Joblessness not due to skills gap but to lack of jobs, says economist

[Dangerosa]

@Mijin

I just want to fifth this: I see it all the time. It’s the kind of thing you’d expect the market would correct, but apparently not as it’s such a common and entrenched way of thinking.

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And on the skills front, I think it’s fine for contract jobs to just list a set of desired skills and leave it at that. But permanent jobs should generally allow for employees to bring some skills and learn/improve others on the job.

Many employers advertise for a role with apparently the desire to find someone super-skilled and experienced in every conceivable area with any association with that job. But someone like that would likely have been promoted out of that role.

Part of it is that the market becomes entrenched. If you go to McDonalds you won’t pay more than a certain amount for your meal. All the costs, including labor, go into what that meal has to sell for. So even if McDonald’s can’t hire for $8 an hour and needs to pay $11 or $12 in order to get people, that might cost them to either raise prices beyond what the market will bear - in which case they don’t sell enough to stay open, or increase their costs beyond what they can see a sandwich for, in which case they won’t stay open either.

And in the McD’s example, remember most restaurants are franchises. McDonalds as a corporation might make money hand over fist, but its up to each franchise owner to keep his restaurant profitable - McDonalds won’t bail you out or pay your people more and cover it from more profitable stores.

[Mijin]

@Dangerosa

Part of it is that the market becomes entrenched. If you go to McDonalds you won’t pay more than a certain amount for your meal. All the costs, including labor, go into what that meal has to sell for. So even if McDonald’s can’t hire for $8 an hour and needs to pay $11 or $12 in order to get people, that might cost them to either raise prices beyond what the market will bear - in which case they don’t sell enough to stay open, or increase their costs beyond what they can see a sandwich for, in which case they won’t stay open either.

And in the McD’s example, remember most restaurants are franchises. McDonalds as a corporation might make money hand over fist, but its up to each franchise owner to keep his restaurant profitable - McDonalds won’t bail you out or pay your people more and cover it from more profitable stores.

Well I was thinking more like adverts for Junior Developers where they have a whole shopping list of skills, some of which are apps or technologies too obscure / specific to an industry to have been taught in Uni. Of course you’re not going to fill that role / or eventually the employer “compromises”.

I think the fast food thing is not such a great example as in the UK at least I think McDonalds often pays a decent amount over minimum wage and has well-staffed restaurants.
But this economy of supply and demand doesn’t always work so well. There are many bars and pubs I see that are understaffed on busy nights. Yet you won’t see many job adverts for barmen that go much over minimum wage (NB: in the UK tipping barmen happens much less frequently than in the US, so they do basically live on their flat rate pay)

[Voyager]

@Dangerosa

Part of it is that the market becomes entrenched. If you go to McDonalds you won’t pay more than a certain amount for your meal. All the costs, including labor, go into what that meal has to sell for. So even if McDonald’s can’t hire for $8 an hour and needs to pay $11 or $12 in order to get people, that might cost them to either raise prices beyond what the market will bear - in which case they don’t sell enough to stay open, or increase their costs beyond what they can see a sandwich for, in which case they won’t stay open either.

And in the McD’s example, remember most restaurants are franchises. McDonalds as a corporation might make money hand over fist, but its up to each franchise owner to keep his restaurant profitable - McDonalds won’t bail you out or pay your people more and cover it from more profitable stores.

But the same thing happens if the price of beef increases (or whatever they put into their burgers.) And you are forgetting that they exist in a competitive market. If their salaries are forced up to $11, so would those of their competitors. Now, fast food is a bit elastic, so some people might choose to eat at home (win for the general health) but the added amount of money in paychecks might more than offset a few cents more for a burger.

McD’s problem today, according to the business news, is not being too expensive but being too cheap. As the economy improves and people have more money higher quality fast food places are doing well. So perhaps improving the customer experience, which is easier to do with better paid workers, might be just what they need to do.

[Dangerosa]

@Voyager

But the same thing happens if the price of beef increases (or whatever they put into their burgers.) And you are forgetting that they exist in a competitive market. If their salaries are forced up to $11, so would those of their competitors. Now, fast food is a bit elastic, so some people might choose to eat at home (win for the general health) but the added amount of money in paychecks might more than offset a few cents more for a burger.

McD’s problem today, according to the business news, is not being too expensive but being too cheap. As the economy improves and people have more money higher quality fast food places are doing well. So perhaps improving the customer experience, which is easier to do with better paid workers, might be just what they need to do.

McD’s has a huge competitive advantage when the price of beef increases, they own cattle ranches and beef processing facilities. They have a lot of control over the cost of their commodities. They don’t own people - its a cost they have no competitive advantage on.

As to McD’s upscaling their brand, personally, I think its a laughably bad idea. I think they have their niche, they do it well, but they’ve fully penetrated that niche. Its time for everyone, including McD’s to expect growth, and it will exist with a cyclical business cycle - when the economy is good, they won’t sell as much - when its bad, they’ll sell more. (At least with the McD’s brand - if they want to compete with more upscale brands, they should have a different brand.)

[Voyager]

@Dangerosa

McD’s has a huge competitive advantage when the price of beef increases, they own cattle ranches and beef processing facilities. They have a lot of control over the cost of their commodities. They don’t own people - its a cost they have no competitive advantage on.

However other fast food companies do have this problem.

As to McD’s upscaling their brand, personally, I think its a laughably bad idea. I think they have their niche, they do it well, but they’ve fully penetrated that niche. Its time for everyone, including McD’s to expect growth, and it will exist with a cyclical business cycle - when the economy is good, they won’t sell as much - when its bad, they’ll sell more. (At least with the McD’s brand - if they want to compete with more upscale brands, they should have a different brand.)

[/quote]

How they should deal with their problem is not that important. My point is that other companies in the same general area can succeed with higher product costs. I don’t know that their workers get any more, but raising salaries is not automatically catastrophic. Especially if everyone else has to do it also. Which is why there are minimum wage laws - you can’t expect employers to increase wages unless doing so for better service is part of their business model.

[Dangerosa]

@Voyager

However other fast food companies do have this problem.

How they should deal with their problem is not that important. My point is that other companies in the same general area can succeed with higher product costs. I don’t know that their workers get any more, but raising salaries is not automatically catastrophic. Especially if everyone else has to do it also. Which is why there are minimum wage laws - you can’t expect employers to increase wages unless doing so for better service is part of their business model.
[/QUOTE]

Of course if everyone else has to do it also, but then the costs of good rise, and what was a living wage no longer is. Because the companies have raised the cost of goods and you get yourself into an inflationary cycle. So now, the people who work at Chipotle still can’t afford to eat there.

[Voyager]

@Dangerosa

Of course if everyone else has to do it also, but then the costs of good rise, and what was a living wage no longer is. Because the companies have raised the cost of goods and you get yourself into an inflationary cycle. So now, the people who work at Chipotle still can’t afford to eat there.

That would be true if minimum wage workers were the only ones buying these products. However those making far more than minimum wage do also, and we pay a good chunk of the increase. Not to mention that minimum wage workers don’t use all of their income to buy products which would be affected.
Yes it is wealth redistribution in a sense.
Chipotle workers can’t afford to eat there because that restaurant is targeted to those with more income. Waiters at the Waldorf Astoria can’t afford to eat there either. It has always been such.

[bump]

@adaher

One thing that’s always surprised me is that most companies won’t pay a premium for a simple job, but one in which the difference between a good employee and a mediocre one is huge.

My bet is that it’s either really hard to quantify what makes one employee better than another, or that there’s less benefit to the company than you might think.

I mean, unless you’re actively tracking pizzas made by one guy vs. another, it’s going to be hard to identify.

Also, there may be a bottleneck (pizza oven time, delivery time, etc…) that negates the advantage of having a faster pizza maker, and that guy ends up spending 1/3 of his time idle. Why pay him more, rather than hiring a slower guy and having him work 100% of the time?

And ultimately, it’s pizza-making. As long as the pizzas are delivered on time, nobody really gives a shit if one pizza maker is faster than the rest.

You can be sure that most companies DO pay premiums on positions they find to be integral to their success, and that the ones that don’t, are likely to find themselves out of business.

[OffByOne]

Lots of opinions out there!

This is not opinion, just my personal experience. YMMV.

I do not have a college degree – I learned programming in a technical school (“Can a phone call change your life?”), nearly forty years ago.

I was laid off in 2005, from a job in a major US corporation. The next nine + years (less than half of which I actually worked) taught me a few things.

Retraining: I am a C++ programmer, with a little experience with C#, all on Windows, plus a little database experience… The jobs I was finding were Java, UNIX/Linux, ASP. My wife believed that all I need to do was take a course (or two!) in one or more of the technologies I lacked. I had to explain to her that the jobs I was seeing wanted experience, not just knowledge.

Interim jobs: I actually tried this. We live just a few blocks from a Kroger, so I applied there. I never heard back, probably because when I listed my previous employers, they looked at my qualifications and thought, “This guy is not going to stop looking for computer work, just because he has this job.” Same thing for Office Max (or was it Office Depot?).

Unicorn Job Postings: Not all job postings are listed to find new employees. If the job description is a little too precise, the odds are that they already have a candidate in mind, but that candidate is an alien, already working for them (somehow), but the company has to show a “good faith effort” to find an American citizen for the position.

I found a job on one of the boards and sent them my resume. They seemed very receptive to me and set up a technical phone interview to determine if I was actually qualified. The phone interview went very well, so well, in fact, they wanted me to fly out to their city (at my own expense(!) but they would reimburse me) for a face-to-face meeting.

When I got there, the softball questions that I had easily handled during the phone interview were gone. They started asking about my experience with technologies that had never been discussed prior to that meeting. After that dismal interview, one of the interviewers, who had been the most technical person in the face-to-face, showed me to a computer that was set up for a test. Each of the things they wanted me to do were things that I had previously stated (during the phone interview) that I had no direct knowledge of. For instance, I had mentioned that I had written some embedded SQL code in a C++ program, but had no experience with actually creating the database I was querying; they wanted me to set up a new database, not write queries against that database.

After I left the interview, I realized that the guy that gave me test, the guy that was most technical in the face-to-face, was from India. Was the job description written to draw me in, so they could reject me and hire an H1B candidate? I don’t know, but I am highly suspicious, since I often see jobs posted that I had previously applied for but didn’t get, and I never saw another posting for this position.

Has my lack of a degree hurt my career? Possibly, early on, but probably not so much later, after I had many years experience. What has really hurt the latter part of my career was not educating myself with respect to technologies I didn’t already have in my skill set, and finding ways to give myself experience in them.

But which way to go? Back in the '90s, I tried to learn as much as I could about OS/2, since I saw that as the eventual successor to MS/DOS and Windows. Ouch! I could have been learning VB.Net, and ASP, and COM, and Linux, etc., etc., etc.

So what should I learn now? The hot things now are mobile and the Internet, especially wherever the two intersect. It’s going to be very lucrative (at least until the next thing comes), and anyone with experience should be able to work steadily. But Droid or iOS? Client-side or server-side? PHP or Ruby on Rails?

(The above are rhetorical questions. At this point in my career, trying to switch over from desktop to browser or smart phone would take longer than I have years left in me to work.)

[Voyager]

@OffByOne

So what should I learn now? The hot things now are mobile and the Internet, especially wherever the two intersect. It’s going to be very lucrative (at least until the next thing comes), and anyone with experience should be able to work steadily. But Droid or iOS? Client-side or server-side? PHP or Ruby on Rails?

(The above are rhetorical questions. At this point in my career, trying to switch over from desktop to browser or smart phone would take longer than I have years left in me to work.)

I’m looking for someone to take over my system, but unfortunately the slot is for a new grad. So I’ve been looking at resumes a lot. I see most know PHP, very few Ruby on Rails which I need. Lots of SQL experience. Lots of Python.

BTW, you are right about the unicorn posts. 25 years ago I wrote some. We were required to hire people who met the requirements, and got someone so good we did hire him as well as the person we wanted to get a visa for. But I suspect that is rare these days.

I hope those clowns paid for your travel at least.