Skills To Pay The Bills

More proof there is no skills gap or skills shortage. 

6 of the top 10 most in demand jobs in Wisconsin through 2026 require a high school diploma, or job-specific training, at most.

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The So-Called "Skills Gap" Is Complete Bullshit

Another "skills gap" crusader:

LaSalle Network CEO Says There's a Huge 'Skills Gap'

Such a good little soldier for the privileged.

Too bad reality doesn't comport with that tripe.

The Myth of the Skills Gap

The problem is, when we look closely at the data, this story doesn’t match the facts. What’s more, this view of the nation’s economic challenges distracts us from more productive ways of thinking about skills and economic growth while promoting unproductive hand-wringing and a blinkered focus on only the supply side of the labor market—that is, the workers.

A Recession-Era Economic Myth Goes Up In Smoke

Throughout the slow recovery, journalists from major papers made a cottage industry of finding CEOs complaining that their hiring searches were coming up empty. Conservative commentators chalked up high unemployment to a so-called “skills gap”: companies needed more qualified workers, they insisted, than were currently on offer. 

But something wasn’t right. If companies really needed qualified workers, why weren’t they raising wages to attract them? Or why weren’t they lowering their qualification standards or offering training to less experienced new hires? If companies really did have jobs that desperately required filling, they would have been working harder to fill them.

Don’t Blame A ‘Skills Gap’ For Lack Of Hiring In Manufacturing

This “skills mismatch” theory is a favorite of corporate executives and the think tanks they fund. But it is based on scant evidence. Individual companies may be struggling to fill specific jobs, but the data shows little sign of an industrywide shortage of skilled workers. In fact, it’s not clear that companies are really trying hard to fill many of these jobs at all.

Talk of a skills gap in the labor market is 'an incredible cop out'

But is there really a skills shortage? If so, why have median wages been stuck in a rut for so long? Why aren’t companies investing more in training and labor-saving equipment? Why aren’t they asking workers to work longer hours? It doesn’t add up, says Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank in Washington.

The persistent myth of the “skills gap”

Nobel Prize-winning economist Paul Krugman calls the skills gap a “zombie idea” that won’t go away despite being routinely debunked. The reason has less to do with ignorance than with power. After decades of rising inequality and an eroding labour share of income, the skills gap mythology downloads blame onto workers and costs onto government. Jim Stanford, writing in the pages of Academic Matters, puts it well: “According to this worldview, the biggest challenge facing our labour market is adjusting the attitudes, capabilities and mobility of jobless workers…The problem is with the unemployed.” The skills gap takes the onus off employers to pay decent wages and train workers, blaming labour market failings on workers instead.

For Further Reading:

The Mythological Skills Gap

The Zombie Skills Gap Meme That Won't Die

It's About Job Shortage, Not Skills Crisis
It's Not Structural Unemployment
Manufacturing
Structural Unemployment: The Data Doesn't Match
Varieties of Unemployment

Skills Shortage Sham

More Skills Gap Crap

Is There Really a Skills Gap?

The Skills Gap Is a Myth

What Would Jesus Do?

According to Scott Walker, Jesus would:

• require able-bodied parents of children on food stamps to work or get training to receive more than three months of benefits
• increase the existing work requirement for all able-bodied adults from 20 hours a week to 30

Walker added, "“With more people working in Wisconsin than ever before, we can’t afford to have anyone on the sidelines: we need everyone in the game. We want to remove barriers to work and make it easier to get a job, while making sure public assistance is available for those who truly need it."

Maybe instead of "training" and "removing barriers," Walker should be helping to create family-supporting jobs. Like the 250,000 he promised. Instead, he seems more interested in cutting taxes on the rich, gutting regulations for his donors, and lavishing subsidies on his cronies.

Such good Christians those Republicans. Those god-fearing, god-abiding moral pillars...as long as you're not poor.

Their blatant disregard for most humans and the environment, alongside their unwavering support for their rich campaign financiers, one has to ask Why Do Republicans Hate America?

For Further Reading:
Why Claims of Skills Shortages in Manufacturing Are Overblown

The Fake Skills Shortage

After All the Talk About a Skills Shortage in the U.S. Job Market, the Real Problem May Be an Employer Shortage

Scott Walker signs bill easing regulations on high cap wells

Wisconsin, under Scott Walker, no longer leads in conservation

Stripping wetland protections to have consequences, intended or not

Wisconsin Foxconn Deal Waives Environmental Regulations

Four disastrous pro-pollution policies from Scott Walker and Wisconsin GOP you haven't heard about

Scott Walker Cuts Higher-Ed Budget, Funds Corporate Welfare

Scott Walker’s $3 billion fraud

Walker shows his priorities with $250 million subsidy to NBA billionaires
Water Pollution Skyrockets Under Walker

Shortage of Skills or Abundance of Excuses?

As most Wisconsinites know, Scott Walker has overseen anemic economic performance for Wisconsin. Job growth has continually lagged the national average.

Once again, Wisconsin job growth trails national pace

Of course, none of this, according to Scott Walker, is Scott Walker's fault. (Regardless that he was elected based on his claims that he could grow 250,000 jobs for the state.) It's the dreaded skilled worker shortage. The jobs are here just waiting for the right workers. 

The laughable link between the two - jobs and the right skills for those jobs - is job training. Another overblown talking-point of economic development hucksters. 

As Marc Levine informed,

As Gordon Lafer, one of the country's foremost researchers on job training, puts it: "Whatever the problem, it seems job training is the answer. The only trouble is, it doesn't work, and the government knows it. . . . Indeed, in studying more than 40 years of job training policy, I have not seen one program that, on average, enabled its participants to earn their way out of poverty."

This, directly debunking the recent drivel being peddled in a Journal Sentinel opinion piece.

Levine continued,

Work force development policy is based on the fallacious premise that Milwaukee's core employment problem is a shortage of skilled workers (a "jobs-skills mismatch"). ...

The jobs are already here? Hardly. Indeed, taking metro Milwaukee as a whole, there is a gap of 88,000 between the number of jobless (working-age residents unemployed or out of the labor force) and the number of job vacancies reported by employers. It is a job shortage, much more than a skills shortage, that plagues the region. ... 

No matter who controls job training programs in Milwaukee, they are doomed to failure unless this economy produces enough family-supporting jobs.

This isn't to say we shouldn't be offering some job training efforts. This also doesn't mean that at some time during the business cycle, the economy won't experience some structural unemployment. But these supposed panaceas of skills-improvement and job-training have proven largely uneventful over the last few decades.

The continued call for increased skills also ignores the fact that the Bureau of Labor Statistics estimates the majority of new jobs over the next few decades will require only a high school education or minimal on-the-job training. Secondly, its also implies that we, as a nation are becoming less educated; this, also, is false.

This skill-shortage talking-point merely allows most of the decision-makers to take the hands-off approach of blaming the victim. "We've got some tools out there. If individuals don't take advantage, that's their problem."

More effective policies include increasing the earned income tax credit, unionization, increasing the minimum wage and increasing job programs (directly employing individuals).

As long as we keep pretending the market has all the answers and our workforce is so woefully inadequate that we can't do or learn the majority of vacant positions, charlatans and other hucksters will continue to sell job training, skills shortage and other bumper sticker policies that do little to address the issues they claim to be so concerned about.

Republican Beliefs And Other Superstitions

Republicans subscribe to the disproven Trickle Down hypothesis:

An economic idea which states that decreasing marginal and capital gains tax rates - especially for corporations, investors and entrepreneurs - can stimulate production in the overall economy. According to trickle-down theory proponents, this stimulus leads to economic growth and wealth creation that benefits everyone, not just those who pay the lower tax rates. 

President Reagan's economic policies, commonly referred to as "Reaganomics" or supply-side economics, were based on trickle-down theory. The idea is that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. Reagan initially slashed the top income-tax rate from 70% to 50%. Trickle-down policy’s detractors see the policy as tax cuts for the rich and don’t think the tax cuts benefit lower-income earners. 

A contrasting theory, Keynesianism, is based on stimulating demand through government spending and other government interventions. An increase in government spending necessitates an increase in income-tax rates – the opposite of what trickle-down theory advocates. Trickle-down theory does not support government intervention in the economy. 

According to the trickle-down theory, if tax rates are lower, people have an incentive to work more because they get to keep more of the income they earn. They then spend or invest that income, and either of these activities will improve everyone’s prosperity, not just the prosperity of those in the highest income brackets. What’s more, in the end, the government may actually collect more income tax despite the lower tax rates because of the additional work performed. The Laffer Curve shows how this relationship works. If the government taxes 0% of income or 100% of income, it takes in no money. In between these two extremes, tax revenues vary because different tax rates encourage people to work more or to take more leisure time.

Conservatives want society, as a whole, to allow the rich to "keep more of their money." Riches are then supposed to trickle down to the rest of society. When it doesn't trickle down 1) the citizens are uneducated, 2) the citizens aren't properly trained, 3) technology is replacing workers, and/or 4) the citizens are just lazy.

Larry Summers recently addressed these falsities:

The core problem is that there aren't enough jobs. If you help some people, you could help them get the jobs, but then someone else won't get the jobs. Unless you're doing things that have things that are effecting the demand for jobs, you're helping people win a race to get a finite number of jobs. […] 

Folks, wage inflation in the united states is 2%. It has not gone up in five years. There are not 3% of the economy where there's any evidence of hyper wage inflation of a kind that would go with worker shortages. The idea that you can just have better training and then there are all these jobs, all these places where there are shortages and we just need the train people is fundamentally an evasion. [...] 

I am concerned that if we allow the idea to take hold, that all we need to do is there are all these jobs with skills and if we can just train people a bit, then they'll be able to get into them and the whole problem will go away. I think that is fundamentally an evasion of a profound social challenge.

Timothy Taylor elaborates on the decline in on-the-job training:

Here's some evidence from the recently released 2015 Economic Report of the President, by the Council of Economic Advisers, showing a decline in employer-provided and on-the-job training in recent decades...

Looking at the overall pattern, a decline in employer-sponsored and on-the-job training suggest that workers who wish to keep building their skills are getting less support from their employers.

Here again we have more Republican beliefs shown to be nothing more than self-serving blather and bullshit.

More Skills Gap Crap

The Milwaukee Business Journal entered the "skills gap" discussion with 5 things employers and job seekers need to do to bridge skills gap.

Why the media continues to push this manufactured drivel is beyond me. There is no skills gap.

The money-quote that captures the ridiculousness of this:

The reason companies are taking longer to hire is that they are getting more specific about the talent that they are looking for and a "great employee is game changing," and potential hires need to focus on "bringing greatness into the workplace," said Jamie Fall, vice president for workforce and talent sustainability for a Washington, D.C.-based nonprofit called the HR Policy Foundation.

So, Milwaukee can't find welders (the oft repeated example) because not enough "game-changing" and "great" employees are out there? Whatever that ever means.

Sure, most employers want smart, responsible and talented employees. But the main reason they aren't filling these jobs is because of the pay. You can't employ a great, game-changing employee for a minimum wage.

All jobs require some on-the-job training. The idea that an employee walks into the door knowing everything is pure fantasy.

This isn't a worker or a training problem, it's a pay problem.

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This anemic-pay epidemic also explains our current record-level income inequality. When people only have enough to get by, they don't consume enough to consistently grow the economy. Our media has been a compliant messenger in the skills gap mythology and, thus, enablers of increasing income inequality. 

The story goes: 

The Haves want nothing more than to employ the Have Nots. Its just the Have Nots aren't pulling their weight. They just can't quite get it done. 

Maybe if the public sector paid more for training, maybe if the public sector did more to educate potential workers, maybe if the public sector gave subsidies to private companies...

Got that? You're stupid and unskilled...and its the government's job to fix things, or at least shovel money at it.

All hail the free market!

Fact-checking The First Debate

The Journal Sentinel summarized the first debate between Mary Burke and Scott Walker in, Mary Burke pounces on Scott Walker's comments on state's 'work problem'.

"We don't have a jobs problem in this state. We have a work problem," Walker said during a discussion about raising the minimum wage.

During an interview with the Milwaukee Journal Sentinel, Walker explained that he is seeking to boost workers in two areas. First, he pointed to employers who need trained workers for higher-skilled jobs like welding. 

"We have jobs, we don't just have enough people with the skill sets to fill those jobs," he said. 

Walker also said he wants to help others acquire the basic skills needed to hold down any job. Walker has proposed requiring drug tests for working-age recipients of public benefits.

This is yet another of the many Republican talking-points that continue to live on even though there isn't a shred of evidence supporting it. In writing about the job training myth, Marc Levine detailed, "As Gordon Lafer, one of the country's foremost researchers on job training, puts it: "Whatever the problem, it seems job training is the answer. The only trouble is, it doesn't work, and the government knows it. . . . Indeed, in studying more than 40 years of job training policy, I have not seen one program that, on average, enabled its participants to earn their way out of poverty."

As I previously wrote in Myth Busting: Job Training, "Most of the new jobs being created require an associate's degree or less. 85 percent of the population in the U.S. have at least a high school degree. Over 27 percent have a bachelor's. The percentage of high school and college graduates has increased since 2000. We have neither an unskilled nor an uneducated workforce. Education as a corrective to the employment problem seems minimally significant." The idea that there are not enough Wisconsin citizens with the needed-skills is ludicrous.

As Catherine Rampell, of The New York Times, reported, "What’s especially odd about these survey responses is that if employers are having trouble finding qualified workers, they should be bidding up wages to attract the few qualified workers who are out there. But that’s not what the data show."

There is no training or skills crisis. We have a class warfare and living-wage crisis.

The Journal falls down, again, and fails to correct these falsities. Instead of practicing journalism and helping the reader to see the truth between competing narratives, they just spread the taking-points for Republicans.

They then go on to insinuate that Mary Burke is a meanie, "For their part, Republicans noted after the debate that Burke appeared ungracious when the candidates were asked to name something that they admired in the other." [This "meanie" issue is actually about a quarter of the entire article.]

I don't admire anything about Scott Walker either. He's a self-absorbed, closed-minded, partisan, hack. No matter where he has gone, controversy and deficits have followed. Does this make me ungracious? Oh well. The simple fact that one is in a debate doesn't also mean that person has earned respect. And, in dissecting the career of Scott Walker, it is awfully difficult to find something to hang your hat on. In preparing for the debate, was Mary Burke supposed to focus on what would make Scott Walker look his best?

Hopefully Wisconsin can move toward a debate of ideas and facts rather than boogeymen and mythology.

For Further Reading:
The Skills Crisis & Job Training
Skills Shortage Sham
For Scott Walker, Jobs Service Is Not Job Number One

Scott Walker's Employment Gaffe

Melissa Harris-Perry Takes Scott Walker To Task For Dishonest Ad On Reproductive Rights

The Big Lie Behind Voter ID Laws

Sunday Reading

CBO Increases Estimate Of The Cost Of The Housing Bubble Collapse

Charles Lane Is Wrong On NAFTA And The Trans-Pacific Partnership
Home Depot  Syndrome, The Purple Squirrel, & America's Job Hunt Rabbit Hole
In Cities, The Average Doctor Wait-Time Is 18.5 Days

Obama, Romney, Ryan All Endorse Retraining for Jobless—But Are They Right?
The Skills Gap Myth
Why Thomas Jefferson Favored Profit Sharing

Training, Skills, & Other Fairy Tales

Time for Wisconsin to get a new playbook. I haven't heard a single innovative idea for economic development from any of the supposed experts being quoted in the media, nor from our development agencies. Just more regurgitation of development hucksterism. And, if what we hear from the Walker administration is any indication of our current state of development, we're still stuck in the '80s.

Research parks, stadiums, venture capital, etc. Why are we continuing with proposals that have already either run their course or been proven ineffective?

Here we go again.

Gov. Walker May Be Poised To Reorganize Job Training

As I wrote back in May 2009: 

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.

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 article (Gov. Walker May Be Poised To Reorganize Job Training) also declares "the state's skills mismatch" as one of the reasons to reorganize job training. Two disproven ideas in one article, now that's efficiency. Job training is pointless unless there are actual jobs available (that pay a commensurate wage for the skills). And, skills mismatch is a clever rebranding for what is actually just low wages.

The Skills Mismatch Myth

Dave Altig, Atlanta Fed, The Skills Gap: Still Trying To Separate Myth From Fact:

"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."

For Further Reading:

A Manufactured Paradox

The Skills Crisis & Job Training

Skills Shortage Sham

Skills Shortage Sham

Structural unemployment - a location mismatch between market demand and skilled workers - is a favorite talking-point of the capitalist, business, conservative cabal. As some direly refer to it, the skills crisis.

With 1 job opening for every 4 unemployed, laborers are hardly in a bargaining position. Most workers, especially is this economy, will take any job they can get. And, if one has a highly-demanded skill during an economic downturn, it stands to reason that he/she would command an appropriate wage in the marketplace. The idea of structural unemployment fails rudimentary logic (as an explanation for the majority of our unemployment).

Enter Scott Walker.

Walker say agencies must work together to solve skilled labor shortage.

This structural unemployment myth allows corporations to keep taxes and regulations at bay. It allows them to avoid paying living wages. As always, unemployment is the governments fault. Or, at least, the government is supposed to provide subsidies, tax breaks, and job training to help "correct" this market disequilibrium.

This has nothing to do with the fact that these same companies, that can't find skilled workers, want to pay inadequate wages for such skilled work.

Conservatives blather on endlessly about the magic of the market, its efficiency, and the iron-clad law of supply and demand. So, keeping supply and demand in mind, what should happen when there is a high demand for a specific skill, yet only a small supply? The price (wage) of the persons possessing such skill should increase. If local companies have the audacity to claim the skilled workers they need are not available, the first question which should be asked is, "What are you paying?"

We don't have a skills crisis.

We have an unemployment crisis. We have a jobs crisis. We have a wage crisis. We have a progressive taxation crisis.

For Further Reading:

It's About Job Shortage, Not Skills Crisis

It's Not Structural Unemployment

Manufacturing

Structural Unemployment: The Data Doesn't Match

Varieties of Unemployment

Labor Shortage Sham

The idea of a labor shortage is getting media buzz again. Companies claim they can't find workers with the skills willing to do the job. The Journal Sentinel pushes this mythology at least once a year. Another excuse why we need to cut corporate taxes and subsidize business operations.

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.

So, if they want to end the labor shortage...increase the wages.

For Further Reading:
The Great Labor Shortage Lie
Is A Great Labor Shortage Coming?
It's About Job Shortage, Not Skills Mismatch
The Labor Shortage Myth
Labor Shortages: Myth & Reality
The Myth of Structural Unemployment
The Myth of The Coming Labor Shortage
The Skills Crisis & Job Training
The Skills Myth
What Labor Shortage?

Milwaukee Should Focus On Infrastructure

The Journal Sentinel has recently wondered Does Milwaukee Have Enough College Graduates To Thrive? and also claimed that To Prosper, Milwaukee Should Focus On Degrees.

I'm not arguing against going to college or against education, in general. But the 'education as a silver bullet' to all our problems has been oversimplified and oversold.

As I have written before, "Most of the new jobs being created require an associate's degree or less. 85 percent of the population in the U.S. has at least a high school degree. Over 27 percent has a bachelor's. The percentage of high school and college graduates has increased since 2000. We have neither an unskilled nor an uneducated workforce. Education as a corrective to the employment problem seems minimally significant."

The so-called "skills crisis" is a myth. Some of this push toward getting more degrees and college graduates seems more of a PR push for diploma mills. Which is what our technical colleges and universities are becoming. We're graduating students and training workers for jobs that aren't there. It may be that we need to reconfigure our curriculum to fit more with the needs of the marketplace, than just continuing to garner degrees.

Milwaukee's percentage obtaining a bachelors degree, among different cohorts, is as follows: 18-24 years old, 8.4%; 25 and over, 13.6%; 25-34, 25.1%; 35-44, 21.7%; 45-64, 20%; 65 and over, 11.9%.

The City of Milwaukee's population ranks only 26th among American cities. Yet, the Daily Beast recently ranked Milwaukee the 15th smartest city in America. Milwaukee ranks 25th in bachelor and graduate degree density per square mile.

The 10 most literate cities are all blue cities with progressive taxation and modern infrastructure. We need the infrastructure and environment where research and innovation can thrive. As Marc Levine, UWM Professor of History, stated (when asked what should be done to close the education gap), "Maintain infrastructure investments (transportation, parks, etc.) vital to neighborhood quality of life."

It's great to have a highly educated workforce. But they need employment. A knowledgeable workforce is only a benefit if it can be put to use.

For Further Reading:
America's Smartest Cities

Myth Busting: Job Training

Globalization is inevitable. You can't stop it. It's good for all. Get on board or be left behind. To stay viable you need additional education and training.

There is only 1 job available for every 6 unemployed workers. So what exactly do these hucksters want people to retrain for? The economy continues to expand (even if that growth is slower). Workers have simply been cut off from the expansion. Capital has been expanding it's share of the profit, while labor has been left behind.

Most of the new jobs being created require an associate's degree or less. 85 percent of the population in the U.S. have at least a high school degree. Over 27 percent have a bachelor's. The percentage of high school and college graduates has increased since 2000. We have neither an unskilled nor an uneducated workforce. Education as a corrective to the employment problem seems minimally significant.

Technology has replaced jobs. This does not mean, as the 'job training' charlatans would imply, simple advances in automation automatically must equate to reductions in the workforce. Increases in productivity upon one variable in the production process can lead to increased needs for labor at another point in the process.

Historically, wages rose with productivity. It isn't an invisible hand or some magical market force pushing us along. It is conscious policy choice. The nanny state has become an inverse Robin Hood scheme. Rather than providing a safety net, ensuring that the least among us do not fall between the cracks, we now provide corporate welfare, ensuring asset price inflation.

We've transformed from a productive economy to an casino capitalism - filled with risk, speculation, and the endless pursuit of higher yields. Any downside is now covered by the public. This is alongside our funding of much of the research and development taking place, and other subsidization of many industries and sectors within the economy.

For Further Reading:
Debt Delusion
Economy Track
Job Crisis: Fact Sheet
Skills Crisis & Job Training
Unemployed Wait Longer For Jobs

Unemployment and Jobs

Heidi Shierholz finds that there are five unemployed workers for every available job. More evidence supporting the idea that (un)employment problems are not the fault of a lack of skills or a need for job-training, but rather due to a lack of jobs.

Retraining Is Good, But...

As Susie Madrik of Crooks and Liars states, what jobs are we training them for?

As I posted earlier, it's not as much a lack of skills as a lack of jobs that is the problem.

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?