Monday, March 10, 2014

Meeting the Need

Job training programs are failing to turn out enough skilled workers to fill job openings in the U.S., a phenomenon that puzzles some European companies that expand into the U.S.
Nationwide, about 4 million job openings are going unfilled, but 10 million people are unemployed, according to Labor Department statistics.
What Germans Know Could Help Bridge U.S. Workers' Skill Gap
It seems to me that if it were important to fill those openings, then the compensation (direct and indirect) attached to them would go up. This would make it worth people's while to go into these fields and learn the skills required. I don't think that we're really looking at a skills gap. Instead, we're looking at discretionary hiring. Yes, employers want these skills, but they can do without them, and so they don't want to bear either the expense of attracting people with the skills or the expense of training for them. Instead, they're hoping that a populace desperate for "jobs" will put pressure on elected officials to have government (i.e. the public) shoulder the costs of training, and thus lower the cost of obtaining skills in two ways, employers don't have to pay for training, and common skills command lower wages.

And this is to be expected. Companies are in business to make money, and so they naturally want to reduce their costs as much as possible. And moving from a situation where employers compete for workers to one where workers compete for jobs reduces the costs of employing people, if for no other reason than it creates a distinct downward pressure on wages. The German vocational apprenticeship programs that supply skilled workers to employers there come with a three-year commitment to an employer. There were programs somewhat like that here - companies would often pay for skills training for workers, with the proviso that leaving within a certain time afterwards would require that some part of the tuition be repaid - but you had to be an employee first - which gets back to one of the basic catch-22s of the American employment market - you need work to obtain experience, yet need experience to obtain work.

We should resist the urge to buy greater employment. Rather we should let wages rise. Skilled trades are not subject to enough scalability to trigger a winner-take-all effect, and thus, needs in those areas can result in significant income transfers to labor. We should be careful about giving that up.

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