JONATHAN COHN AUGUST 9, 2010
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One of todays' economic surprises is the mismatch between the number of people without jobs and the number of jobs that are available. Typically the two track each other closely. But lately they have diverged, leaving economists to theorize on why.
One explanation, discussed in this space last week, is that long-term unemployment has become a trap. Once people are out of work for a while, they have a harder time getting a new job: They might have trouble conducting the job search, because they've lost their home and phone service. Employers might conclude that their long-term unemployment is the result of some defect that makes them less desirable employees. And so on.
But there's obviously more to this story. And an article in today's Wall Street Journal introduces a new wrinkle: Employers say they can't find enough skilled workers to fill skilled positions. This has Kevin Drum puzzled:
Even if there's a shortage of high-skill workers, that's a long-term problem, not something caused by the recession. In fact, as the chart accompanying the story shows, the number of high-skill job openings has declined since 2008. At the very least, then, companies should be having an easier time--slightly easier, anyway--filling their open positions unless either (a) they've lowered their wages or (b) high-skill workers are literally retiring en masse. Whatever it is, something doesn't quite add up here.
So what gives? Gary Burtless, the Brookings economist who specializes in labor markets, e-mails with a theory:
It is always the case, in my experience, that employers say they "can't get good help these days." I wouldn't be surprised if in March 1933 (unemployment rate: 25 percent) employers complained it was hard to get good help. Especially when employers complain about the difficulty of finding workers with specialized skills, you've got to ask yourself, how did workers accumulate those specialized skills in the good old days? The answer, usually, is that some employer invested in training the worker. Often the training cannot be obtained in 4-year or community colleges or in for-profit technical schools. It is training that employers and workers jointly invest in on the job.
Because we have 9.5 percent unemployment, employers may be under the impression trained workers are available for a song, but the fact remains training will be required for many job vacancies, and employers will have to make an investment in training if they want their workers to posess the needed skills. A high unemployment rate changes the balance of power: workers will have to pay for more of the training; firms will pay for less of it. But it is unrealistic to expect workers to pay for 100 percent of the training required for a very specialized job. The only place the training may have a payoff is in the job vacancy being offered by the firm. Why should a worker invest hundreds or thousands of dollars in specialized training when the only position where it will be used is in a position being offered by one firm or possibly in just three or four firms?
Even though employers complain there aren't enough trained applicants, my strong suspicion is that there are plenty of qualified applicants available who are willing to be trained for the job openings that are currently available ... if employers help workers invest in the required training. One sometimes wonders how the U.S. managed to fight and win World War II (1943 unemployment rate: 2 percent) when there were so few trained workers available to fill millions of new and specialized jobs.
Again, that's clearly not the whole story. But I bet it's one part.
7 comments
I rather suspect there is some truth to this. That our education system isn't exactly world class anymore, and that the foreigners who attend the bits that now have much greater opportunities to return home to, that didn't use to exit, might also be a part. As might the fact that we've been encouraging talent to move to move to careers of dubious economic usefulness (hint: finance) through an overt policy to allow wealth to accumulate at one end of the spectrum. Sorry, as celebration of the wonders of the free market. We've recently been hiring, and although unemployment is much lower in the high tech sector, I've been surprised at how difficult it has been to find software and validation engineers who can even impress during an interview. That we're going to need to do some training is expected.
- Nari224
August 9, 2010 at 1:52pm
I agree 100% with Nari, too many talented people in parasitic fields like finance. Given all the whining this country does nowadays, I wonder how we won WWII too. Also interesting is that Debt to GDP in 1943 was a lot higher than it is now. And marginal tax rates on the highest income brackets were pretty high too (Over 70% on the top bracket from 1940-1980!). And what followed that was not economic disaster, but one of the more prosperous periods in American history.
- vips73
August 9, 2010 at 2:00pm
When employers complain about a lack of labor, what they invariably mean is a lack of labor at the price that employers would like to pay. You see, markets are good only when they work to the advantage of capital. When markets work to the advantage of labor, even a segment of the labor market in the midst of an unemployment crisis, capital complains. The commitment of capitalists to capitalism is shallow to say the least. Their only real commitment is to capitalist welfare at the expense of everyone else. Their special pleading is ridiculous. Nothing would satisfy them other than to have all the money in the world.
- roidbouloi
August 9, 2010 at 2:04pm
Here in San Bernardino County (CA) there is an excellent workforce training program that has received stimulus money. The program was created by the 1998 Workforce Investment Act. New hires are subsidized by as much as 100% of their salary for up to 6 months, specifically so employers can train them. The County also acts as a job placement agency. So if training to fill vacant jobs is a problem, programs exist to address it. Perhaps these programs are geared to less-skilled workers which is not where the need is. If so, the adminstrators need to do a better job of reaching out to employers in need. This is a solid Republican county, but the Dems could make political hay here, and in many more districts around the country, I expect, identifying and publicizing programs like these, created by a Democratic administration and funded by the stimulus. As it is, our Republican reps are taking a boat load of credit for bringing home the bacon, when they're not trashing Obama.
- koppgeo
August 9, 2010 at 3:05pm
vips - I know what you mean. Not to mention all that debt during WWII was racked up by a massive government spending program on economically useless non-durables (well, very limited life time durables). I mean, just imagine how much the government was crowding out private investment, while at the same time, achieving that life-long goal of the democratic party to expand the ranks of parasitic government employees and reducing domestic demand by sending said parasites off to fight in a war! I mean, it just cannot have happened that this was good for us. We all know that it would have been just as economically useful to push all those aircraft, tanks, ships and munitions into the sea (or lake) for all the good it did us. Or just have people dig holes and fill them up. Because we all know Keynes was completely wrong.
- Nari224
August 9, 2010 at 4:15pm
Absolutely, Keynes was a moron, all that "borrowing" for WWII probably caused the Great Depression... I'm sure someone just mixed up the years on wikipedia, I should probably correct it for them. After all it was 70 years ago, so who can keep track.
- vips73
August 9, 2010 at 5:58pm
It's even worse that that! Roosevelt was behind Pearl Harbor, because he wanted to enter WWII as an excuse to expand government. I'll bet you Rand Paul is going to accidentally say that some day.
- ironyroad
August 9, 2010 at 7:30pm