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Kenan Institute 2025 Grand Challenge: Skills Gap
Research • Insight • Growth

Why Does the Skills Gap Matter?

The overall skill level in a workforce determines the tasks that workforce can competently perform. As such, it’s directly linked to economic productivity; not only do you need these skills to foster innovation, but the impact of any innovation or technological progress will be severely limited if the workforce lacks the skills to properly use it.


Gerald Cohen

Chief Economist, Kenan Institute of Private Enterprise

Is the Gap Really Growing Wider?

Do you believe there is a gap in the skills your organization needs and what your employees possess right now?

Expanding Skills Gap

Source: “Market Insights by Wiley: Closing the Skills Gap 2023″

It’s difficult to measure the level of skills in the workforce, which makes it challenging to determine whether there’s a skills gap and whether it’s growing. One method of measurement uses employer-level survey data to assess whether employers can hire workers with the skills they need to perform a given job. The 2023 Wiley survey illustrated here points toward an expanding gap.

The Effect of the ‘Silver Tsunami’

Demographic mix influences the country’s labor pool and its intrinsic skills. With the baby boomer generation moving into retirement, the US labor force participation rate has dropped, leaving employers with a shrinking pool of workers from which to draw the new skills they need.

Working Age Population

% of Total Population

Silver Tsunami

Shaded areas represent recessions as determined by the National Bureau of Economic Research
Source: Census Bureau

One Path Toward Bridging the Gap

Bridging The Skills Gap

Financing constraints can hinder individuals who want to add or upgrade skills to take advantage of a changing job market. Skills-based training through earn-and-learn programs paid for by employers, such as apprenticeships, eliminate the need for financial aid.

Distinguished Fellows

The Kenan Institute Distinguished Fellows, appointed on an annual basis, comprise an exemplary set of global scholars committed to leveraging their individual expertise, thought leadership, research and networks to further the institute’s efforts to examine – and drive solutions to – the most complex and timely issues facing business and the economy today. The 2025 Distinguished Fellows work to support the Kenan Institute’s exploration of the skills gap. 

Sekou Bermiss
Associate Professor of Strategy and Entrepreneurship, UNC Kenan-Flagler Business School, and 2025 Kenan Institute Distinguished Fellow
David J. Deming
Isabelle and Scott Black Professor of Political Economy, Harvard Kennedy School, and 2025 Kenan Institute Distinguished Fellow
Annelies Goger
Fellow, The Brookings Institution, and 2025 Kenan Institute Distinguished Fellow

Frontiers of Business Conference:
Bridging the Skills Gap

SAVE THE DATE: October 9, 2025 • Carolina Inn, Chapel Hill, NC

SHOW ME:

Join us for the 2025 Frontiers of Business Conference: Bridging the Skills Gap on October 9 in Chapel Hill, NC. Be part of the conversation and discover innovative solutions to position workers and businesses to succeed.

The Skills Gap
Skills Gap

Our 2025 Grand Challenge examines the skills gap – the difference between the skills that employers seek and those that workers possess – which is being driven by technological breakthroughs, demographic changes and cultural shifts in the workplace.

Our American Growth Project examination of skills in the workforce begins with a discussion of why skills are difficult to measure, then moves to a broad look at two ways to estimate the skill level across our Extended Metropolitan Areas.

How do firms try to retain workers in a tight labor market? New research finds that employers use a variety of pay and nonpay mechanisms but that multiplant companies may find the nonpay options more cost-effective.

As part of our 2023 grand challenge, we survey factors such as demographics, health trends, immigration and childcare that are essential to understanding the dynamics now at play regarding the supply of workers in the labor force.

UNC Kenan-Flagler Business School Professor Mark McNeilly discusses how ChatGPT and other AI tools will change the workplace - as well as how workers can best prepare themselves for these changes.

Issues constricting the supply of workers, the sector-by-sector employment effects of a potential recession, the emergence of new technologies – these are the primary labor demand themes we’ll focus on in our 2023 grand challenge.

COVID-19 and the subsequent rise in work-from-home policies by firms have changed the landscape of skilled labor in the United States. The Survey of Working Arrangements and Attitudes finds that 15% of employees are working from home full time, as of September 2022. This dramatic increase in remote work has led to an equally dramatic physical migration of workers across the U.S. Census data shows a sharp decline in populations of the largest U.S. cities and increases among midsize cities and smaller metro areas. For example, from 2020 to 2021, the counties of Manhattan (New York County) and San Francisco both saw a decline in their population of 25- to 54-year-olds by nearly 10%.

Remote work seems likely to continue in a post-pandemic world, if employees have their say. In this week's insight, our experts highlight how businesses can rethink workspaces and better engage and involve employees in the office and those working from home.

Much has been written about the disproportionate number of women who have suffered pandemic-related job losses during COVID-19, but a related consequence has not been as well explored: the serious disruption of women’s careers, particularly in fields in which “path dependence” matters for success. In this Kenan Insight, we examine this more subtle asymmetry in the pandemic’s impact as indicative of far broader issues for women’s advancement in the workplace.