I.T. Grunt Catches Paul Krugman Being Right! -About “Skills Shortage”
Krugman: Even a stopped clock…?
H/T our old friend Life of an I.T. Grunt (sadly much less active than before being sabotaged, as I understand it, by Treason Lobby activists) for Paul Krugman Opines On The Displacement of American Workers
This draws attention to The Fake Skills Shortage The New York Times November 25, 2012 in which Krugman says
Whenever you see some business person quoted complaining about how he or she can’t find workers with the necessary skills, ask what wage they’re offering. Almost always, it turns out that what said business person really wants is highly (and expensively) educated workers at a manual-labor wage. No wonder they come up short.
And this dovetails perfectly with one of the key arguments against the claim that much of our unemployment is “structural”, due to a mismatch between skills and labor demand. If that were true, you should see soaring wages for those workers who do have the right skills; in fact, with rare exceptions you don’t.
Krugman in turn refers to a longer New York Times piece Skills Don’t pay The Bills By Adam Davidson November 20, 2012.
The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist…. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” …Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.
In a recent study, the Boston Consulting Group noted that, outside a few small cities that rely on the oil industry, there weren’t many places where manufacturing wages were going up and employers still couldn’t find enough workers. “Trying to hire high-skilled workers at rock-bottom rates,” the Boston Group study asserted, “is not a skills gap.”
I am not sure Davidson really understands this topic. He relates an anecdote about an employer who
…was deeply frustrated when his company participated in a recent high-school career fair. Any time a student expressed interest in manufacturing, he said, “the parents came over and asked: ‘Are you going to outsource? Move the jobs to China?’ ” …his answer to a nervous parent’s question is not reassuring. The industry is inevitably going to move some of these jobs to China, or it’s going to replace them with machines.
Once again, the way to get people to take business risk – just as to work – is to pay them more.