At last, we got economists saying the obvious. My favorite part is where the economist says, "Every time you hear an employer saying they can’t fill a vacancy because they can’t find anyone with the skills I need, be sure and add the phrase “at the wages I’d like to pay.”
I have heard this phrase from quite a few employers who post on the Dope, it will be fun pointing them to this quote next time they come up with it.
Haven’t economists (other than Tea Party Republican economists) been saying that all along since, like, forever? Paul Krugman, for example, has been writing about that all along.
I’m not sure what’s controversial here, but “lack of jobs” is as much an oversimplification as “lack of skilled workers”.
There are two curves: one for the rates that people of a given skill level are willing to work for, and another for the value to a company of a person with a given skill level.
You expect to get employment up to the point where these curves cross. The intersection point moves in one direction if demand decreases, or supply increases, or skill levels decrease. It moves in the other direction if demand increases, or supply decreases, or skill levels increase (and plenty of other factors as well, like cost of living).
There is also a thresholding effect. In my group we need fairly elite people. Perhaps 3/4 of applicants are ostensibly skilled, but not worth anything–they would be a net negative in productivity. Past that threshold, the value of a hire increases dramatically, but not infinitely so, and so we have a hard time matching the salaries of (say) Google or Apple. So we end up in a dicey position where we’d like to hire people, but they’re either worthless or too expensive.
Elite workers do well in this situation, but the rest of them do not. Increased skills would help.
That is the reason many employers like desperate employees, because the price goes down. I’ve even heard a woman I know, a recruiter and a right winger, say that high unemployment is good because good employees are a bargain.
Just for the record I’m on the right, I’m a libertarian and I don’t for one second think unemployment is a great thing for anything.
I already always do that.
There’s apparently a phenomenon that leads employers to refuse to pay sufficient wages to actually attract a worker if the job is perceived as being too lowly to “deserve” a higher pay. Let’s say a shop owner wants to hire a fishmonger : even facing a dramatic shortage of trained fishmongers, he won’t raise the offered pay much above minimum wage because someone cleaning fishes “shouldn’t” be paid that much (and presumably then complain about not being able to find any worker).
It apparently works in reverse too : someone with, say, an university degree, will be offered a higher pay even when unemployed people with his competences are all over the place. The employer will feel obligated to offer a very decent salary to an engineer, even when the job market for this line of work should result in much lower offers.
In the late boom 90s I was in IT. It was a spectacular time. People couldn’t find the people they needed at what they wanted to pay, so they paid more. And they paid more to poach from other companies. But it became a game of musical chairs. Sure, you’d have someone with the skills you needed for six months - but after six months another recruiter offering him 30 or 40% more money would call and he’d slip through your fingers. It was nuts.
I wouldn’t say given the musical chairs going on that you could find people. And it wasn’t great for everyone - when it crashed, a lot of people lost their jobs - and most of those people fifteen years later have never seen the salary they had. For those that bought houses and started families off of late 1990s IT salaries who didn’t manage to hang on, life got tough fast.
I’m still in IT, and the job market is tight again. It is hard to find the people we want to hire at what we can pay. But our business is small and works under contract. If we pay people more, we might as well just not hire them at all and shut the doors, our clients won’t cover the difference and our margins aren’t thick enough to deal with it. (I think the company won’t get through another year because of it).
^ This.
You also see it sometimes as “this person is paid too much for what they do.” Um… assuming no fraud, maybe that person is extremely high performing in that role? Maybe the employee does value the person that much?
See, it’s funny - we hear all about supply and demand and how scarce supply makes prices go up and so on and so forth… but somehow that isn’t supposed to work for workers. Have trouble finding someone to do X? Og forbid you raise the pay rate to attract talent, the job isn’t worth that much. Except, if people aren’t willing to do it for what you pay then obviously you have misjudged things and it IS worth more. Or you go hire illegal aliens and pay them illegally low wages and things like that, right?
Whenever some business guy goes on the news and says “We need more workers for job X!” I always think of the handbills in The Grapes of Wrath. Steinbeck describes employers during the Depression flooding the country with handbills saying there is a shortage of workers for the fields in California. Of course, there is no shortage, but it’s in the interest of the employers to have an oversupply of workers for every job. Printing the handbills is cheaper than paying a decent wage. Nowadays, they don’t even have to print up handbills. They just issue a press release and let the media lap it up.
This tells me nothing: it would be true whether the problem were employers unwilling to pay reasonable wages, or employers unwilling or unable to pay unreasonably high wages to compete for the few skilled workers in an industry.
If a firm is not willing to pay the clearing market wage for a role, it will likely go unfilled. If that firm can continue to operate profitably without that role filled, maybe they didn’t need it in the first place. Otherwise they will see their performance and profits decline and will likely increase the wages they are willing to pay for that particular role.
Most labor is a commodity just like products. The economic theories of supply and demand apply to labor just like other commodities. Nothing new here.
Or petition the government to let you buy more indentured servants.
That or they don’t tell you that the vacancy they want to fill is slotted for a unicorn. That is, a guy who knows how to animate in flash, do professional photoshoots, design a game for iphone from scratch, print t-shirts in the lab upstairs, operate a CNC router, and you know, for this position it’s a major plus if you know how to do dog grooming.
“Where are all the experienced employees?!”
Part of the problem is that many employers don’t even understand what skills they need for a job. For example, the classic issue of IT job ads that confuse skills with tools. (“.net” is a tool, “software development” is a skill)
I’ve seen your first paragraph demonstrated also but it’s not a good thing. Lots of employers let things like computer security, user experience/interface design, and user documentation go by the wayside because they think they don’t need them. Sure the customers struggle a bit, but they make do, so it doesn’t seem to affect our profits (much… that we can tell without measuring outcomes with and without… and counting intangibles as being worth 0$… the usual bean counter limitations).
Just in case people think you’re being silly, a few years ago when I was between jobs I was hitting the Dice site daily. There actually was a job opening for a computer programmer that also listed HVAC repair as a requirement. I saw an IT help desk position that required a masters degree. And a ton of job ads that combined varying levels of programming, project management and business analysis - three very different jobs into one position!
Outside of programming, I saw a job ad for people to work a call center for a company that bought debts and then tried to hound the debtors into making payments. They would only accept applicants with a four-year college degree. Really. I do not imagine they were paying huge wages. Purple penguin ads are not rare here in Georgia. (We have the highest unemployment rate in the country.)
Saying what all along?
I don’t see why you think this matters. It is two sides of the same coin (or more technically accurate - two series in the same supply & demand graph). And it’s not like “jobs” is some monolithic group.
If there isn’t a demand for widget makers, there isn’t a demand. That’s a lack of jobs. If companies can’t find talented widget designers to invent better widgets at a rate they can afford, it’s a lack of talent. I see both.
We all know that there is a lack of middle jobs because most middle jobs have been replaced by cheap offshore resources or automation. Sure there are a lot of McJobs but they suck and don’t pay well. And there are a lot of jobs if you are a brilliant Silicon Valley engineer or Wharton MBA or something like that. But jobs where you just run a machine in a factory all day or collate paper in an office are long gone.
And to be honest, I don’t know how people can’t find some kind of work for years at a time. I know lots of people who lost jobs during the 2008 financial crisis, including myself. All of us managed to find jobs (in some cases, multiple jobs) within a few months. I can see maybe if you work for the one office in Middle of Nowhere, USA. But I also read a lot of “I need career advice because I graduated with a degree in accounting but don’t like accounting” posts on this board to. I think a lot of people somehow magically expect some sort of fantasy job doing god knows what to land in their lap.
When I look out the window, I see a lot of people going to and from work. I guess figure out what those people are doing.
Funny enough, I just showed my wife the description of a job I was interviewing for. It was like three pages of qualifications. 8 years experience in management consulting or similar profession. 6 years financial service or banking experience. A laundry list of technologies and certifications. I’ve touched on about 80% of the qualifications. But the only reason I am able to do that is because I’ve changed jobs every 1-4 years and my exposure to most of that stuff is so high level or superficial as to be useless beyond discussing in the abstract. So really, exactly the sort of employee they probably don’t want.
If I get this job, it won’t because I’m a perfect match for their ridiculous qualifications. That’s just a data dump for a search engine anyway. It will be because I have 15 years experience in this field and actually know the practice leader who runs this group (having worked for him ten years ago). Or that might be the reason I don’t get this job.
You and just about everyone in this thread seem to be considering the issue only in terms of IT and other high tech sectors. But that’s just a tiny faction of what we call “the economy” as a whole. There are whole huge swaths of the job market where extra training would do little or no good. Employers and their bought and paid for politicians and economist monkeys keep citing “training” as the solution to our employment issues, not because it’s the actual solution to our employment issues, but because it’s what works best for employers. And it was just refreshing to hear an economist speaking truth to power for once.
It’s possible that instead of putting the words “I’d like to pay” coming from the mouths of employers you may want to use “I can afford to pay”.
I have a very low opinion of an economist who implies that the average employer has some big stash of spare cash that he can use to raise the pay rate for any given job.
Actually, I don’t have a very high opinion for economists in the first place.