MCBASSI & COMPANY

Another look at low-wage jobs going unfilled

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Last month, my colleague Laurie Bassi posted about the “surprising” finding that manufacturing firms are having a hard time filling some of their available jobs.  Laurie noted that one likely explanation is fairly simple and obvious: many of the jobs are paying below-market wages and aren’t attracting workers for that reason.

Last week, Slate writer Daniel Gross tackled the same issue – and came to a similar conclusion: “employers shouldn’t be surprised that Americans won’t take their crummy, low-wage jobs.”  He notes that even in an era of high unemployment, “the laws of supply and demand apply” and employers may simply not be offering terms that are attractive enough to potential employees.

Sloppy NY Times reporting about skills mismatch

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Today The New York Times ran a front page story on how the “skills shortage” is having a negative effect on manufacturing in the United States.  The article reports that manufacturing firms are not able to find the highly skilled employees they are seeking for $15 to $20 an hour, and can’t find job applicants who come with the highly technical, specialized skills required for the work.

Although the Times is not typically known for its pro-business reporting, this article strikes me as frightfully one-sided.  It fails to consider that employers’ complaints about skill shortages may simply result from below-market wages and/or miserable investments in training.

If U.S. manufacturing is to get the skilled workers it needs, then it will have to compete with the other sectors in which these workers are in demand and can find jobs (even in a labor market with dreadfully high unemployment).  And if manufacturers want highly-trained workers, then they need to invest in training (which far too many do too little of).

The classic economic symptom of a declining firm is a failure to invest.  When manufacturers complain about the shortage of skilled workers, they are confusing the symptom with the problem.  If they would raise wages and/or invest in training people, they’d find that the apparent “shortage” would begin to disappear.

High unemployment masks skill shortages

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A new report on talent mobility from the World Economic Forum notes that today’s high worldwide unemployment rates mask longer-term global skill shortages.

For example, barring economic breakthroughs, the United States would need to add 26 million workers to the labor force by 2030 to sustain the economic growth of the last two decades, with shortages of highly skilled workers representing the most significant challenges.