The Zombie Skills Gap Meme That Won't Die

Friday, On Real Time With Bill Maher, guest Mike Rowe got the ball rolling, continuing the mythical meme that is the skills gap.

We've all heard it - I know such-and-such company that just can't find any workers to do the numerous positions they are trying to fill. According to the proponents of this fairy tale, the U.S. just isn't training workers to do the jobs businesses need.

Yet, when we actually look at the data, a classic supply-and-demand explanation (with most of the blame on low wages) appears.

As UWM professor Marc Levine notes, "There is, in short, little labor market evidence – when we examine job openings, wages, hours, employment projections, or worker credentials— of a skills gap or structural unemployment...National data on wages, hours, job vacancies, and employment projections provide no evidence that a skills gap has caused high unemployment in the U.S. as a whole –- either before or after the Great Recession. This finding is consistent with the conclusions of a daunting array of research and analysis on the subject. As we have seen, these include: Studies by: a) Scholars from such top universities as Duke, Berkeley, Penn, Stanford, MIT, and UW-Madison; b) Economists from the Brookings Institution, the Roosevelt Institute, the Center for Economic and Policy Research, and the Economic Policy Institute; c) Economists at the Federal Reserve Banks of Atlanta, Boston, and Chicago; and d) Consultant-economists such as the Boston Consulting Group. In addition, articles and commentary by: a) Two recent Nobel Laureates in Economics (Krugman and Diamond); and b) Two former heads of the President’s Council of Economic Advisers (Tyson and Lazear), thoroughly reject the skills gap or structural unemployment as explanations for our underperforming labor market."

The U.S. does have a few industries, in a few locations across the country, where specifically-trained workers are needed. Do you know what happened in those few places? The already-employed workers saw their hours increase to meet the demand, to fill-in for the needed-workers. Wages also rose to attract workers to the job openings.

This structural malady is a small proportion of unemployment. As Rortybomb informs, "A report the IMF put out - The Great Recession and Structural Unemployment - which found find that structural unemployment is 1%-1.75% nationwide, with skills being 0.5%."

In most places, where some falsely claim a skills gap, wages for new hires have not risen, nor have the hours of those currently-employed increased.

Dave Alitg, in The Skills Gap: Still Trying To Separate Myth From Fact, stated, "We have yet to find much evidence that problems with skill-mismatch are more important postrecession than they were prerecession. We'll keep looking, but—as our colleagues at the Chicago Fed conclude in their most recent Chicago Fed Letter—so far the facts just don't support skill gaps as the major source of our current labor market woes."

As I've written, "In reality, this is simple supply-and-demand economics. People don't want to work at grueling jobs for low pay, minuscule benefits, and without a retirement plan. If these jobs were paying living wages and had some sense of security, people would be lined up around the block for the positions."

For Further Reading:
Skills Shortage Sham

The Mythological Skills Gap

The Skills Gap & Unemployment In Wisconsin: Separating Fact From Fiction

Beyond the anecdotes of local employers, the Wisconsin and Milwaukee labor markets show no statistical evidence of a skills shortage:

Wages: If Wisconsin employers were encountering a shortage of skilled labor, wages would be going up, but in Wisconsin real wages have declined since 2000. By contrast, in states such as North Dakota and Wyoming, where there really is demand for and a shortage of skilled labor, caused by a boom in the energy sector, real wages have jumped by double digits since 2000. Wisconsin wage "growth" also lags the national rate, another sign that there is no labor shortage here. 

Hours: In contrast to states with tight labor markets such as North Dakota, there is no evidence that Wisconsin employers are adding hours to their existing workforce, to compensate for an alleged skilled labor shortage. Average weekly hours worked in Wisconsin are down 4.3 percent compared to 2000. 

Occupational Projections: Although promoters of the skills gap idea claim that the skills requirements of future jobs will vastly outstrip the skills and education of Wisconsin workers, occupational projections for the state reveal that 70 percent of projected openings through 2020 will be in jobs requiring a high school diploma or less. 

Underemployment and Workforce Overqualification: In reality, Wisconsin and Milwaukee suffer from the opposite of a skills gap: an economy that generates too few quality jobs and a labor market that is characterized by the underemployment and overqualification of skilled and educated workers. 25 percent of Milwaukee's retail salespersons hold college degrees (up from 11 percent in 2000); 60 percent of Wisconsin's parking lot attendants have had some post-secondary education. The "job gap" has created a skills mismatch of sorts in the Wisconsin and Milwaukee labor markets, but it is the inverse of the one commonly put forward: it is a mismatch of too many highly educated workers chasing too few "good jobs." 

Rising Human Capital: Contrary to skills gap rhetoric, educational attainment has increased dramatically in Wisconsin and Milwaukee over the past decades. Nearly 90 percent of Milwaukee's adult population holds a high school diploma (up from 50 percent in 1970), and 31 percent hold at least a bachelor's degree (up from 11 percent in 1970). Gains in UW-Milwaukee The Skills Gap and Unemployment in Wisconsin 6 educational attainment have occurred for all racial and ethnic groups. All data point to consistently rising human capital formation in Wisconsin and Milwaukee.

The Missing Link

It's good to (finally) see the Journal Sentinel clutching onto Richard Longworth's promotion of a more regional governance between Milwaukee and Chicago, and amongst other regional cities. But how long will this latest fascination last? Lip service (or should I say ink) to regionalism has flippantly been given by the Journal in the past.

Sadly, such communal (dare I say socialist) conceptions of government - cooperation for the benefit of the whole - whereby decisions are made with a broader concern have been brushed aside for decades by political and business leaders alike.

In 1992, looking at the potential positive regional impact from light rail transit (LRT), Marc Levine, professor of history and urban studies at UWM, found, "The UWMCED study concludes that, although the economic benefits of LRT should not be oversold and will require supportive public policies to be fully realized, a light rail system could contribute significantly to economic development in the city of Milwaukee and the entire region."

Levine, in reporting on Milwaukee's inner city in 2006, stated, "As a consequence of these trends, income inequality in metropolitan Milwaukee deepened last year, as the inner city fell further behind other areas of the region... These are massive income gaps that have widened considerably since 1990 and signify deep economic polarization in the region. “Regionalism” has become the new buzzword among city and corporate leaders, but, so far at least, there has been little indication that these leaders are prepared to implement the kinds of regional equity policies –in transportation, tax-base sharing, or growth management—that other communities have used to attack regional economic disparities."

In 2008, Levine proposed, "The region’s corporate leaders, represented by the Metropolitan Milwaukee Association of Commerce and the Greater Milwaukee Committee, supposedly support regional rail transit. If that’s true, they should make it the centerpiece of the Milwaukee 7 initiative, turning it into a more muscular regionalism that could underpin an economic revitalization of the city and region."

And, other voices have been calling for more regional approaches to governance for decades. Suddenly the Journal Sentinel is on board. Better late than never, I guess.

The problem is that by opposing rail (and other more regional - cooperative - policies), the Journal Sentinel has stymied progress on the very issue they suddenly see as a no-brainer. Rail would-have-been an catalyst for infrastructure, jobs, and an improved regional linkage. It would have been one of the biggest investments in the region in a generation or more.

The Journal Sentinel goose-stepped right along with Scott Walker and his plan to refuse funding for rail expansion in the region.

Milquetoast coverage and the occasional blip regarding a "regional" solution to the issue-of-the-moment is not full-throated support for regionalism nor meaningfully helpful in bringing regional governance, as a topic, to the forefront.

It's hard to claim to be for the region when one supports policies that prevent the region from more efficiently linking together and growing.

Walker's Terrible Job Record

A "great" "debate" is taking place on jsonline over Walker's Jobs Record An Unmitigated Disaster. (Actually, it's the typical uninformed conservatives griping about that which they seem to know little.)

One commenter, Cubcake, has been continually trying to fault the arithmetic in the article. When a professor does an analysis, he/she is just being a devious liberal lying with statistics. But when Scott Walker pulls  preliminary "data" from his rectum, which can't be compared to other states' numbers, this is sound statistical analysis.

Ceomrman2 has the definitive takedown(s), "You can view the total seasonally adjusted non-farm payroll here: http://www.bls.gov/news.release/laus.t05.htm . There were about 2,732,000 jobs in Wisconsin in April of 2012. That is 21,400 fewer than in April, 2011. The numbers you're thinking of (i.e. the ones you linked to in previous posts) are not correct for this discussion. You can't blame a politician for the seasons or the rainfall levels, so numbers must be seasonally adjusted and must exclude farm labor. Yes, of course there are more jobs in summer when high school and college kids are out of school and farms need workers. Try taking a deep breath and thinking to yourself "maybe the guy who has spent decades researching employment trends in the industrial heartland of the United States actually knows what basic economic indicators mean?" Cubcake - the numbers you are referencing are not the correct numbers for this discussion. I can see why you might think they are - the profession's jargon can be unintuitive - but the relevant time series for this discussion is the seasonally adjusted non-farm payroll count. You can view that data here: http://www.bls.gov/news.release/laus.t05.htm. You can feel free to disagree with Prof. Levine, but he does understand his basic economics measurements."

The cognitive dissonance of Republicans is breathtaking. No matter the reality (comparative stats, criminal investigations, lying to Congress, stalling investigations, crony capitalism, or dividing and conquering for big-money donors), whatever Walker says or does is correct in the eyes of his followers. This mindset is now de facto for conservatives. Nothing oppositional can penetrate their worldview. Close-mindedness and a penchant for sloppy analysis are not the prerequisites we should want for those supposedly involved in shaping public policy.

WOW! This recall election is big! Vote Tom Barret, Mahlon Mitchell June 5th!

Misrepresentation & Disingenuous Reporting

Bringing poverty to the attention of the masses doesn't go over well with privileged media members and other apologists. Bruce Murphy, the Journal Sentinel, and John Pawasarat of UWM's Employment & Training Institute are all up in arms over Marc Levine's use of "joblessness" rather than "unemployment." The basic gist of the argument is that joblessness is bigger; which makes the number of people without jobs sound really, really scary. This opposition wants us to just stick with the U-3 unemployment number - because that's what they're used to and it's not as frightening as the joblessness number.

This isn't an issue (as it should be) because too many are unemployed, discouraged, or underemployed. The dissenters are upset because Dr. Levine uses a metric that better illuminates the gravity of the situation - joblessness. Those who interchange unemployment and joblessness are to be blamed for not reading the caveats of the research. Joblessness is a different measure. But simply being different does not make it incorrect nor misleading.

This is a problem of sloppy reporters, not bad research. The research clearly defines "joblessness" and finds 53 percent of black Milwaukee males fall under this category. Journalists claiming this as 53 percent unemployed are merely practicing shoddy reporting. For the Journal Sentinel's PolitiFact to make an issue of Marvin Pratt confusing joblessness and unemployment (he misstated 52 percent "unemployment") and then claiming his comments as completely false, is another example of careless and deluded reporting. 53 percent are not unemployed, but black males in Milwaukee are facing a daunting job market. To call this false would imply that black Milwaukee males were performing better than other black males in other metro areas. They are not.

Bruce Murphy, himself, states, "Levine responded via email to say he does not use the word unemployment but “joblessness” in his study. True. But that routinely gets turned into the word unemployment by the media, film producers, etc. I think in his zeal to dramatize black unemployment, Levine ends up misleading people." So, the media incorrectly substitute unemployed for jobless, and this is Levine's fault? How is this his zeal to dramatize something? This is a case of sloppy reporters blaming someone else for their hasty comprehension.

And, for Bruce Murphy to be calling Levine's research on the subject "exaggerated" and "questionable" is baffling. What is questionable about it? What is exaggerated? Yes, unemployment and joblessness are not the same thing, but that doesn't mean the conclusions of the joblessness study are unimportant or questionable. It's a sad disservice when those untrained in the social sciences and proper research comment and mislead on that which they do not understand. Plus, Murphy feels vindicated and correct because the PolitiFact article made many of the same (erroneous) claims he initially made. Yes, for Murphy, two wrongs make a right. As Dr. Marc Levine comments on Bruce Murphy's Milwaukee Magazine page, "For any reader who takes seriously Bruce Murphy's comments on my research, I encourage a look at my analysis: 'Mismeasuring Joblessness.' On virtually every point, Murphy is simply wrong and either deliberately distorts or does not understand the issues."

Dr. Levine's rejoinder to the grumblers highlights the explanation of joblessness in the original research; so that even they might be able to wrap their heads around the concept. It is the fault of those reporting on such research whom are to blame for confusing the two measurements. They seem to imply Levine means unemployed when he uses jobless and is, therefore, misleading us. This is not the case; the concept is clearly operationalized in the research. Maybe they should actually read the entire report(s) before (improperly) commenting on the conclusions and/or concepts.

The other, and perhaps saddest, concern of this dust-up is that the objectors have focused this - unemployment and poverty issue - on the semantics of reporters (and their misunderstanding) rather than on the actual problem - many people can't find work! They're upset that Dr. Levine is reminding us of all of the citizens in our society that go without, struggle, and are hurting on a daily basis. Whether it's 25 - 35 - or 50 percent, it's too much, and we should be talking and doing something about it. Doing something other than obfuscating the harsh reality many face by bickering over which metric we want to focus our attention. Either one you choose, the numbers are not good. For the jobless, the underemployed, the part-timers seeking full-time, for these workers, however you define it, they're still suffering.

For Further Reading:

Alternative Measure Of Labor Underutilization

Alternative Unemployment Measures

Joblessness Remains

Life In Milwaukee, Black & White

Structural Issues Impacting Milwaukee's Black Unemployment

The Unemployment Rate & Beyond

Where The Bread Is Buttered

It seems blind faith and self-interest has paid off well for Michael R. Lovell, dean of the UWM College of Engineering and Applied Science. He was behind Carlos Santiago's growth plan and a supporter of "a massive infusion of investment dollars into his department." Now that Santiago is leaving, Lovell has been appointed interim chancellor. I guess the movers-and-shakers behind the growth plan feel Lovell knows the talking-points well enough to see this boondoggle through.

Professor Marc Levine, UWM history and urban studies professor, has shown that the entrepreneurial growth strategy centered on a university is largely an illusion. Yet, the Journal Sentinel is again pushing the idea that this initiative will be a huge spin-off and job creator. All based on purely anecdotal evidence.

The media and the well-connected always gripe about public spending, public employees, and any project that actually tries to do good and help workers and those in need. We can't do it. It's too much. We can't afford the debt. But when it's a playground for the rich, a research park, or some other speculative white elephant, we can't afford not to do it.

I'm all for the expansion and development of UWM as a university and research hub. But much of this growth plan should be tweaked, moved, or discontinued. Some of this funding could obviously be better spent, especially now, during these tough fiscal times.

For Further Reading:
College: Cash Cows?
Don't Stop Believing
Water Down Corporate Accountability

Colleges: Cash Cows?

Marc Levine (University of Wisconsin-Milwaukee history and urban studies professor) has released a report, The False Promise of the Entrepreneurial University, questioning the validity, efficacy, and opportunity cost of UWM's 'university as economic engine' development strategy.

He is not stipulating that universities do not have any affect on economic development outcomes for their surrounding areas. As some have wrongfully, stunningly, and incoherently ranted. He merely shows the data which - when measured by a variety of socioeconomic indicators - exposes few of those whom have attempted such a strategy have reaped benefits to justify the cost.

John Torinus - Serigraph Inc. chairman and tax-avoider, and Journal Sentinel business-class mouth-piece - belittles the research. He sites Madison's University Research Park as one such 'entrepreneurial university' project that has worked, and therefore, forget the numerous examples and statistics that Levine has gathered, we should continue blindly moving forward, pumping money into ill-conceived, poorly planned, and empirically unsubstantiated ventures. Facts and well-reasoned discussion be damned!

John Wiley, chancellor emeritus University of Wisconsin-Madison, takes swipes at the research. Using much of the same anecdotal, status quo-clinging, vested-interest, economic development talking-points that have been mistakenly used over and over again in city after city.

I also see many commenters, whom I have to assume only bothered to read Levine's Journal Sentinel piece and not his full report, complaining that Professor Levine doesn't acknowledge UW-Madison's successes. Although, he mentions Madison numerous times in his report.

Simply wishing and hoping to be like another university (in this case, Madison) that has achieved entrepreneurial success, or throwing money at a "good bet," does not automatically make it happen. Taking risks can pay off. There are always risks in investing. But most want to minimize their risk and not just do something for the sake of doing something.

Also, I'm always a bit perplexed by those knocking the research of academics - the "cheap seats" as John Torinus put it. Or as one commenter said about Levine, "...directs a few campus centers and does not appear to have any major leadership experiences." Directing an academic center is not leadership? Who teaches those whom will become managers, executives and CEOs? Isn't it academics and professors? If professors don't know what they're talking about and they're not "leaders," why are we investing in the engineering and Water Institute professors? After all, they come from the "cheap seats," too.

Attack the message, not the messenger. If one can find holes in the methodology and analysis, fine, pick it apart. But to try and demean Professor Levine because he has raised questions regarding UWM's development proposal is childish and does nothing to substantively address the concerns he has documented.

UWM is on the right track in many regards. The University has made great strides in academics and in the community over the last few decades. But that doesn't absolve them from criticism and open discussion of their policies and community investment decisions.

Many detractors have made this into a Levine versus Santiago melodrama. That's too bad. The real point should be a discussion about what is the proper amount to invest, where, and toward what activities. Levine's research indicates we may want to look at other options for our limited investment dollars. We do not have to simply jump at any idea Mr. Santiago, his associated commercial interests, and the cabal of local power brokers pushes forward.

[Disclosure: I was formerly employed by the Center for Economic Development under the directorship of Marc Levine.]

Manufacturing

Some economists have purported the ideas that domestic spending has shifted away from manufactured goods, growing international trade is at most a minuscule reason for the declining manufacturing employment, and the decline in employment is a part of a natural, comparatively advantaged, order involving a rise in demand for skilled workers.

The last point was directly addressed in a previous post, The Skills Crisis and Job Training, "There is little evidence of absolute declines in cognitive or hard skills in the United States or generally poor performance relative to other advanced industrialized countries," as reported by associate professor Michael Handel.

Another relevant question is whether or not this supposed rise in demand for skilled workers was simply the by-product of having more college graduates available for the workforce. It's the chicken or the egg question. Also, even though a country moves toward higher skills and education among more and more of its citizens, does that necessarily mean that the productive use of the workforce also follows in-line by only providing services and offering more "professional" employment opportunities?

No matter how advanced a country might be, every citizen cannot be a lawyer, doctor, or CEO. As I reported in The Skills Crisis and Job Training, Marc Levine finds, "Over the next decade the Bureau of Labor Statistics projects the greatest job growth in occupations requiring a high school education and short-term, on-the-job training."

Manufacturing productivity has been consistently increasing throughout the years, but demand supposedly hasn't kept up. Josh Bivens dissects and dismantles this (and the other claims) idea of decreased demand in his report, Shifting Blame For Manufacturing Job Loss. He finds:

Trade imbalances in manufacturing accounted for 59 percent of the decline in employment.

Demand for manufactured goods as a share of total demand has grown over the past 10 years.

The rising trade deficit in manufactured goods accounts for 58 percent of the decline in manufacturing employment between 1998 and 2003.

The use of contract, part-time, and temporary workers by manufacturing companies also hurts wages and overall employment numbers. A development obviously connected to increased productivity and cost-cutting initiatives at firms (induced by global competition of cheaper labor).

Some also explain the (mythical) decline in domestic spending for manufactured goods with the supposition that goods have become cheaper. But this is a glaringly, sweeping generalization. Which goods? Cheaper for whom? Sure VCRs are relatively inexpensive, but cars are the second largest purchase for most families, and the price of most cars is near the yearly median income of most workers. And, let's not forget that wages have stagnated for the majority of workers since the 1970s.

Dean Baker writes, "At the end of the 1960s, nearly twenty-nine percent of workers in the U.S. were employed in manufacturing...part of the decline of manufacturing is attributable to the decisions of firms to move operations overseas...the U.S. has been running an annual trade deficit in excess of $150 billion for the last several years. If this trade deficit were eliminated it would create over two million additional manufacturing jobs, and increase of almost fifteen percent."

The trade deficit has been accelerated by the high value of the dollar versus other currencies.

"The American dollar had been high through much of the Bretton Woods period, but in 1979 it took off and rose some 60 to 70 percent...Manufacturing thus did not decline as a consequence of natural causes, but was hastened to the edge of the cliff and pushed off by the high dollar," concludes Jeff Madrick. As a share of overall employment in the Midwest, manufacturing has fallen from 29 percent in 1969 to 12 percent in 2007. Declines were pronounced during the Clinton administration because of Robert Rubin's high dollar policy.

Howard Wial and Alec Friedoff, in a report for the Metropolitan Policy Program at the Brookings Institution, found that, "Despite these job loses, manufacturing remains a major driver of the nation's economy and the economy of the Great Lakes region."

Manufacturing represents 20 percent of GDP in Europe, 14 percent in the U.S., 33 percent in China and 18 percent worldwide. David Huether of the National Association of Manufacturers, in a New York Times article by Nelson Schwartz, explains, "Manufacturing makes up two-thirds of U.S. exports and contributed more to GDP growth over the last 20 years than any other sector of the U.S. economy. Our share of global manufacturing output has remained steady at 20 to 23 percent over the past decade."

In a recent posting, Failure Bonuses, I noted that the Economic Policy Institute had found:

Of the 20 richest countries tracked by the U.S. Bureau of Labor Statistics, the United States ranks 17th in hourly pay for production workers in manufacturing.

Of the 16 nations with higher compensation for production workers in manufacturing, the United States ranks behind only Ireland (a nation with a manufacturing workforce less than 2% as large as that of the United States) in terms of “value-added per employee” (a rough measure of productivity).

The combination of relatively low compensation and high productivity means that U.S. manufacturing leads the world in terms of competitiveness of per unit costs of manufacturing output.

If the wages claimed by managerial and non-supervisory labor in the United States were the same as the median of comparable countries, U.S. manufacturing would have a 6.4% cost advantage over major trading partners.

Robert Scott elucidates, "Manufacturing supported 14 million jobs in 2007, about 10.1 percent of total employment...generating $1.6 trillion in GDP in 2006 (12.2 percent of total U.S. GDP)...gross output of $4.5 trillion in 2005, by far the most important sector of the U.S. economy in terms of total output." In Wisconsin, manufacturing generated 20.8 percent of GDP, $47 billion.

Manufacturing is a hugely important industry. It deserves our attention and support. To simply allow it to steadily decline is a failure of national, industrial, economic, and security policy. Manufacturing is an important element of our economy and a source of many well-paying jobs. Manufacturing also allows us, as a nation, to innovate and produce products sought after the world over. Doing nothing and allowing America to become a nation of service-providers leaves our choices to the whims of foreign producers.

After all that has happened since the economic collapse of 2008 (the fault of our "professional" financial service providers - Wall Street), I think it's time we rediscovered production of tangible objects. I'd much rather be helping assembly line workers get back on their feet and securing America's future building and providing things - such as wind turbines and electric cars, rather than seeing my money gambled on the black hole that is Wall Street.

For Further Reading:

If GM Was a Canadian Company It Would Be Asking For Help
Robert Rubin: Coward or Liar

The Bankers' Regime

Thoughts on American Manufacturing Decline and Revitalization

Who's Afraid of a Falling Dollar?

Will Robert Rubin Haunt the Next Democratic White House?

The Skills Crisis and Job Training

The myth of a skills crisis among workers sure has gained steam among municipal leaders, the business community, and even some (so-called) academics. Although, in reality, this phenomenon is more of an urban legend. As Marc Levine [a former employer], professor of history and urban studies at the University of Wisconsin-Milwaukee, reports in a Milwaukee Journal-Sentinel article, “Over the next decade the Bureau of Labor Statistics projects the greatest job growth in occupations requiring high school education and short-term, on-the-job training.” According to the Census Bureau, 80 percent of the City of Milwaukee population has at least a high school education. The total number for the U.S. is 84 percent.

Gordon Lafer, associate professor at the University of Oregon, in his expansive and definitive work on job training, The Job Training Charade, states, “Job training has served primarily as a form of political diversion. At both the federal and local levels of government, the rhetoric of job training has encouraged a discourse about poverty and unemployment which minimizes the public’s expectations of government. If poverty were viewed largely as the result of a shortage of jobs, and the government were held responsible as employer of last resort, scores of mayors and governors would have been thrown out of office in response to the dislocations of the past two decades. By instead promoting a view of poverty as largely rooted in the educational, cultural, and moral failings of poor communities, the assumptions underlying training policy suggest that the government could not be expected to provide more than marginal assistance toward solving this problem.” (212)

The market and the government are doing all they can or are able to do. The heart of the problem is the motivation, laziness, and inherent inabilities of poor people. Or some variation of this is what job training proponents would like us to believe.

As noted in this review of Gordon Lafer’s work, “The commonsense idea that there are plenty of jobs to go around if only the unemployed and the poor had the motivation and the skills to fill them…The number of decently-paid jobs that were available over the last twenty years has never been more than a fraction of the number needed to raise the poor beyond the poverty level…Except for certain professional positions that require specialized and highly controlled education and that compromise a very small portion of the labor market, variables such as gender, age, race, and whether or not workers are unionized, are more important determinants of the levels of employment and wages than are the levels of education.”

David Howell, professor at Milano The New School for Management and Urban Policy, observes, “In short, employers in the 1980s responded to increased competitive pressures by taking a low-road human resource strategy, one aimed above all at reducing current labor costs…In a great many industries, workers learned new skills to work with more advanced production technologies – but their higher productivity was not reflected in higher wages…In the 1980s, higher skills have simply not led to higher wages. In industry after industry, average educational attainment rose while wages fell.”

The disappearance of good-paying jobs has more to do with a decrease in collective bargaining (unionization) and anti-worker public policy initiatives rather than a lack of skills in the workforce.

Michael Handel, associate professor of sociology and Northeastern University, finds, “There is little evidence of absolute declines in cognitive or hard skills in the United States or generally poor performance relative to other advanced industrialized countries." (Annual Review of Sociology, Jan. 2003)

For Further Reading:
Bush’s Call For Job Training: Cruel Joke on Unemployed
Is There A Skills Crisis?
Worker Skills and Job Requirements: Is There a Mismatch?

Equitable Development

Two excellent articles on economic development - what it should and should not be:

Big, Empty Boxes

Developing Jobs or Developing Real Estate?

Miller Pork

Don Walker’s April 3, 2008 article, from the Journal-Sentinel, “Miller Park: Economic promises got it built. Has it paid?” implies there is a debate among economists about whether communities benefit from stadiums or not. There is about as much a debate among economists on this subject as there is among climate scientists about global warming.

But lets not get bogged down in nuance and fact.

First, we'll start with this corporate welfare defender. In this corner - the number one advocate, expert witness, and stadium-subsidy supporter - why, none other than Bud Selig. (Which is like asking Bill Gates if he thinks one should buy Microsoft.)

Walker states, “Selig believes passionately that such revenue growth did occur in the metropolitan area and commissioned a study released in October 2006 that showed the financial impact.” Amazing! Commissioning a study to show an impact and, low and behold, it does.

Selig then went on to use the well-worn contention about the intangible benefit of a sports stadium to a community. The problem with this type of implied, quasi-analysis is that, through taxation for this stadium, taxpayers felt a tangible deduction in their income. The hopes of everyone gathered at the ballpark to watch the game (direct use), or everyone getting together at the local pub to root on the Brewers (spillover) is all very quaint and well, but it’s not an economic impact analysis and it isn’t an economic development policy. Hoping and wishing should not be public policy.

Most studies show decreased activity in correlated economic sectors and the money being spent is merely a realignment of existing spending patterns. Growth is not occurring. Stadium subsidization is corporate welfare and a zero-sum game. Study after study has been done -- just because you build it, there’s no guarantee anyone is going to come. And, more likely, because you've built it, you now have less dollars in your city for schools, roads, parks, public transportation, etc.

Another hilarious declaration was Selig saying, “It [the stadium] saved baseball for Milwaukee and Wisconsin.” This equivocation reveals the real intent of the whole stadium-booster cabal: use public dollars for private playgrounds or else they will move to another city that will succumb to their bribe. And because this type of extortion is common in so-called economic development practices, it’s happening in every city. If people want to see the biggest welfare mothers driving around in their Cadillac's look no further than the corporate community, whom receive millions of dollars of giveaways, like stadium subsidies, every year.

The numbers the article's proponents cite from the 2006 study also seem to have been pulled from thin air. The talk of increased activity at hotels, restaurants and retail stores is mostly that – talk. Marc Levine of UW-Milwaukee Center for Economic Development [a former employer], the opposing view in the article, states that the actual total employment in the county and employment for hotels is down since the opening of the stadium. When we evaluate a stadium’s impact with measurable indicators we see no such gains in areas such as retail and hotels from having a stadium, as claimed by the boosters. So, I guess we're back to those intangible benefits.

If ifs and buts were candy and nuts, we'd all have a merry Christmas.