jobs

Dean Baker Thinks Unfilled Jobs More Due to “Incompetent Managers” Than Skills Gap

/ The Old Crank

Today I noticed that Dean Baker of the Center for Economic and Policy Research, who knows a lot more about this stuff than I do, shared my skepticism about this Washington Post article on the alleged skills gap in the manufacturing sector. Actually his response was a lot stronger than mine:

The Washington Post told readers that the manufacturing industry is suffering from incompetent managers and therefore is not hiring as many workers as it should. According to the Post, managers don’t realize that it is necessary to raise wages to attract more workers and instead are whining that they can’t get the workers they need to fill vacancies.

Baker produced a chart showing how far hourly wages for non-supervisory workers in the manufacturing sector has fallen in recent years, and it’s kind of astounding:

Chart showing decline in manufacturing wages

Source: Dean Baker, CEPR, using Bureau of Labor Statistics data.

Skilled Factory Workers or Cheap Skilled Factory Workers?

/ The Old Crank / 1 Comment

As I wrote earlier, the Washington Post published a story today on the alleged skills gap in the manufacturing sector in Michigan and other parts of the country. If you make your way all the way to the end of the story, after reading various employers lament the fact that the workers they laid off in 2009 now can’t work any of the newfangled machines that these companies installed during the recession, you get to this interesting paragraph:

The shortage of skilled workers has also pushed up wages, though executives said raising them too far could push more work to overseas plants. (my emphasis)

In other words, if you are one of those laid off workers who does invest time in the re-training required to get your job back, don’t expect a big return on that investment in the form of higher pay, or we will ship your job overseas.

The article closes with an anecdote that again raises the question as to whether at least some employers who complain about the lack of skilled workers are actually complaining about a lack of cheap skilled workers:

A Michigan company that makes camshafts for cars, as well as farm and mining equipment, has had ads out for at least six months for CNC machine operators and programmers. The pay runs from $15 to $21 an hour, a relatively good wage in this part of the country.

“The problem is as soon as we get someone in, one of our other guys will jump ship,” said Tyson De Jonge, engineering manager at Engine Power Components. “They get better offers.” (my emphasis)

The author of the piece accepts the company’s claim that they are paying a “relatively good wage” even though the evidence seems to contradict this assertion. It sounds like these folks are “jumping ship” because someone is offering them better pay somewhere else.

Anthony Carnevale: Skills Mismatch Not the Whole Story

/ The Old Crank

Whatever you think about the effectiveness of federal job training programs, Amy Goldstein’s story in Saturday’s Washington Post notes the basic problem with relying too heavily on job training to solve the country’s unemployment problem by itself.

Anthony Carnevale, the director of Georgetown University’s Center on Education and the Workforce, which has produced valuable research on the relationship between earnings and educational attainment—including the long-term value of a college education—acknowledges, according to Goldstein that “retraining can’t always overcome a scarcity of jobs.” She writes:

That skills mismatch, while real, is not the whole story, Carnevale says. At the moment, he points out, the country has 3 million to 4 million job openings. But if you add up the people who are unemployed, in part-time jobs because that’s all they could find or so discouraged that they’ve quit looking for work, he says, the country has more than 20 million people who could use a job. (my emphasis)

In other words, not enough jobs are out there, even if every single person who needed re-training received it. None of this means that re-training, investments in community colleges, and increasing access to higher education are bad policies, but it does suggest that there are other factors that need to addressed in order to fully address inequality and economic opportunity.

Interestingly, the Post comes back today with a story on the skills mismatch in some areas of the manufacturing sector.

Are Education Investments Enough?

/ The Old Crank

Yesterday, Jared Bernstein highlighted a new paper on income mobility by Katherine Bradbury, from the Boston Federal Reserve, which bolsters the argument that the rate of family income mobility—the ability of families to move up and down the income scale—has been gradually diminishing for the last several decades, while income inequality has grown over the same period. This is important, Bernstein explains, because there are some who argue that the increase in income inequality in this country is offset by greater mobility—in other words, they argue that while the gap between rich and poor is widening, at least more people are able to move up and down the income scale more quickly.

Bradbury’s paper has a great chart showing that this does not appear to be the case—that in fact, there appears to be a decline in the rate of mobility across the last several decades.

Bernstein believes the two are causally related. That, in his words, “higher inequality is itself driving a chain of events that leads to lower rates of income mobility.” He continues:

There are various links to this chain—and this is just a hypothesis at this point (but I’ll bet I’m right). The relationship between income concentration and political power is one important link. The austerity measures we are now contemplating, the regressive changes to the tax code, the sharp cuts in discretionary spending (a part of the budget that pays for, among other things, various investments in human capital targeted at less advantaged populations)—the general and pervasive view that we a) can’t afford the investments and social insurance we need, and b) can’t raise taxes to pay for them—is not an objective fact based on analysis. It’s a political call based on power.

Last night, Fareed Zakaria hosted a special on CNN called “Restoring the American Dream: Fixing Education.” On CNN’s web site, Zakaria writes:

I’ve been thinking about Occupy Wall Street, which is now occupying a number of other cities in America. What is it really about? The protesters don’t like bank bailouts; they feel the 99% have been hard done-by and they’re protesting what they see as unprecedented inequality.

His conclusion is that the lack of social mobility is what underlies it all:

I think underlying their sense of frustration is despair over a very un-American state of affairs: A loss of social mobility. Americans have so far put up with inequality because they felt they could change their own status. They didn’t mind others being rich, as long as they had a path to move up as well. The American Dream is all about social mobility – the sense that anyone can make it.

Zakaria also has stats. He notes this week’s TIME magazine cover story on social mobility, in which the author points out that if you were born in 1970 in the bottom one-fifth of the socio-economic spectrum, you had only a 17% chance of making it into the upper two-fifths.

From what I can tell, the terms “social mobility” and “inequality” used by Zakaria here are roughly equivalent to—or at least very closely tied to—the concepts of income inequality and income mobility discussed in Bradbury’s paper. In other words, he thinks (and I think he’s probably right about this) that people are frustrated because they see rich people getting richer while their own opportunities to get ahead are diminishing. (Although I’m not sure if this goes far enough—people seem angry about not just diminishing opportunity to get ahead, but about falling further behind.)

Zakaria’s answer, like others in the media, is education:

There are a number of reasons why we find ourselves in this predicament – but the most important of them is how much we have lagged behind on education. No other factor is as closely linked to upward mobility. Education is the engine of mobility (my emphasis).

Reading this after reading Bernstein’s article, I wonder if our education system really is the primary reason why we “find ourselves in this predicament.” After all, many of the Occupy Wall Street protesters are college-educated, as are many of the long-term unemployed. While I would imagine that most protesters would agree that equal opportunity for education is consistent with their message, what people appear to be most directly angry about is that despite having educated themselves and worked hard and done all the things they are supposed to do, economic opportunity is actually narrowing—and in some cases, drastically. (I also think many are focused more on immediate actions and less in long-term investments—but that is another discussion.)

Everyone agrees that investments in education make sense, but what is the degree to which these investments will actually impact family income inequality absent any other reforms or changes in our economic system? Is education still the primary engine of mobility that Zakaria claims it is? Do people believe that it is? Perhaps this is discussed during the program (which I have not seen), but in his introduction, Zakaria does not get into the issue of income concentration and political power that Bernstein raises.

In education we talk a lot about return on investment. You can’t get two sentences into a conversation with a pre-K education advocate, for example, before hearing about how x number of dollars invested in the system will result in y amounts of economic output. But the income inequality and mobility problem suggests to me that right now there may be a different, more relevant way to ask about return on investment in education: to what extent will our investments in education result in greater income equality and/or greater rates of mobility? If those investments are not going to do it on their own, what else needs to happen? In particular, I’m hoping that when people call for reform and increased investments in education as a direct response to these protests, they can address these questions.

I think these are especially relevant questions for those of us in the adult education field. Clearly, a lot of adults who need help with basic skills are hoping that improving those skills will lead them to greater economic opportunity. One thing for sure: we tell them that all the time. But for adult learning to lead to greater economic opportunity, there has to be a reasonably equitable economic playing field for them to enter once they upgrade those skills. What if students decide that this is no longer the case—that whatever effort they put into improving their skills, they will end up right back where they started? There is a line in Bradbury’s paper that suggests this is not an unreasonable position: she writes that “families’ later-year incomes increasingly depended on their starting place. (my emphasis)”