Do we have a shortage of workers, or just cheap employers? Part two of two.
Summary: So much of our consensus thinking results from full-spectrum propaganda from well-paid shills working for our ruling elites, well-funded institutions of disinformation and propaganda. This is one reason why we’re losing, and the Republic dying. Here we examine one issue of importance, important both by itself and as an example of a larger phenomenon: do we have structural unemployment? See part one here.
“Anyone who is willing to work and is serious about it will certainly find a job. Only you must not go to the man who tells you this, for he has no job to offer and doesn’t know anyone who knows of a vacancy. This is exactly the reason why he gives you such generous advice, out of brotherly love, and to demonstrate how little he knows the world.”
― From The Treasure of the Sierra Madre by B. Traven (1927)
Part one (yesterday):
- Introduction, about propaganda
- Some quotes
- Simple rebuttals to claims about worker shortages
- For more information about employment patterns
Contents of part two:
5. More quotes
6. More evidence these claims are bunk
7. What about employers paying fair wages, but unable to find skilled workers?
8. For more information
(5) More Quotes
“…when you hear an employer saying he needs immigrants to fill a ‘labor shortage,’ remember what you are hearing: a cry for a labor subsidy to allow the employer to avoid the normal functioning of the labor market.”
— Dr. Michael S. Teitelbaum of the Alfred P. Sloan Foundation, quoted in “How and Why government, universities, and Industry Create Domestic labor Shortages of Scientists and high-Tech Workers”, Eric Weinstein, National Bureau of Economic Research, 14 December 2001
“…the problem may not be that there are too few STEM qualified college graduates, but rather that STEM firms are unable to attract them. Highly qualified students may be choosing a non-STEM job because it pays better, offers a more stable professional career, and [are] perceived as less exposed to competition from low-wage economies.”
— “Steady as She goes?:Three generations of Students through the Science and engineering pipeline”, B. Lindsay Lowell et al, presented at Annual Meetings of the Association for Public Policy Analysis and Management, 7 November 2009
“If a genuine labor shortage existed, wages in these fields would have risen dramatically in ways they have not. In addition, unemployment rates in this sector have increased dramatically over the past year, with engineers reaching their highest unemployment rate since 1972. Graduation rates in the STEM fields also indicate that the United States is producing enough graduates to meet the employment needs of the industry.”
— “Review of vulnerabilities and potential Abuses of the L-1 visa program”, Office of the Inspector General, January 2006
(6) Broader Evidence that these claims are bunk
More broadly, look at actual evidence — not the anecdotes usually cited (ie, employers complaining, as they always do, about workers’ wages):
(a) “Jobs Americans Can’t Do? The Myth of a Skilled Labor Shortage” by the Federation for American Immigration Reform, November 2011 — This report contains the following findings:
- There is no evidence that there is, or will exist in the foreseeable future, a shortage of qualified native-born scientists and engineers in the US.
- The glut of science and engineering (S&E) degree holders in the US has caused many S&E graduates to seek work in other fields. Less than one-third of S&E degree holders are working in a field closely related to their degree, while 65% are either employed in or training for a career in another field within 2 years of graduating.
- Wages in science, technology, engineering and mathematics (STEM) occupations have not kept pace with those of other college graduates, and in some occupations have actually decreased.
- The Government Accountability Office (GAO) found that some U.S. employers acknowledged that “H-1B workers were often prepared to work for less money than U.S. workers” and this factored into the employers’ hiring decision. … Nearly 675,000 H-1B and L-1 visa holders were approved for work in the US in 2009. L-1 approved visas rose by 53% from 2000 to 2008.
(b) “Skills Mismatch’ Causing High Unemployment? Not Quite“, Lisa Shapiro, Huffington Post, 21 March 2012 — Excerpt:
“I do not find any credible evidence of anything approaching a shortage in manufacturing workers anywhere in the country,” said Andrew Sum, a professor of economics at Northeastern University who specializes in education and the labor market.
The Bureau of Labor Statistics also calculates job openings in manufacturing — and its numbers are less than half those cited by the Post, which attributed its figures to the Manufacturing Institute, an industry trade group. According to the government data, last year the average number of vacancies was less than 230,000. There are seven to eight times that many unemployed manufacturing workers, Sum said. The Post reported that the shortage of skilled workers has also pushed up wages. But here, too, Sum said, the evidence does not match up.
Since the beginning of the century, manufacturing wages for production workers have barely increased, Sum said. And in the last two years, as employers have said they’ve been having difficulty filling spots, wages have declined slightly. “If there was a big shortage of workers, than we should find wages rising. But this just isn’t the case,” Sum said. “That doesn’t mean that specific companies won’t ever have trouble finding a machinist, but when you add it all up, it doesn’t amount to very much.”
… The point of the argument is to then say: ‘We don’t need to ramp up demand or infrastructure investment. We need to fix people,’” said Paul Osterman, a professor of human resources and management at the M.I.T. Sloan School of Management. This rhetoric, Osterman added, fits well with another priority for business owners: “Firms are always interested in shifting the costs of training to the public sector,” he said.
Over the past 30 years, experts say, most in-house training programs at manufacturers have disappeared. The programs have never been entirely replaced, even as private and public training programs have been created, with a wide range of success in employment placement. Recently, more companies have looked to states to train their workforces.
North Carolina, for example, spent $1 million to develop a custom curriculum at a community college for workers at a Caterpillar plant. The primary beneficiary, The New York Times reported, was Caterpillar itself.
(c) “Worker Skills and Job Quality“, David Neumark and Rob Valletta, Federal Reserve of San Francisco, 30 April 2012 — Abstract:
Some observers have argued that the nation’s high unemployment rate during the current recovery stems partly from widespread mismatches between the skills of jobseekers and the needs of employers. A recent San Francisco Federal Reserve Bank conference on workforce skills considered evidence that employers have had difficulties finding workers with appropriate skills in recent years. However, these mismatches do not appear to be much more severe than in the past. Overall, the conference proceedings suggested the U.S. economy can still produce good jobs for workers at a variety of skill levels.
(d) “The Structural Signature“, Paul Krugman, New York Times, 8 May 2012 — Excerpt:
Now consider the argument that our problems are mainly structural. The way this story is usually told is that we had too many workers in the wrong industries, that we have to expect a depressed level of overall employment as workers are moved out of these “bloated” sectors.
OK, so what should be the signature of that story? Surely it is that job losses should be concentrated in the bloated sectors, that employment should if anything be rising elsewhere — and wages should be rising in the unbloated sectors more rapidly than in the bloated ones.
(7) What about employers paying fair wages, but unable to find skilled workers?
A common reply to evidence about “scarce jobs but flat wage” is that the wages offered are “fair”, so they should attract workers.
Do these people believe in capitalism and free markets? Perhaps they would prefer that wages — or all prices — be set by a board of wise and well-informed technocrats, who plan an efficient and prosperous economy?
It’s economics 101: supply and demand are met by changes in price. If workers are scarce, then wages rise — which will increase supply. If an employer refuses to raise wages (wages are a small fraction of costs in most manufacturing industries), then the employer is just whining about the lack of cheap workers.
(8) For more information
Other articles about structural vs. cyclical unemployment
- “The Effect of Modern Technological Conditions upon the Employment of Labor“, The American Economic Review
- “Is America facing an increase in structural unemployment?“, brief answers from a range of economists, 23 July 2010
- “Identifying Cyclical vs. Structural Unemployment“, Brad DeLong (Prof Economics, Berkeley), 24 August 2010
- “Only Advanced-Degree Holders See Wage Gains“, David Wessel, Wall Street Journal, 19 September 2011
- “Steve Rattner, Card Carrying Member of Top 1%, Tells Us We Should Lie Back and Enjoy Much Lower Wages Resulting From Globalization“, Yves Smith, Naked Capitalism, 10 October 2011
- “Structural Flashbacks“, Paul Krugman, New York Times, 8 May 2012
- “More on the structural unemployment thing“, Paul Krugman, New York TImes, 9 May 2012
- An excerpt from Paul Krugman’s new book End This Depression Now!: Chapter One – How Bad Things Are
About the coming major destroyer of jobs: the robot revolution –
- The coming big increase in structural unemployment, 7 August 2010
- The coming Robotic Nation, 28 August 2010
- The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
- Economists grapple with the first stage of the robot revolution, 23 September 2012
- The Robot Revolution arrives, and the world changes, 20 April 2012