by 2033, according to a report by the Manufacturing Institute and Deloitte. The accounting and auditing profession faces a growing talent shortage. The Health Resources and Services Administration projects a shortage of 113,000 physicians and 267,000 registered nurses by 2028.
These shortages are not the result of temporary layoffs or economic cycles. They stem from something far more fundamental: a trainability gap, a widening mismatch between the skills workers possess and the education modern jobs require.
A ‘learning recession’
The root of this problem lies in an education-to-employment pipeline designed more than a century ago that has not kept pace with a technology-driven economy.
A recently released report from Stanford, Harvard and Dartmouth refers to a decade-long decline in K-12 achievement scores beginning in 2013 as a “learning recession.” Large numbers of students are leaving high school without the basic literacy and numeracy needed for modern work. These are the new “techno-peasants.”
According to the 2024 NAEP Grade 12 reading assessment, 32% of seniors scored below the basic level, meaning they struggle to locate information in a text or follow written instructions. In mathematics, 45% scored below basic, indicating difficulty with fractions, ratios, multi-step reasoning and interpreting graphs.
These are not advanced skills. They are the minimum competencies required to read a safety manual, calculate medication dosages, interpret a wiring diagram or troubleshoot a digital system.
Today’s so-called “blue-collar” jobs require interacting with automated equipment, reading digital schematics and diagnosing problems using software. When nearly half of high school graduates lack the foundation to be trained for these roles, labor shortages should not be surprising — they are inevitable.
The question is how much longer we can endure this dangerous disconnect between the skills that employers need and the skills too many graduates and adult workers lack. Fixing it will require action on several fronts.
Educators, parents must address crisis
First, we must strengthen the basic educational foundations of our schools. Each state formulates its K-12 educational standards and policies. States and districts should strengthen their educational mandates. Some have already made real progress in establishing and enforcing rigorous literacy and mathematics standards that prepare students for the demands of today’s workplaces. Their successes should be studied, shared and scaled nationwide.
Second, students need to show up. About 1 in 4 American students is chronically absent, defined as missing 10% or more of the school year. No education system can succeed if students are not in the classroom.
But just showing up is not enough — students also need to feel engaged in and supported by their schools, and in return, they need to commit and engage in their schools.
Third, parents and other caregivers must be active partners with their schools.
They must demand high academic standards, make sure their kids consistently show up for school, and with their iPhones turned off.
Finally, businesses must play a larger role in building the talent pipeline. Employers should support high school career academies, internships and apprenticeships, and they must invest in employee training that keeps pace with technological change.
Research from Stanford University and the World Bank shows that well-designed training programs raise both productivity and profits. Yet only 27% of U.S. businesses offer such training, a sharp decline since 1995.
The bottom line is this: The crisis of the trainability gap will persist until we rebuild an education system capable of preparing students for the jobs of today and tomorrow. This will require sustained commitment from parents, educators, policymakers and the business community.
Now is the time to begin implementing the systemic changes needed to address the techno-peasant crisis before it seriously jeopardizes the U.S. labor economy.
George W. Bohmstedt held the titles of senior vice president and institute fellow before he retired from the American Institutes for Research in 2025. He was the project director of a five-year congressionally-mandated evaluation of the National Assessment of Educational Progress and, for 25 years, he chaired the NAEP Validity Studies Panel for the National Center for Education Statistics. The views stated here are his and not necessarily those of AIR.
Edward E. Gordon is the author of “Future Jobs: Solving the Employment and Skills Crisis” and a member of the Chicago Federal Reserve Economic Roundtable. He is the president of Imperial Consulting Corp. in Chicago.