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.

[source]

Skills Shortage, Labor Shortage, Skills Gap ... All Bullshit

The dutiful parrots of the media continue to push the "labor shortage" myth. Unemployment is near an all-time low. Yet, we still hear the cries of "labor shortage" and "skills shortage" in the media.

CNBC recently wrote The U.S. Labor Shortage Is Reaching A Critical Point. Employers are supposedly having trouble finding qualified employees to fill 6.7 million job openings.

Lacking self-awareness, the article stated, "Employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives."

Just as basic economics would predict.

As Dean Baker wrote, "We aren't seeing large-scale increases in pay despite near-record profit shares. This suggest that either employers are really not short of workers or that they are too incompetent to understand the basics of the market."

Baker continued, "The implication of the CNBC piece that claims that hiring is down because businesses can't find qualified workers. If this really is the problem, then the solution, as everyone learns in intro economics, is to raise wages. For some reason CEOs apparently can't seem to figure this one out, since wage growth remains very modest in spite of this alleged shortage of qualified workers."

For Further Reading:
The Washington Post Really Really Hates Markets When It Means Higher Pay For Ordinary Workers
Americans Need To Stop Obsessing Over The Unemployment Rate

Pay More

Dr. Ed Yardeni, President and Chief Investment Strategist of Yardeni Research, Inc., provided a summation of the latest U.S. employment findings:

Plenty of jobs available. In August’s consumer confidence survey, the Conference Board found that the percentage of respondents who said that jobs are plentiful rose to 26.0%, the highest since August 2007. The percentage saying that jobs are hard to get was 23.4%, near recent cyclical lows, and consistent with the cyclical low in the unemployment rate.

Record job openings. It’s actually somewhat surprising that nearly a quarter of respondents still say that jobs are hard to get given that job openings are at a record high. Perhaps many workers simply lack the skills required by the available jobs.

Unfilled positions hard to fill. NFIB’s August survey also reported the following litany of complaints by small business owners about the labor market: “Fifty-three percent reported hiring or trying to hire (down 3 points), but 46 percent reported few or no qualified applicants for the positions they were trying to fill. Fourteen percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem. This issue ranks third out of nine major issues listed. Twenty-six percent of all owners reported job openings they could not fill in the current period, down 3 points from, the highest reading in this recovery.”

Business owners, especially in our hyper-politicized environment, have been claiming there aren't any skilled workers to be found.

One caveat from Yardeni's findings:

Why aren’t wages rising more rapidly? There are a few explanations for the slow pace of wage gains. One possibility is that high-wage Baby Boomers are retiring and more jobs are going to low-wage Millennials. Workers may be afraid to push for big raises, fearing that that would provide an even greater incentive to employers to replace them with automation, robotics, and artificial intelligence. Since the Trauma of 2008, corporate managements have been obsessed with keeping a lid on their costs and maintaining high profit margins.

Although Yardeni mentions the lack of wage growth, he really doesn't give that factor its proper due. Which is sad because its the crucial point in this discussion. If demand is high and supply is low, wages should rise. That's basic economics.

Owners can't have it both ways - claiming they have all these positions to fill, yet they can't find anyone, while also being unwilling to increase wages to attract workers. If they are such astute businessmen, they should understand basic economics.

As Barry Ritholtz wrote, Having Trouble Hiring? Try Paying More.

None of this means there is never some frictional or structural unemployment, where skilled workers for a certain industry are in short supply. But, again, this is solved by increasing wages.

For Further Reading:
Shortage of Skills or Abundance of Excuses?
Skills Shortage Sham
Training, Skills, & Other Fairy Tales
The Zombie Skills Gap Meme That Won't Die
Low Wages, Not Skills Mismatch

Why Wages Are Not Returning as Job Growth Increases

Wage 'growth' continues to go nowhere
Wage Growth Is Weak. Inflation-Adjusted Wage Growth Is Much Healthier

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.

Jobs! Jobs! Jobs! Get Your Jobs Here!

'Hiring event' looks to fill 1,000 job openings at 75 companies.

Which would fill 1.4% of Walker's dubious claim of 70,000 job openings in Wisconsin.

Hopefully the participating companies are ready to pay a living-wage to attract workers to the open positions. 

As I wrote in (April 2013), Welders Wanted. We Don't Need No Stinking Welders!:

Welding Job Fair Fails To Spark Interest 

There is such a skills mismatch. Some Wisconsin companies just can't find welders. MATC was nice enough to organize a job fair to facilitate those looking for work connecting with the companies that supposedly need them. Too bad the companies, crying about Wisconsin not having skilled workers to fill positions, also seem to not have the time to show up.

If companies are unwilling to pay an honest-day's-pay, they can't realistically expect someone to do an honest-day's-work.

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

There Is No Skills Shortage. Scott Walker Has Been Terrible For Wisconsin.

Two more memes debunked (again):

Existence of skills gap debated

Walker jobs promise appears out of reach

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

Welders Wanted. We Don't Need No Stinking Welders!

Welding Job Fair Fails To Spark Interest

There is such a skills mismatch. Some Wisconsin companies just can't find welders. MATC was nice enough to organize a job fair to facilitate those looking for work connecting with the companies that supposedly need them. Too bad the companies, crying about Wisconsin not having skilled workers to fill positions, also seem to not have the time to show up.

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 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

Weekend Reading

Death Of The Fringe Suburb
Double Taxation Of Corporate Profits & Other Fairy Tales
George Will Confused By Numbers At The Post Office
Mining Bill Rushed Before Governor's Office
Myth Of Profligate Euro Zone Countries
No New Drugs? Blame Wall Street
The Obama Spending Non-Surge
Skilled Jobs Go Begging? Not Quite
Small Business & The Millionaire Surcharge
The Squeeze On State Workers
Top 0.1% Of The Nation Earn half Of All Capital Gains
Walker's Union-Busting Bill Challenged In Court
Who Does Not Pay Taxes? Kimberly Clark, Brunswick, Rockwell, & Snap-On

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